Bidding is both art and science. Understanding the project type and fit relative to oneself and the competition matters. Markets are cyclical and the list of factors that influence competitor pricing is long. Contractors armed with the right data to make informed decisions who are accountable for the right metrics at the bidding table set themselves apart from their competitors. Artificial intelligence will play a role in the future of estimating and bidding work.
A contractor struggled to understand why there were large gaps (money we left on the table) between their bids and the competition on certain types of jobs.
Analytics tends to be an overused buzzword, and my apologies in advance for even mentioning it here. The following is a definition according to Merriam-Webster... Analytics: The method of logical analysis.
This contractor would bid a county job with 90% self-perform work aggressively and lose by a smidgeon. Then, they would bid a night-time project with heavy subcontracted work on the more conservative side of the spectrum and leave uncomfortable amounts of money on the table. They had the same cost inputs, the same competitors, and sometimes even the same Estimator. But the gaps were astounding. Trying to make sense of all this information made them want to pull their hair out. And hearing the Monday-morning quarterbacking when a target bid was lost or when money was left on the table did not make life any easier for the Estimating team.
Before the contractor could conduct analytics on anyone else, they had to look in the mirror and conduct an analysis on themselves. So, they analyzed prior bids and realized that they were selling themselves short on difficult, more complex, and less appetizing work. Naturally, the opposite was the case on more straightforward bids. They were self-admittedly using a 10-pound hammer for every nail when a 20 oz claw hammer would have done the trick in certain instances. Now, they had actionable data to improve their process and outcomes as classification by job type became a larger driver in the margin selection process. This is an example of how analytics can unlock insights and create value.
The one consistent thing about highway markets is that they evolve over time. Contractors with an empathetic perspective regarding their competition will create an edge for themselves over time. Understanding how a project fits one firm compared to another is a valuable tactic in bidding. Contractors who consistently measure themselves and their competitors using bidding analytics create opportunities for their teams to improve. The vast amount of available data is a boon for folks who aspire to learn and improve.
Finally, I believe that artificial intelligence (AI) will play a major role in estimating and bidding work in the future. BIM/CIM (Building Information Modeling or Civil Information Modeling) has progressed immensely over the past 10 years and will continue to make Estimators’ jobs easier. Most AI is an aid to human users and will not automatically do all the estimating for a Contractor. With the amount of intense and expensive manual takeoff and cost estimating work required to put together a bid today, advanced technologies are emerging and will continue to improve the process of an Estimator doing their work.
In summary, deep insights can be gained from bidding analytics to improve performance and profitability. Understanding a competitor’s perspective can help improve one’s own results. And AI that aids human Estimators to do their jobs more easily and efficiently will continue to change the way that work is bid in the future.
This post marks the conclusion of our 8-part series on how highway contractors can succeed in the project acquisition process. It has been a pleasure to share experiences, lessons learned, and where we believe things may be headed. Heavy highway estimating to some is admittedly not the sexiest topic, and this does not deter the team at Edgevanta in the slightest from our obsession with building a technology to help solve the project acquisition process for highway contractors.
Sincerely,
Tristan Wilson
CEO and Founder
Edgevanta, LLC
This is the 8th deep dive of a multi-part series on the project acquisition process of the construction cycle for highway contractors.
