Estimating is expensive. A single commercial construction bid can consume 40-80 hours of estimator time, plus subcontractor coordination, management review, and opportunity costs. Bidding everything that comes across your desk wastes resources and dilutes your win rate. Smart contractors qualify opportunities carefully, bidding selectively on projects they can win profitably.
The Cost of Bidding
Direct Costs
Estimating time:
- Review documents
- Perform takeoff
- Price the work
- Assemble bid
Management time:
- Go/no-go decisions
- Bid review and approval
- Strategy discussions
- Submission coordination
Administrative costs:
- Plan procurement
- Bid bond fees
- Travel for site visits
- Printing and delivery
Opportunity Costs
Resources committed to one bid can't be used for:
- Other bid opportunities
- Project execution
- Business development
- Training and improvement
The Math
If you bid 20 projects to win 2:
- 10% win rate
- 90% of effort "wasted"
- High cost per win
If you bid 10 qualified projects and win 3:
- 30% win rate
- 70% of effort wasted
- Lower cost per win, more wins
Qualification Criteria
Project Fit
Size match:
- Within your typical range?
- Not too small (overhead burden)
- Not too large (capacity stretch)
- Right for current workload
Type match:
- Experience with this project type?
- Team qualified for the work?
- Equipment and resources available?
- Specialty capabilities required?
Location:
- Travel distance acceptable?
- Local presence required?
- Site logistics manageable?
- Labor availability?
Competitive Position
Your strengths:
- Unique qualifications?
- Relationship with owner?
- Recent similar success?
- Competitive cost structure?
Competition level:
- How many bidders expected?
- Who's the likely competition?
- Your historical performance against them?
- What's their current workload?
Project Characteristics
Contract terms:
- Acceptable payment terms?
- Reasonable risk allocation?
- Fair contract language?
- Bonding requirements met?
Schedule:
- Achievable timeline?
- Fits your workload?
- Crew availability?
- Material lead times?
Specifications:
- Clear and reasonable?
- Products you can source?
- Quality standards achievable?
- Substitutions allowed?
Client Assessment
Owner track record:
- Payment history?
- Reputation in industry?
- Decision-making process?
- Change order practices?
Relationship status:
- Existing relationship?
- Past project performance?
- Potential for future work?
- Strategic importance?
The Go/No-Go Decision Process
Information Gathering Phase
Before deciding, gather:
- Bid documents overview
- Project scope summary
- Owner information
- Competition intelligence
- Schedule and logistics
- Contract terms summary
Scoring System
Rate each opportunity:
| Criterion | Weight | Score (1-5) | Weighted | |-----------|--------|-------------|----------| | Project fit | 25% | 4 | 1.00 | | Win probability | 25% | 3 | 0.75 | | Profitability potential | 20% | 4 | 0.80 | | Strategic value | 15% | 5 | 0.75 | | Resource availability | 15% | 3 | 0.45 | | Total | | | 3.75 |
Set threshold for pursuit (e.g., 3.5 minimum).
Decision Meeting
Key questions to answer:
- Can we win this?
- Can we make money on it?
- Do we have resources to bid it properly?
- Does it fit our strategic goals?
- What's the risk/reward balance?
Participants:
- Estimating manager
- Operations/project management
- Executive (for larger projects)
- Business development
Document the Decision
Record:
- Decision made (bid/no-bid)
- Rationale
- Key factors
- Any conditions
Value:
- Learn from patterns
- Improve future decisions
- Reference for similar opportunities
Red Flags: When to Pass
Project Red Flags
Avoid or proceed with caution:
- Unrealistic schedule
- Incomplete documents
- Excessive spec requirements
- One-sided contract terms
- Unclear scope definition
- Repeated postponements
Client Red Flags
Warning signs:
- Poor payment reputation
- Excessive litigation history
- Unreasonable during bid process
- Disorganized or uncommunicative
- Budget doesn't match expectations
Competitive Red Flags
Unfavorable conditions:
- Wired bid (incumbent has inside track)
- Too many qualified bidders
- Bidding against much larger firms
- No differentiating advantage
- History of losing to this group
Internal Red Flags
Your own constraints:
- Key resources unavailable
- Conflicting deadlines
- Insufficient time to estimate properly
- Outside expertise needed
- Bonding capacity concerns
Green Lights: When to Bid
High-Value Opportunities
Strong indicators:
- Previous successful work with owner
- Limited qualified competition
- Perfect fit for capabilities
- Clear path to profitability
- Strategic relationship value
Good Alignment
Positive signs:
- Matches your sweet spot
- Team has relevant experience
- Standard scope and specs
- Reasonable contract terms
- Adequate bid time
Strategic Value
Worth pursuing even if competitive:
- Opens new market
- Builds key relationship
- Adds to portfolio
- Creates future opportunities
- Develops team capabilities
Tracking and Learning
Win/Loss Analysis
Track for every bid:
- Project name and type
- Bid amount
- Win/loss result
- Winning price (if available)
- Key factors in outcome
Pattern Recognition
Analyze trends:
- Win rate by project type
- Win rate by client
- Win rate by size range
- Margin on won projects
- Reasons for losses
Continuous Improvement
Use data to:
- Refine qualification criteria
- Focus on high-probability opportunities
- Improve estimating accuracy
- Develop winning strategies
Resource Allocation
Tiered Effort
Not all bids deserve equal effort:
Tier 1 - Maximum effort:
- High win probability
- Strategic importance
- Strong fit
- Premium proposal quality
Tier 2 - Standard effort:
- Competitive opportunity
- Good fit
- Normal bid preparation
- Quality submission
Tier 3 - Minimal effort:
- Speculative bid
- Keep relationship
- Quick turnaround
- Basic submission
Balancing the Pipeline
Maintain healthy mix:
- Some high-probability pursuits
- Some competitive bids
- Occasional stretch opportunities
- Consistent bid activity
Avoid:
- All-or-nothing on single bids
- Overcommitting resources
- Periods of no bidding activity
- Chasing everything
When to Reconsider
Change Your Initial Assessment If
New information:
- Competition drops out
- Scope changes favorably
- Better terms offered
- New relationship opportunity
Changed circumstances:
- Backlog decreases
- Capacity opens up
- Market conditions shift
- Strategic priorities change
Knowing When to Walk Away
Even after starting, consider stopping if:
- Documents reveal major issues
- Bid requirements change unfavorably
- Better opportunity emerges
- Cannot deliver quality bid
Conclusion
Selective bidding isn't about avoiding work - it's about focusing on winnable opportunities. The most successful contractors know their sweet spot and pursue projects that fit their capabilities and business goals.
Effective qualification means:
- Understanding your competitive position
- Evaluating opportunities objectively
- Allocating resources strategically
- Learning from results
Don't chase every project. Chase the right projects with focused effort and quality bids. Your win rate, profitability, and estimating efficiency will all improve when you bid smarter, not just more.
ConstructionBids.ai provides detailed project information upfront, helping you quickly qualify opportunities and focus your bidding efforts on projects that match your capabilities.
