Estimating too slow
While one big bid is being prepared, many other tenders that could have been entered are missed.
An anonymised case study of a construction contractor. No names and no prices, only the market, its tender estimating problem and how it could work better.
This study is based on a real conversation with someone in the market. All data is anonymised.
Construction and engineering-network contractors live on public-procurement tenders, from heating, water and sewage renovation in apartment blocks to large reconstruction works. Roughly one tender in ten is won, so you have to enter many. And to enter, every tender needs a full estimate within 14 to 15 days. Whoever can price more tenders and hit the number more accurately enters more of them, and wins more.
A tender comes with a bill of quantities that lists every work item and quantity. Estimators price each line against state or market unit rates, while supplier and subcontractor quotes arrive in different formats, PDF, Excel or email. Pricing a large, multi-million project by hand can take up to a month, yet only 14 to 15 days are given per tender. In practice that means only one or two bids can be prepared in a month.
There is no single standard: every client and municipality provides the bill of quantities and template in its own way, so each time the work has to be adapted from scratch.
While one big bid is being prepared, many other tenders that could have been entered are missed.
Roughly one tender in ten is won, so without a high volume of entries there is no steady flow of work.
Drawings and the bill of quantities do not match, for example the concrete volume in one document differs several times over from the other. It surfaces too late.
Too high and the tender is lost. Too low and the work runs at a loss. It all depends on accuracy under time pressure.
Everything rests on a few experienced estimators. When hands run short, the number of entries drops too.
Imagine a tool where you upload the bill of quantities and the drawings, and in hours, not weeks, it returns a priced number and flags the errors.
It reads the bill of quantities, assigns a rate to each line and calculates a preliminary price in hours.
It cross-checks the bill of quantities against the drawings and flags quantities that do not match, with a link to the project page.
It brings supplier quotes that arrived as PDF, Excel and email into one place, so the bid reflects real numbers.
The result: a faster, more accurate price and the ability to enter far more tenders with the same team.
Faster estimating lets you bid on more tenders, which means more wins.
The cross-check surfaces project mismatches before the bid is even submitted.
The price is hit more precisely, so there is less risk of working at a loss or losing on a price set too high.
Tenders are a numbers game. On average about two out of eleven are won, so everything depends on how many tenders you manage to price at all.
The limit is not the price, it is the speed of estimating. A large project priced by hand can take a month while the tender allows fourteen to fifteen days, so some tenders are never even started.
The bill of quantities is priced automatically and checked against the drawings, and mismatches such as a wrong concrete volume are flagged before the bid goes out.
More tenders are entered in the same time, and the margin is calculated more precisely because less of it is guesswork.
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If the speed of estimating also decides how much you can win, let's talk. Together we will look at how this could work in your company.