This is newsletter #44 in the series. If you have missed prior newsletters, and are enjoying the series, we encourage you to purchase the complete Electrical Estimating Program. Click on the coupon at the bottom of this page.

High bids can cause you to lose the sales that your company depends on. Low bids can win sales, but cause the loss of profits or the demise of the company. Between these two losing propositions is the “accurate” bid—and that is the only kind of bid you want to produce.

An accurate bid is important:

• Helps lock in profits
• Eliminates built-in loss of revenue or profit
• Provides a means for knocking low bids out of the competition
• Reduces cash-flow problems
• Reduces resource conflicts
• Provides the highest return on the bidding effort
• Provides accurate information for negotiation to win a job or support changes
• Reduces risk
  

It is important that you understand what a “winning bid” actually is. Many people think it is the one that lands the job, but quite often, the winning bid is actually the “losing” bid, because the company that won the job by underbidding did not win anything but financial loss.

A winning bid is one of two things:

• It lands you a profitable job that your company can handle.
• It prevents you from taking on a losing project.
  

A losing bid is one of two things:

• It prevents you from taking on a profitable project that your company can handle because the bid was too high.
• It lands you a losing project because the bid was too low.
  

Your company might not be able to handle a job due to resource constraints, lack of expertise, conflicts with other projects, or any number of other factors. Most of these factors will not be identified in any document your company has. Nor will any alarm bells ring to notify you that something is out of kilter. You have to discover and quantify these things by analysis. Now, armed with your knowledge of the estimating process and how to determine the break-even point, you just need to know how to properly prepare a winning bid.

For more information on this topic, get a copy of Mike Holt's Electrical Estimating video program and textbook.