Bidding question's

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Re: Bidding question's

Bigjohn67,

I appreciate your concern. Unfortunatly the ball is already rolling. I feel I have a moral obligation to do what I think is right though it might bite me in the a$$. Thank you again.

Justin W
 
Re: Bidding question's

Starting out, estimating is just your "best guess". If you are diligent and keep good time and material records (AKA, job costing) you can use this information to help in future estimates.

I was working for a company that did use job costing. I was trying to train an employee to take over a department, and part of his work was estimating. He had just finished a job (SAM's Club fuel work) a couple of months ago, and I had him prepare an estimate for another one we were bidding. He spoke with other workers, and came back with a labor hours estimate of 540 hours. I pulled up the job cost report for the previous job (that he actually performed) and showed him it took 890 man hours to do the last one. We were slow and he wanted to get the work, so it affected his judgement.

This is one of the biggest pitfalls of estimating. If you are busy and don't really need the work, then your estimates get fat and ..... you don't get the work. If you are slow, your bid gets too tight and you get the work but....... you really can't do it for that price. You must try to build a database that can help you objectively bid a job instead of subjectively bidding it.

Good luck!
 
Re: Bidding question's

A conversation I heard during a slow market period:

Owner of EC to Estimator: "We missed the last 4 bids that you put together. You need to sharpen your pencil."

Reply of Estimator to Owner: "I can guarantee that we will get the next 4 bids, if getting bids is all you're interested in."

That ended that conversation. The owner tried to become more selective of the jobs to bid, and spent his time and effort in that quest. The estimator bid those jobs as always, but his success ratio went up. Most of those jobs made money.

If you bid on junk, high competition jobs in a slow market and are so desperate that you cut your prices until you land contracts, you are playing Russian Roulette with a fully loaded gun.

A related experience:

During the 80's I watched a very LARGE EC go broke by taking every large job he bid. He built up a tremendous backlog of work. His idea was to keep all of his people busy so he didn't lose any, pick up the best people from his slower competitors and accept the losses until the market turned around. When the market turned good, then he'd have all his people in place, command most of the large work and make big money.

Also, he thought that his competition would stop bidding on jobs he was bidding because they wouldn't want to waste their time, because he would get the job anyway. That would allow him to start raising his bids, even though the market was slow. It didn't turn out that way. Some competitors fell off the bidders lists, but new ones always took their place.

Unfortunately, his capital didn't stretch as long as the bad market, plus he exceeded his capacity to effectively manage his work. His bonding company took a BIG hickey and had to complete well over 100 million $ of work. The bonding company had to sink well over 10 million $ (I heard it was around $20-30M) of their own money into completing the work.

He'd have done better in Vegas. It was an old, well established, family owned company and the whole family went broke.

[ April 08, 2005, 01:47 AM: Message edited by: tx2step ]
 
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