Be the Best Bidder

Best Bidder practices for construction subcontractors

Best Bidder not lowest bidder

You know there are those who only choose the lowest bidder. No matter how detrimental that practice often is. It happens. This story from ENR tells the tale well.

And, here is another low bid fire station disaster.

If you wish to remove “lowest” from the criteria general contractors might use when considering your bid here are a few things for you to consider.  Because price shouldn’t be the only determining factor in a winning bid.

The Best Bidder will bring

 

  • Outstanding trade expertise.

 

  • Proof of required licenses and insurance.

 

  • Confirmation of past performance with comparable projects.

 

  • Excellent safety records.

 

  • Good equipment.

 

  • Demonstration of well-tended financials (including cash flow capabilities and good qualifications for meeting your vendors’ payment terms.)

 

Soft qualities of Best Bidders

While the following qualities are harder to quantify, they often fit in the make-it or break-it category for GCs. General contractors looking for the best bidder rather than the lowest bidder will watch for:

  • Responsiveness – responding to all forms of communication in a timely manner.

 

  • An excellent attitude – includes understanding how to respond to problems with creativity and a can-do attitude.

 

  • A dedication to teamwork – within your own company, with other trades, and with the GCs representatives, demonstrating your desire to create a mutually beneficial partnership.

 

  • Cleanliness – keeping the site as clean as possible at all times.

 

  • A reputation for integrity – honesty and sincerity, including owning up to your own or your team’s mistakes.

 

And, it is in these soft qualities where you have the most opportunity to promote your value as opposed to focusing on price.

Think about it — when your bid is close to other bids, often your reputation is all it takes to assure you get more than a passing glance.

Who you gonna call?

It is just as important to choose a general contractor worth submitting a bid to as it is to be a subcontractor worthy of consideration.

Here are questions vital to your pre-bid decision.

  • How long has the general contractor been in business?

 

  • How many subcontractors have they worked with? (Contacting past subs may give you an idea of how easy or difficult it is to work with this GC.)

 

  • Do they have procedures for handling conflicts?

 

  • How many levels of management do they have in place?

 

  • Who will be your point of contact?

 

  • What paperwork will be required? And how frequently?

 

  • When will the job begin?

 

  • What is the estimated time of completion?

 

  • What is the scope of the work required?

 

Best Bidder practices

Putting your best foot forward before the bid is called is only the first step. Take every opportunity to let GCs know why your services are better.

And finally, be sure to manage your bid processes well. Determine to focus on bidding projects that will result in profitable returns and repeat business.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. 866-629-7735

Counting the Cost in Construction Accounting

Counting the cost in construction accounting.

Counting the Cost in Construction Accounting

Counting the Cost in Flood Waters

There is an interesting law here in Arizona which is known by the name, “Stupid Motorist Law.” It says something to the effect of “any motorist who becomes stranded after driving around barricades to enter a flooded stretch of roadway may be charged for the cost of their rescue.” Apparently, the law can be found in Arizona Revised Statutes section 28-910. Also, just as apparently, the law isn’t regularly enforced.

So, for those of us who don’t drive around barricades when the summer rains create raging rivers where before there were only dry creek beds (or simply dips in the road) it doesn’t mean much one way or the other. For those who do, it only means they won’t be charged by the state for their stupidity. Yet, they will still likely be “taxed” because of their poor decision.

  • Towing
  • Repair
  • Beyond repair
  • Missed time at work
  • Lost opportunities

And, don’t forget all that schplainen’ they’ll have to do with rescue workers. Not to mention spouses, parents, children, friends, insurance companies, and so on.

Counting the Cost in Words

Yet, being wise to the way of words, I would replace “stupid” with the word, “ignorant.” Here’s why – being stupid means you don’t have the brain cells to get the job done. Being ignorant means you haven’t as yet learned.

See the difference?

This article will help you understand it better if you’re ignorant of how the two are different.

Counting the Cost of Ignorance

And, just like the wayward, water plunging drivers there are some who are guilty of breaking the “Accounting Ignorance Law.”

And, what that looks like is, they don’t yet understand how they can be aided in growing their construction contracting business through correct use of their financials – and it is going to cost them.

Here is the deal. Average Joe Contractor isn’t the competition they need to be concerned about. It is the up and moving commercial construction contractor who has gotten savvier and more sophisticated. It also means the General Contractors (who are also more savvy) expect their subs to bring a better level of efficiency and expertise not only in the field, but also in the office.

This has led to higher expectations which makes the cost of not knowing what you’re doing with the financials much higher these days.

And its not just the competition or the GCs.

Counting the Cost in Construction Accounting

It’s the complexity of software, SaaS, apps, construction bookkeeping nuances, and so on.

One of the huge benefits of QuickBooks and integrated apps is how much information you can obtain from having all the correct input in all the correct places. Its job costing, bidding, accounts receivable management (with or without AIA style billings,) estimating, invoicing, timesheet data, reconciliation of balance sheets, WIP reports and supporting documentation, making appropriate bill payments, certificate of insurance management, project close-out documents management, and on and on.

What that leaves us with is that understanding (and using) all the great benefits you can get from QuickBooks and the supporting apps is more complex these days, and even more so now that you’re ready to Run With the Big Dogs.

So, my advice?

Don’t drive around the barricades!

And don’t leave your construction business accounting needs to wishful thinking or chance. It will cost you.

You can get in touch with us here or give us a call Toll Free: 866-629-7735.

7 Things Impossibly Savvy Contractors Wear

Ever wondered which common traits shape successful owners of construction companies and construction service businesses? Here are seven foundational traits which are found in the “closets” of savvy construction contractors.

Garment #1 They are Servant Leaders

The following quotes will give you food for thought concerning how savvy contractors lead.

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” John Quincy Adams

“You don’t lead by hitting people over the head – that’s assault, not leadership.” Dwight D. Eisenhower

“What you do has far greater impact than what you say.” Stephen Covey

“Where there is no vision, the people perish.” Proverbs 29:18

“I define servant leadership as a person’s dedication to helping others be their best selves at home, work, and in their community.” S. Chris Edmonds

“The key to successful leadership today is influence, not authority.” Ken Blanchard

“Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.” Jack Welch

This article from Inc. encapsulates the concept quite well.

Garment #2 They are Resilient in the face of adversity

Ever wonder what it would be like to buy a construction company where the financials were “sinking like a rock,” turn it around, then make it extremely profitable within a few years? You might want to check out Isaac Lidsky’s story, because that is what he did. Oh, and did I tell you — he is blind.

He has written a book, Eyes Wide Open, you might want to check out. And, be sure to watch this video all the way to the end (after he completes his talk) because he reveals one important aspect of how he, as a blind person, is able to run his construction company. And, just in case you want a bit more information, here is a link to the company, ODC, where Lidsky is the CEO.

Savvy contractors understand the risks as well as the opportunities they’re facing. They can “get back up” after a shockwave hits. They understand how to manage complex ideas and situations. There is a sort of nimbleness to them. And, they’re really good at long-term thinking.

Garment #3 They are Self-Disciplined

Yeah, you know what this means and what it takes!

Garment #4 They have exemplary Core Values

They have personal core values which they bring to their businesses. This is all about what they believe, therefore how they act.

Here are some examples:

  • They take pride in their work. They enjoy seeing the finished project.
  • Their safety meetings aren’t solely based on outside influences (like OSHA,) but rather on the fact that they care about their employees.
  • They have integrity.
  • They understand the power as well as the responsibility that comes with being a leader.
  • They aren’t required to “lose the ‘tude,” because, in fact, they tend to have a good attitude most of the time.

They believe in striving for excellence, being honest, truly serving the customer, having fun, being fair, teamwork – you know, good stuff like that.

This article shows a pretty neat way to come up with and USE a common set of core values within your construction contracting or service business.

Garment #5 They are Flexible

They are flexible and knowledgeable concerning how to meet the needs of both employees as well as customers

Being flexible allows them to make it through the bad weather of changing desires, the bad weather of sudden new competition, the bad weather of employee shortage, the bad weather of equipment damage or loss, the bad weather of – well you know . . . bad weather.

Yet, they also know when to draw the line.

Thomas Jefferson said it like this, “In matters of style, swim with the current; in matters of principle, stand like a rock.”

Garment #6 They have Problem-Solving Skills

The simple explanation – Problem solving involves methods and skills to find the best solutions to problems. We all have problems. And, we all have problem solving skills. All good parents, doctors, waiters, truck drivers, accountants and everyone must solve problems day-by-day and hour-by-hour.

What sets savvy construction business owners apart from “regular” construction business owners is the continued practice and constant honing of problem solving skills.

Typically, there is a ladder of thought and action involved in reaching a solution.

One ladder of problem solving skills could look like this, with the bottom rung being Listening and the top rung, Implementing Solutions.

Implementing Solutions

Collaborating

Evaluating

Data Interpretation

Data Gathering

Anticipating

Listening

Savvy construction contractors simplify things, use “what if” thinking, and focus on the solution rather than the problem.

Garment #7 They Pay Attention to the Company’s Financials

Savvy construction contractors know that knowing what is happening with the bottom dollar is bottom line good business sense.

We’re happy to talk with you about what you need and what we can provide. Give us a call 480-442-4032 Toll Free: 866-629-7735

5 Bookkeeping Mistakes Made by Construction Contractors

Mistakes construction contractors make when trying to scale

Because you own or manage a construction contracting business, you have a legitimate desire to oversee every aspect of that business yourself. Yet even the savviest contractor sometimes makes mistakes, especially when it comes to bookkeeping.

There’s no question that maintaining accurate financials is a fundamental part of maintaining a healthy contracting business. And, being aware of the most common bookkeeping mistakes can save you from time loss, headaches, and even potential penalties.

Here are the top accounting mistakes made by construction contractors:

 

Improper handling of petty cash receipts

Trashing your “petty cash” receipts can add up to “larger cash” losses. Keeping these bits and pieces of receipts is helpful for many aspects of your business including budgeting, claiming tax deductions, and tracking overall cashflow. And, let’s not forget that having documentation in case of an audit removes much of the stress involved.

Steven Bragg, over at Accounting Tools  offers this information concerning Petty Cash Procedure

Improper comingling of business and personal finances

We’re not going to take too long here. The main thing we have to say on this subject is Don’t Do It!

Be sure to have separate accounts for your personal and your business affairs; otherwise it gets really messy! Besides the fact of not knowing exactly where your business stands at any given moment, there is that important aspect of paying someone to clean up the mess when tax time rolls around.

Improper or no backup system

Making sure all your financial information is backed up (duplicated) and stored in more than one location is of utmost importance. As you most likely know from experience, bat guano happens.

Beyond the day to day need to engage your financial records there is always the IRS to consider. This article from American Express found on their Open Forum page discusses some methods of recapturing required information necessary to appease the tax-man. What the article doesn’t address is the expense and time loss involved in the restoration process. And, it is the closing sentence in the article which is best to keep in mind if you wish to avoid the headache associated with restoring or retrieving lost information. It reads, “Business owners should seriously consider off-site storage of important documents.”

Improper classification of employees

Most construction contractors have some combination of full-time employees, part-time staff, and varying sets of subcontract teams. And, there are times when one person on your team may slide from one status to another as work demands. Keeping up with who gets a 1099 and who receives a W-2 makes a huge difference in your operating costs as well as your tax filing situation. Keeping compliant and avoiding misfiling taxes is imperative to the wellbeing of your construction company.

This article from Pro Construction Guide is full of helpful information concerning the who’s how’s and what’s of determining employee status.

Improper designation of bookkeeping duties

Thinking you, your spouse or your cousin’s next door neighbor are a good, cheap way of getting your accounting done can be a very costly mistake. Not many construction contractors are self-professed financial experts. Along the same line, while software and technology can compensate for a lack of bookkeeping expertise, it can only go so far. Plus, hiring an in-office person off the street who has no construction contracting bookkeeping experience looks much like the blind leading the blind when it is time to put your financial records to use in building your building business.

Leaving your business accounting to an experienced bookkeeper who’s already learned the ropes about your construction contractor bookkeeping needs allows you to gain much more clarity concerning your business’s past performance as well as gives you information concerning which “next steps” to take in growing your business.

Get in touch with Schulte and Schulte today to get your construction business’s financial records working for you, and best of all, you can dodge these mistakes altogether.