fbpx
Esticom is now part of the Procore platform.  Learn more >
How to Navigate the Electrical Bidding Process
Chapter One

How to Navigate the Electrical Bidding Process

The bidding process for electrical contractors is time-consuming and resource intensive. Many electrical contractors receive an overwhelming number of bid requests from general contractors that they do not have a working relationship with. On one hand, this is great—it creates opportunity to expand your business network and win electrical projects you might not have known about otherwise.

But consider this first, the electrical estimating process can take weeks of hard work for an electrical estimator to determine the cost of a project and submit a bid to a general contractor. Because of this, you need to first consider how likely you are to win and successfully complete an electrical project before you dedicate the time to begin the estimating process and submit a bid price. One best practice in this decision phase is to ask yourself “What kind of relationship do I already have with this general contractor?” If the answer is that you have a great relationship and work history with them already, there’s a higher likelihood of success winning and completing the electrical project successfully, meaning the bidding process is worth your time. If the answer is that you have a nonexistent relationship with the general contractor, you may want to avoid spending time estimating the project and move on to your next bid invitation or use this as an opportunity to develop the relationship knowing that it might take a few bids before you receive an award.

How many other electrical contractors am I competing against?
What's my contract award percentage with this general contractor?
What's my success rate with this general contractor and the type of work?
Do I have enough time to complete the estimating process
electrical estimating tip

As a general rule of thumb, you want to avoid projects with five or more electrical contractors bidding the electrical scope of work. As the number of electrical contractors increase, your chances of winning go down, while the risk of taking a bad project goes up significantly. You wouldn’t want to be the low price out of 10 electrical contractors, would you?

Have You Worked with This General Contractor?

Once you go through the time-consuming bidding process, will the general contractor give you a fair shake or is he going to use your number as a check price to negotiate with another electrical contractor? Assuming you’ll get a fair shake at the electrical project, has the general contractor requesting the bid already been awarded the construction project or is he one of three general contractors bidding, meaning your competition just increased threefold? At a minimum, find out what other general contractors are bidding the construction project and submit your number to them as well. Depending on which general contractor you like the best, you can provide your best bid number to help them out. Remember, not all general contractors are the same. Some do not run tight ships when it comes to paying their subcontractors in a timely manner or managing the projects to ensure things run smoothly.

Related Article: Build Profitable Relationships in Construction by Firing Unprofitable Ones

Can I Realistically Handle the Scope of Work?

During the bidding process, it is important to focus on construction projects where you have experience and are confident you can handle the type of work. This will help you reduce the chances of making a mistake and ensure you can complete the electrical job when you are awarded the contract. Your reputation is on the line, meaning this could either lead to more business for you in the future when the project is completed successfully, or tarnish your brand if the project encounters set backs or delays.

Also consider this: while it can be tempting to jump into other verticals to expand your footprint, there’s a learning curve that can be expensive for an electrical contractor. If you do decide to venture into new markets or other types of electrical projects, you should know that there is a time to value factor. In the beginning, your team will be less productive, meaning higher job costs due to the increased project management and job management required to effectively manage the project, increased labor hours, material costs, and higher overhead costs due to lack of experience. In turn, you will be less profitable until you gain experience with the type of work.

Can I Realistically Handle the Scope of Work?

How Carefully Did I Review the Bid Documents?

Before deciding to estimate an electrical project, always carefully review the bid documents. This includes division 26 electrical drawings, specifications and any addendum that might have been released, which could depend on the electrical contractors’ responsibilities as is generally outlined in the division 1 specifications. This could also include division 27 communication and 28 life safety. You’ll also need to review the division 1 general requirements, which outline responsibilities and conditions such as payment procedures, allowances, substitutions, submittal requirements, and completion schedule. Pay close attention to any punitive language, especially as it relates to scheduling and conflict resolution due to errors and omissions. If the contract documents are incomplete, who will take responsibility for the mistake?

Assuming you win the project, is the contract language something you can live with? You want to determine this before you begin the electrical estimating process and allocate too many resources.

How Carefully Did I Review the Bid Documents?

Do I Have Time to Accurately Bid the Project?

As a final step, ask yourself: “Do I realistically have time to build an accurate estimate of job costs and submit a bid for this project by the general contractor’s due date?” This includes having the man power to perform a quantity takeoff, determine labor cost, material cost, and round up quotes from suppliers and subcontractors that are required to complete the electrical project scope of work.

Hastily bidding a project on a tight deadline can lead to errors and omissions. In a lot of cases, you need to ask why you are receiving a bid request from a general contractor with such a short turnaround time. There’s a good chance your number will be used as a check price to lower a competitor’s number who’ll receive the project if they comply even though you submitted the best bid option for the project.

Do I Have Time to Accurately Bid the Project?

In the next chapter, we'll take a close look at the importance of reviewing electrical drawing package and specifications.

Continue to Chapter 2

Get All 8 Chapters of Esticom's Inside Real-World Electrical Estimating in one eBook!

DOWNLOAD FREE

Copyright © 2023 Esticom Inc. All Rights Reserved