I have spent a lot of time conducting bid reviews, encountering some exceptional, some satisfactory, and others in need of improvement. Folks have asked me about the recurring patterns I have observed. Here goes.

In my experience, I have noticed that numerous highway contractors tend to allocate excessive amounts of time and effort to reviewing estimates or determining their project costs. Unfortunately, discussions on margin and competitive analysis often occur hastily, as an afterthought at the end of the meeting. This approach, although prevalent in the industry, is a choice rather than a requirement.

While understanding your costs is undeniably crucial, it represents only one component of the larger equation:

Cost + Gross Profit = Price

Estimating involves comprehending your costs, whereas Bidding is knowing how to price your work. I firmly believe that more emphasis should be placed on the latter aspect. By dedicating more time to pricing strategies, there are opportunities to seize low-hanging fruit, win more projects, minimize bid spread, and maximize profitability.

In line with this philosophy, we have compiled a list of seven key factors that every estimator should be aware of and effectively communicate during a review meeting:

1. Let me provide you with a comprehensive overview of the scope, quantities, and costs involved in this project.
2. Allow me to illustrate the project's location and highlight the proximity of our asphalt plant relative to our competitors.
3. I will demonstrate how this project aligns with our existing crew resources, considering schedule constraints and capacity.
4. Here is an analysis of the competitive landscape, including our competitors' known backlogs and available resources.
5. Here are our historical profitability and bid spreads of similar projects for your reference.
6. Let me inform you about the upcoming bids in the area following this one.
7. Based on the project's desirability and all of the above, here are my recommendations on markups.

Now, I would like to ask for your advice.... How does your current process compare to the points mentioned above? I invite you to share your thoughts and experiences on this matter. Together, we can foster a better understanding of best practices and continue to refine our approaches. Send me an email at tristan@edgevanta.io and I’d love to hear from you!

Sincerely,

Tristan Wilson

CEO and Founder

Edgevanta, LLC

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