Q: We are thankful to be very busy, but our company seems to constantly underbid projects and we can’t pinpoint where the mistakes are being made. Do you have any suggestions?
A: The good news is that you’re busy; the bad news is you’re not making the profits you could be making. Luckily, this is fixable.
Most often I see the biggest mistakes being made in underestimating the labor on projects. I highly recommend you start using the NSCA Labor and Installation Standardsreport rather than just relying on your own numbers. At least compare your labor breakdown to the NSCA standards to spot any glaring differences.
Next, I suggest that you thoroughly review your bid process. My suspicion is that you don’t get the project manager or lead technician to sign off on each project before submitting your price. Rather than just handing them the job, get them to buy into the success of the job by being involved with installation labor estimates, prep work and assembly time, contingency factors, documentation, etc. This always results in better teamwork.
I’d like you to network with other NSCA members who do understand the fixed and variable costs on each project type that you do. I encourage you to join and participate in discussion on our LinkedIn page. The group consists of only industry members who can offer a lot of great feedback and suggestions.
A lot of times we see companies that have prepared a bid that simply lacks enough margin to cover the overhead, design time, sales expenses, travel costs, etc. We have some excellent classes and expertise in this area.
But when you do pinpoint the problem, don’t shoot the messenger. Separate the people from the problem and work to fix the situation, not place blame. Many times it comes down to a lack of training, knowledge, or simply having old processes that didn’t identify hidden costs or inadequate labor estimates. Look forward and start making money. — CW