Over the last week or so, I've been having a number of conversations with clients over the quote to win ratio's. Believe it or not one MD told me that his business had only won one tender out of 40 which they had quoted for! Others seem to be in the 1:10 ratio.
We spoke about a number of reasons why this might the case and came up with the following potential reasons:
1. Are you quoting for everything, even jobs you don’t want to win, which will skew your figures?
2. Is your process consistent in relation to how you develop and work on quotes?
3. Are the rates you are quoting on the right rates and if not, are you pricing yourself out of the market?
4. How are your estimators quoting for business and are they using all the information available to them to help them quote accurately?
5. Have you assessed the abilities of your estimators in relation to their individual quote to win ratios and is it a training issue you have?
I’m sure that these 5 questions are not exhaustive and some of you can think of many more to ask and that’s not a bad thing. The question for me is are you asking them?
I was speaking with a relatively new client recently and the MD spoke proudly about the company having its best ever year. This was great news, the problem was that the average profit on jobs was around 10%, which was less great news and not surprisingly, causing them more than a little concern.
The fact of the matter is that if you can’t get your estimating process and team right, the job is going to be wrong from the get go and therefore you are potentially going to end up with a lot of pain and lost profit on the job. It’s a bit like being a goalkeeper. If you make a mistake it’s probably going to be a goal. If an estimator makes a mistake it’s probably going to be an own goal and can potentially damage your reputation, profitability and reduce the number of tenders you are invited to quote for because you’re deemed too expensive by the main contractor.
Asking yourself the 5 questions above will be a good start to understanding the estimating issues you might have and get you looking at your approach to the task.
It is far better to:
1. Identify and only quote for the work you want to do
2. Ensure your process is consistent and can be audited to reduce errors and inconsistency
3. Make sure your prices are right and you’re not shooting yourself in the foot right at the start
If you would like some more advice and guidance then get in touch. There is also the potential of funding to help you analyse and address the issue…