Electrical Estimating and Project Selection

We had an estimating project cancelled recently, for a very good reason. It was a very complex switchgear upgrade at a generation facility. After attending a job walk, our customer decided they may not meet the owners requirements for experience. Concurrently, I was reading the specifications and had found several paragraphs that may have also disqualified my customer.

It was the right decision. My customer made the choice not to waste time and money on a project he had a very slim chance of winning.

How you choose projects to bid can have a major impact on your win rate. This came into focus for me when I was a junior estimator. The management consultant  hired by the company I was working for asked me to analyze the projects we were bidding, and develop a matrix for choosing projects. Here is what I came up with.

• Type I – The project has been offered to you. Negotiate a price and the job is yours.
• Type II – One GC or owner is putting the job out to bid with a limited number of bidders.
• Type III – Multiple GC’s are bidding the project.
• Type IV – Projects that are advertised.

Obviously, the Type I project is the most desirable, but requires the you have established the relationships that bring this kind of work.

The Type IV project has the lowest chance of becoming a contract. The worst I have seen is bidding against a field of 30 other electrical contractors. The odds are that one of them will make a mistake and end up with a project.

 There are times when it may be necessary, or even desirable to bid Type IV projects. You may have skills or expertise in an area that gives you an advantage on certain bids, or a GC that you have a good relationship with may ask you to bid an advertised project.

 

There are also times when an advertised bid does not have a lot of bidders. Keep your eyes peeled for these, as you can often get a better markup on these projects.

 

Another part of project selection is resource scheduling. Does your company have what it needs to do the work, including cash, talent, labor pool, tools and infrastructure?

 

The matrix shown above is very basic, and would need to be modified to reflect your companies’ needs and abilities.

 

As usual, let me know what you think.