Bidding Strategies

Bidding strategies vary from contractor to contractor, market to market and range from highly analytical mathematical formulas to the less tangible criteria such as the “gut feel.” There are two key decisions in competitive bidding process: to bid or not to bid and the appropriate markup for profit and overhead to be applied. Many studies have attempted to answer how the markup decision should be made, even to the point of developing models based on the premise that contractors want to maximize their profits in the competitive bid arena. A key to learning and improving is to understand all of the collected data available starting with home office overhead. The resource analysis process should begin with an analysis of the strengths and weaknesses of the contractor's team: tradespersons, supervisors, and management. A contractor's bidding strategy is as varied as the individuals involved in creating the strategy and their marketplace experience.