What Construction Jobs Aren't Worth Taking?

Bidding on construction projects is how many small businesses secure work and build their operations. This complicated process can pay off when it's approached thoughtfully and consistently. At the same time, a freewheeling approach to bidding can put your enterprise in a difficult position. You need to understand your capabilities - both of your staff and the heavy equipment you already own, finance or can easily access - the associated costs, potential complications with each project and many similar considerations to bid effectively.

Let's look at how to take a careful approach to projects and avoid the bids that may lead to more trouble than the payoff may be worth.

Recognize your capabilities, realistic options for expansion and limits

Some bids don't require much from your business beyond the due diligence required to review the specifics and ensure there are no hidden issues or other factors that could cause trouble. When you already have the right equipment available and employees with the relevant experience to complete the scope of work involved in a project, it can be easy to see if the job is the right fit for your company's abilities. And if you're already familiar with the organization requesting bids, that's even better.

There are also some projects that slip into a gray area. Perhaps you don't have all the necessary machinery available. If your relationship with your local Cat dealer means you can easily rent equipment, or you have a desire to finance a new Cat machine, the job may still be worth an entry in the bidding process. If you'll need to deal with the high costs of long-term rentals or finance so much equipment that it drains your working capital each month, the project may be better left to another company. Tip: Bids That Beat The Competition

Similarly, if you don't have the necessary manpower to complete the job, you'll have to decide if bidding on the job is worth it. Take the cost of increased payroll, benefits and similar financial responsibilities into account, as well as your ability to complete it within the agreed timetable.

In situations where you'll have to dramatically expand some or several aspects of your company to effectively handle the work associated with the project, you should think twice about bidding. You may see an especially valuable opportunity, but the details involved and the need to take on work you're not familiar with can quickly lower the overall return the project provides.

Take the full view of cost and profitability

You should always pass on jobs that don't offer a significant return for the costs placed on your company to complete them. A thoughtful approach to accounting for those costs helps you make the most informed decision possible, as construction bid software provider ConstructConnect pointed out. That means carefully reviewing your business operations and taking as many factors into account as possible, including:

• Employee costs, from wages and workers' compensation to payroll tax and any insurance needs.
• Any and all taxes that your company will be required to pay.
• Time and cost of traveling to and from the job site, keeping equipment secure while on site, and any similar responsibilities. 
• Insurance and bonding needs.
• The cost of hand tools, fuel for equipment, the wear and tear on the equipment you own or finance, rental cost for specialized tools, and related considerations.
• Time spent managing and overseeing this project at the expense of other potential work, both for you personally and other employees who work in managerial roles.

If you're confident that you've completely accounted for the total potential cost, your bid will be that much more accurate and reflective of your company's needs. Although it's a separate issue from bidding on projects that aren't a good fit for your business, remember that submitting an unrealistically low bid will only secure work at the expense of reasonable profit.

Build knowledge of the organization requesting the bid

An understanding of the entity requesting the bid, whether it's a government agency, private business or another type of organization, can help you make a smart business decision. This may be as simple as asking about them with colleagues and other contacts in your industry. Conducting research online may help you discover if the group requesting the bids has faced issues with paying out on contracts or making work difficult for the businesses they partner with in the past. Although you can't uncover every potential issue before submitting a bid, a little research can go a long way.

We're here to help your company finance the equipment it needs for projects that make good financial and operational sense. To learn more, get in touch with us today.