Planning for Profit

Charles Mahaffey

April 2005

As the second quarter of the year is upon us and your financial statements have been completed, this would probably be an excellent time to assess your previous year.

You already have a lot of the answers that could help you prepare your company for a better and more profitable future, but in order to realize the answers, you need to ask the right questions. I’m not talking about the type of questions related to your profit/loss statement. Since this column is written to address topics related to estimating, the questions are more from an estimating/sales perspective.

Here are a few questions to get you started:

Am I really spending enough time with the estimate to know if I’m producing a competitive bid, or am I just applying unit cost to labor and materials and giving little attention to the details? To have much of an impact here, you should not only know what your labor and material costs really are, but you’ll also need to think constructively about the job as you perform your takeoff. Build the job in your mind. Also, you might see the bid in a little different light if you complete your estimate in time to allow you to think about it for a day before you turn in your bid.

What companies did I bid with last year, and what was my success rate with them?

Let’s face it: Some companies are going to just string you along. You need to focus your time and energy in the direction of the contractors that are making you money and avoid the company that uses you for nothing more than someone to keep their favored subcontractor "honest.”

What types of jobs did I bid last year, and what was my success rate?

Categorize the jobs you bid last year by type (hospital, hospitality, school, etc.) and by size. Here you will probably find a range between the type and size of project with which you are more successful.

How well do I know the decision-makers within the companies that provide work for me?

This, I believe, is something that some of us take for granted. I wouldn’t stop with just getting to know the decision-makers, get to know as many people in the organization as you can. Call them up on a Friday and offer to take several of them to lunch. Put together a golf or a fishing trip to entertain your clients. I’m not saying that you need to "buy them,” but you need to show them you appreciate their business.

Am I doing all that I can to know about (and bid) the negotiated projects that my clients might have coming out?

Offer to help prepare conceptual estimates for your client’s negotiated projects. Someone is providing this information for them, and it might as well be you. Because the negotiated jobs are typically more profitable than hard-bid projects, do what you can to position your company to do more negotiated work.

Here’s to a more profitable year!

About the Author
Charles Mahaffey is president of Accuest, LLC, Marietta, Ga. Accuest provides estimating and consulting services for commercial drywall subcontractors.