The Craziest Reason Contractors Lose Bids

Written for ABC’s Managing Your Business – March 2015

The craziest reason you lose bids isn’t price. It’s because you’re qualified.

In a recent webinar, “9 Biggest Mistakes Construction Companies Make on Proposals,” one of the most surprising mistakes exposed was that construction companies lose bids because they are qualified.

Yes, of course, a contractor needs to be qualified to get the project. However, the problem is that construction companies stop marketing once they’ve proven their qualifications. Every other contractor applying for the job is likely just as qualified, which means a proposal must show how the company offers more than just competency. Otherwise, the company gets stuck in the low-bid downward spiral.

Think like the selection committee. One of its biggest annoyances is when all the bids look and sound alike. Selection committees frequently can’t tell contractors apart. If you remove the company name from the proposals, they all read almost verbatim: “We are qualified to do this project because…”

When this happens, the only way the selection committee can distinguish the proposals is by price.

The committee must justify why they picked the winning contractor. If all the applicants seem to be similar in qualifications, then the only justification often becomes the price of the quote. While it’s an infuriating situation, the selection committee didn’t make an error; they picked the best value, which, in this case, is the cheapest price for a qualified contractor.

Here are two ways to create proposals that are not based on price:

  1. Establish the mindset and attitude that your construction company is better than all of the other construction companies bidding against you. Believe that you can dominate the proposal process. If you don’t think this way, why are you bidding on the job? Why are you even in business if your company is no better than any other construction company? Don’t be caught thinking like a commodity salesman; otherwise, your work will be priced as a commodity.
  2. Show, explain and demonstrate to the selection committee your value by differentiating your company from the pack. The selection committee wants to pick the best value, which doesn’t mean the cheapest. They want the Cadillac, but when Cadillac doesn’t show the buyer why they are any different than a Kia, then the Kia’s price wins every time.

Price is a secondary differentiator because the client wants assurance the job will be done right. Give the client what it needs making sure the company stands out as the best choice for the job. When you do this, the client won’t worry so much about picking the cheapest price for the work.