Tenders are an essential step in securing construction contracts in Quebec, as in many countries. They are supposed to ensure fair and transparent competition between companies, allowing project owners to select the best offer for their projects based on specific criteria. But are tenders always fair? Do you really have an equal chance, or are the games rigged from the start? Are construction companies the biggest losers in this system? Many contractors ask themselves these questions—and rightfully so!
Even without discussing favoritism or bribes, we must recognize that the system is biased, often pushing companies to shoot themselves in the foot! To win these coveted tenders, many businesses reduce their margins as much as possible to be the cheapest bidder, even if it means taking enormous risks.
So, if offering the lowest price to win a tender isn't the right strategy, how can you stand out and maximize your chances? Precise estimation and well-established processes will be your most valuable allies! Ready to win more tenders without sacrificing profitability? Let's get started!
Responding to construction tenders shouldn't be reduced to cutting prices. To maximize your chances of winning without sacrificing profitability, focus on:
When responding to a tender, we often think that price is THE decisive factor. After all, clients want to maximize their investments and control their budgets. But in reality, the lowest price isn't always the best choice for them.
Construction is a demanding field that requires numerous skills, where the smallest mistake can have dramatic consequences. Project owners aren't necessarily looking for the cheapest offer but rather the one that presents the best value for money. Why? Because an excessively low price often leads to problems during the project: poor material quality, delays, budget overruns, contractual disputes... All risks that can quickly cost more than the initial savings.
Of course, in some public or private contracts, price may be the dominant criterion, but experienced project owners know that choosing a company solely based on the lowest price is a significant risk and a mistake.
As we've seen, trying to be the cheapest is a dead end. It's tempting to lower your price as much as possible to win a tender, especially when they're rare, as in 2024, but this strategy can put your company at risk. Wanting to "bid at any cost" is playing with fire!
One of the biggest pitfalls of this approach is misassessing the true costs of a project. In construction, several factors can change rapidly:
Working with an ultra-thin margin means depriving yourself of room to maneuver in case of unexpected issues:
In this context, the slightest mistake can be fatal. If a construction site encounters an unforeseen event, a company with margins that are too thin risks completing the project at a loss or, worse, abandoning it midway.
A poorly executed project, massive budget overruns, or abandonment can ruin a company's credibility and jeopardize its chances of securing new contracts.
In the construction sector, reputation is a key asset. A reliable contractor who delivers well-executed projects on time and without major overruns will have an easier time winning tenders and growing their business. Conversely, a company that experiences a series of problems with its projects risks being excluded from future tenders, even if it offers attractive prices.
Choose profitability, not survival!
Winning a tender shouldn't be a race to the lowest price but a demonstration of your ability to deliver a profitable, quality project on time. Here are three essential strategies to maximize your chances of success:
A well-prepared offer is based on precise and rigorous estimation of the project and its actual costs. Why bid if you're not certain the project is profitable for you? Take care with your estimates and offer your services at the right price! To help you, leverage suitable and proven software, like TPL Solutions. This will allow you to:
The more streamlined your operations, the better positioned you'll be to beat your estimates on site and increase your profits! Project management software can help you:
Instead of selling a low price, demonstrate why you are the best choice:
Companies that succeed in the long run aren't those that slash their prices but those that deliver projects without hitches. By combining expertise, technology, and effective management, you put all the odds in your favor to win profitable and sustainable contracts.
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