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Asbestos Abatement Blog

Differentiation in Competitive Bid

Josh Woodard - Monday, October 27, 2008

So, it has been a while since I blogged due to jury duty and catching up after jury duty, but I am excited to be back.  I have, what I consider a very challenging topic today -- Differentiation in Competitive Bidding.

I have been an executive in the construction industry for about a year. The general principles of business are applicable from all of my prior training and work, but initially low-bid threw a real wrench in my business practices. Here are three topics, and a little advice about each, that I find absolutely fascinating:

  • Friend or Foe -- I have worked with several general contractors, and I still wonder if they are friend or foe. In my naivete I thought that once we were awarded a sub-contract that we would be partners, friends, team-mates, etc. Boy was I shocked when one general created almost insurmountable hurdles for us. For subs it is critical to align your goals, as much as possible, with the general. They are your boss, and they are your customer (don't try and draw this relationship out on paper -- it's impossible). I will never start a sentence with the words, "If I were the general contractor," because I am not one. I respect that they have requirements and needs, and try to align with them whenever I can. When I can't, I take a deep breath and hope they are reasonable. Most have been.
  • Low-Bid/High Change Order -- Low bid was a completely new concept to me. I came from selling professional marketing services where differentiation was the name of the game. The goal was to thoroughly explain the "value" of your services, which should always exceed the price. When the value was sufficiently higher than the price, you made the sale. In many cases (not always) low-bid dismisses differentiation by assuming that bids are "apples to apples." I spent energy communicating value regarding particular projects, but found a less competent company was getting the jobs. It was so frustrating. Later, I found out that our competitor was low-bidding with inordinate amounts of exclusions, and then charging insane amounts of change orders. Here are a few things to consider:
    1. If you win all of your bids your pricing structure is probably too low.
    2. If you don't win any bids your pricing structure is probably too high.
    3. Cream rises to the top. Bid reasonably, do great work, and you will get signed contracts.
  • Strategic Partners -- We have done a lot of floor preparation for a regional tiling company. Since impressing them on one project we have done three more. In all three cases we were not low-bid, but we still got the job. In one case, the general contractor even denied us the project. When our friends (people like to do business with their friends) got the tiling portion of the project they told the general that we were the best. We did the job at the full contract price. The general was ecstatic with our work, and we expect to work with them again.

So, the point of all of this is, business as usual. Even when you are playing in the competitive bid game you have to be different, you have to be better. On a job-by-job basis you can demonstrate superior products, services, and processes, and in time you will develop an outstanding relationship. I am fortunate to work with veterans in the asbestos abatement industry, where our company is already recognized for excellent performance and reasonable pricing. Folks may be compelled to take the low-bid on a per-project basis, but be assured that over time your efforts to differentiate yourself from the competition will pay great dividends.

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