Precise Bidding = Profitability

Many questions should be asked before bidding a job, but one should always come first: "Does this project fit my business and can it profitable? Contractors need to learn to be selective about the type of projects they bid and avoid going after every potential project.

Don't let the unknown ruin what you think is a perfectly good bid. Prepare a thorough bid by first visiting the job site and uncovering potential hidden problems.

AVOIDING PITFALLS. Look at the size and type of proposed irrigation system to see if your firm has the experience and financial capability to do the project efficiently and profitability. Check the bonding and insurance requirements as well as taxes, licenses, permits and additional costs that may come up during the project.

After making the decision to put an estimate together, perform a job site inspection. Check the drive from your office to the site to see if it is a longer than average drive time. If so, add that time to your estimate. While you're at the site, dig some holes to check the soil conditions. Don't bypass this step to save time.

Once the soil and ease of trenching/excavating is determined, look for steep slopes or poor drainage areas that may require hand digging or result in slower installation. Survey the area surrounding the site for vandalism or potential vandalism. Nearby schools can result in children traversing the site, leading to future problems.

PREPARING THE BID. Set up an estimate spreadsheet with the following headings across the top: quantity, size or measure, description, material unit price, material total, labor unit price, labor total, total materials and labor. Next, perform a quantity material takeoff. As you count heads, valves, etc., use a colored pencil to mark each one so you know which ones you've counted. This is helpful if you're interrupted. Color all the lateral lines using a different color for each pipe size, making judgments faster and more accurate.

Once all the bid items are listed, contact your local supplier for current equipment prices. Enter the unit prices on the irrigation estimate sheet. Job costing records will provide the amount of labor required to trench and install the equipment. After adding up the material and labor totals, overhead costs and any miscellaneous costs, profit should be a minimum of 10 percent of your sales price or an add-on of 11 percent. Because of the high risk involved with irrigation systems and all of the unknowns involved with weather, underground utilities and excavation, a minimum profit goal of 15 percent is recommended.

REFLECTION. Ask yourself if you feel the estimate is accurate. Do you need the work, can you handle the project without a lot of problems and will it be easy to do? If you have any doubts about the project or if the market will allow a higher price, increase your estimate.

Accurate estimating is the key to a profitable irrigation contracting business. Implementation of a good estimating and job costing system will keep you ahead of your competition and help your firm be more profitable.

This article is an excerpt from The Complete Irrigation Workbook by Larry Keesen. For information on purchasing this book, contact Lori Skala at 800/456-0707, ext. 201.