Improving the Bidding Process: Why Your Bid-Hit Ratio Matters Part 1
Do you ever find yourself thinking about how insurmountable the bidding process can be at times? Contractors may find themselves exasperated by the competition in the construction market and, as a result, bid for as many projects as they can or leave a lot of money on the table just to win a bid. But, contractors must evaluate their bidding strategies if they want to see greater success.
Our Brandon construction attorneys want contractors to understand the importance of their bid-hit ratio in relation to improving their bidding process. In part two of our article, we’ll talk more about the importance of your bid-hit ratio.
Identifying Your Bid-Hit Ratio
Your bid-hit ratio is an important way to measure the success of your bidding process and to optimize your bid strategy. Your bid-hit ratio is a simple calculation that shows the rate of your success when bidding on projects. For example, your bid-hit ratio may be a 5:1 which means that on average, you are winning one contract for every five jobs you submit a bid. The lower your bid hit-ratio, the better. Tracking your bid-hit ratios over time and by project type provides you with valuable information so you will know where to focus your efforts the next time you bid.
Breaking Down Your Bid-Hit Ratio
To determine where you are more successful, break your bid-hit analysis down into the following categories:
- Job type (public or private)
- Contract size
- Profit margin estimated
Your analysis can give you valuable insight about where you should not focus your bidding efforts in the future so you can avoid making the same mistakes twice.