As engineering, procurement and construction firms (EPCs) face the reality of fewer and smaller projects that are out for bid, achieving higher win rates has become critical for growth. Traveling, meeting with customers and hearing their stories has lead me to believe there are a few best practices that differentiate the firms that are consistently successful in winning work from those for whom luck seems to be a strategy.
The key to winning more bids in this competitive environment, without introducing undo risk, lies in changing the way you approach the process of estimating.
Best Practice No. 1: Optimize Collaboration to Create the Best Bid
Fewer projects means your bids must be competitive, but if you underbid you put your firm’s
welfare at risk. I’m amazed at how many firms still decide their bid is “finished” just because time has run out, and end up not putting their best foot forward.
To hedge against this, best-in-class firms have moved from spreadsheets to purpose-built estimating software. They’ve also redesigned their process so that the engineers and estimators collaborate early and often. These firms can bid more jobs and increase their win rate because their clients have more confidence in their bids.
Best Practice No. 2: Use a Common Cost Model
In the bidding phase, the process model can generate most of the information needed for an early estimate. Coordination between the process engineers and estimators around a consistent set of project information can result in considerable savings of time and effort. If the project moves forward, the same information can be leveraged as the design and estimate evolve to keep the engineers and estimators in sync.
Best Practice No. 3: Re-Use Estimates
A well-organized library of previous designs, actual costs and previous estimates can cut your bid time down substantially. These former deliverables essentially contain your firm’s accumulated knowledge and experience when it comes to project estimating and procurement. Being able to quickly ascertain the relevancy of previous project estimates and update them for changes in materials pricing, labor and facility location allows your firm to bid more jobs while reducing bid and project execution risk.
One of the best ways to get started in changing your estimating approach is to understand your firm’s level of estimating maturity. From spreadsheets to model-based estimating to purpose-built estimating software and eventually linking your estimating with procurement and construction processes, it’s a journey. Start with a realistic picture of where you are today and make a plan to take the next step.
At AspenTech, we’ve worked with hundreds of firms to improve their engineering and estimating processes —let us know if we can help you! You can also register for our upcoming webinar with WorleyParsons to learn best practices for creating credible, high-quality estimates to win more projects.