Bid Smarter on Construction Jobs With Sage Intacct

9 min read

June 28th, 2024

Every year, business leaders in the construction industry fight a constant battle to beat out the competition and win work to cover their costs, stay operational, keep their crews working, and turn a profit. For many construction business owners, winning the battle means submitting as many bids as possible and hoping, fingers crossed, to win enough projects to survive another year. 

This willy-nilly approach, however, is very time-consuming, stressful, and expensive. Plus, there are actually jobs out there that could cost your business money, rather than helping it generate a profit. In order to wage a bidding war and successfully emerge on top, your business needs to bid smarter - not harder - to identify the best requests for proposal (RFPs) for bidding and submit stellar proposals that set your construction firm apart from the competition to win the right jobs for your business. 

9 Construction Industry Bidding Tips for Smarter, More Successful Job Bids

1. Bid Smarter With a Better Back Office

The first step to bidding smarter in the construction industry is to get your back office in order. Without a well-run back office, you won't have the data you need to evaluate and improve your bidding process.

The foundation of every high-performing, modern back office is a good accounting software solution that can help you collect data and automate processes. Financial management solutions designed specifically for construction businesses, such as Sage Intacct software, are the best options for construction businesses. These solutions are designed to meet your specific needs, and they can take your bidding process to the next level by helping you select the right RFPs for bidding, automate the estimate process, and increase the number of bids you win. 

2. Know Which Jobs You Want to Bid

Next, to bid smarter, you must identify which jobs you should bid. This step will save you time, money, and stress. When using a "throw everything against the wall and see what sticks" approach, you not only waste time bidding on jobs that you shouldn't but you can also miss out on winning the work that would truly be best for your business. 

To identify the RFPs that are best for your business, you need to look back on your company's past performance. With a back office that is designed to work for you, you can use unit economics to evaluate your business's profitability and performance by class. This enables you to pull profit and loss reports on specific clients, jobs, and types of jobs to see which category generates the best profit margins. (You can also use profit and loss by class to see if any particular job category ends up costing your business money.)

With project-based accounting, you'll be able to identify whether large jobs, small jobs, government contracts, private contracts, local jobs, regional jobs, or other categories of work are more profitable than others. This will help you narrow down the pool of available RFPs to submit bids on only the RFPs that are most likely to generate the best profits for your company. 

3. Practice Due Diligence

Before bidding, it's also important to practice due diligence with the projects you have selected for bidding before you actually put together and submit your bids. You should know the details of a project backward and forward. You should visit the job site, looking for any potential challenges that weren't made clear in the RFP. Additionally, look into the location's zoning and local government requirements to ensure there aren't any unforeseen legal details or overlooked technicalities that could be costly before you submit a bid. 

Read More: The Top KPIs for Construction Firms

4. Nail Down Your Costs to Ensure a Price Optimized for Profitability

Cost tracking in construction businesses is vital. As in all businesses, construction companies have two primary categories of costs: direct and indirect. Your direct costs are those directly associated with the jobs you do. Direct costs include expenses such as money spent on:

• Direct materials (building supplies)
• Fuel and/or transportation to or from a job site
• Direct labor (hours worked on the job)
• Equipment rented for completing a specific job
• Job-specific permits

Indirect costs are also known as overhead costs, and they include things like the costs associated with your office space, office supplies, office furniture, insurance, licenses, utilities, subscriptions, and indirect labor (hours worked running the business but not completing a job). 

In order to know your costs and optimize your pricing in bids, you must carefully track direct costs, associating them with a specific job. Additionally, you need to be able to accurately allocate overhead costs (using an overhead rate) among your projects, so that you are building in a large enough margin to cover direct and indirect costs in your bids while leaving room for a profit. 

Sage Intacct construction accounting software includes dynamic allocations and smart cost categorization to help automate and improve the process of job costing, applying an overhead rate, and generating job estimates for bids.

 The Top 6 KPIs For Construction Firms.  

The AEC Scorecard™️: The only KPI scorecard designed exclusively for the construction industry. 

[FREE DOWNLOAD]

5. Differentiate Your Construction Firm

Of course, price is going to be one of the leading factors in the bid selection process. However, other factors come into play, as well. For example, a client might be willing to pay a slight premium to have a construction company with a good reputation work on their project instead of a business that is unknown or that has a bad reputation.

For this reason, it's essential to differentiate your construction business from your competition in your bids. Plus, since you'll be working on fewer bids when you bid smarter, you'll have more time to construct a compelling case for why yours is the best business for a particular job. 

Be sure to include information in your bid about your company, how you do business, your track record, similar jobs you've successfully completed, photos of your work, your timeline for working, your communication style, and your professionalism. Additionally, provide a list of any awards you have won, special certifications you've earned, and positive reviews from past clients. 

6. Schedule a Meeting

When you submit a bid to a client, your business is just a bunch of numbers and letters on a page. If you're able, you can set your company further apart from the competition by getting some face time. Schedule a meeting with your potential clients. Take them out to lunch, put a face to your business's name, and show them the human person behind the bid. 

This type of one-on-one meeting helps to build trust, shows your commitment to a job, shows that you're willing to dedicate your own time to securing the work, and also creates a strong foundation for a new customer relationship. Additionally, this type of meeting provides you with an opportunity to ask questions and get clarification on any particulars of a job that are not clear in the client's RFP.

7. Automate the Bidding Process

Accounting software designed for construction firms is intended to automate processes that involve numbers. This means that you can use your software to generate job estimates. An automated job cost estimate can provide:

• Better Speed - You'll save time doing manual research and calculations to create an estimate.
• Improved Accuracy - Your estimate will be more accurate because it will draw on all of the historical and current financial data in your system. 
• Early Bid Submission - A faster estimate process can help you submit your bids before their deadlines. Early submission could help you improve your chances of winning a job because it demonstrates exceptional organization, strong motivation, and a good work ethic. Additionally, submitting bids early gives your client more time to consider your company, and it gives you more time to schedule a face-to-face meeting before decisions are made. 

Why is Intacct the number one provider of construction finance management software? (We’ll give you a hint- it starts with 20-40% boost in work efficiency!)

Watch the full demo here.

Speak to one of our business performance specialists  to learn how GrowthForce can support you on Sage Intacct (sign up here!)

8. Understand Your Seasonality and Seasonal Work Capacity

Throughout the bidding process, it's important to consider your work season. Depending on your company's location, seasonality could have a big impact on your job capacity. As a result, seasonal businesses must carefully consider the work completion deadlines on the jobs that they choose to bid and accept. You'll want to bid on a wide variety of jobs that are spread throughout your work season so that you can ensure a full schedule where your business isn't over-booked and your crew isn't sitting around, waiting for jobs to begin. 

9. Measure, Track, and Know Your Bid-Hit Ratio

Your bid-hit ratio is the number of jobs you win for every bid submitted. For example, if you have a 10:1 bid-hit ratio, then you win one job for every ten bids submitted. Keeping track of your bid-hit ratio is important because it shows you how successfully you're bidding on jobs. 

When it comes to standards for bit-hit ratios, every industry has a different benchmark. In construction, bid-hit ratios of 4:1 and 10:1 for private and public jobs respectively are typically considered standard, healthy ratios. These ratios demonstrate good, sustainable job bidding performance. 

If your bid-hit ratios fall short, take a close look at your job bidding process to identify potential problems, make changes, and continue tracking your numbers to improve your bid-hit ratio. 

Read More: Financial Reports Vs. Management Reports: What’s The Difference

Bid Smarter With Outsourced Accounting for Construction Businesses

Sage Intacct is a powerful accounting software solution for construction businesses. With its vast marketplace of third-party extensions, it can be expanded into a comprehensive enterprise resource management tool that allows you to automate and improve nearly every aspect of your company. 

Despite its valuable capabilities, getting a handle on Sage Intacct software can be complex and challenging - especially for a construction business owner who is already busy focusing on running their business. Paired with an outsourced accounting services provider, however, Sage Intacct can help you take your business to the next level. 

With an experienced financial team to guide you through the application and use of powerful financial management technology, you can improve your bidding process, win more of the right jobs for your company, and strengthen profits to grow your business in the future.