Increasing Your Sales to Commercial General Contractors
Selling your services to commercial general contractors can be frustrating. You respond to their requests for bid and are fairly sure your prices are competitive. You also have plenty of experienced manpower to handle the larger commercial jobs, but still for some reason you just don't seem to get the work come award time. The other problem, of course, is that generating all these estimates takes time - lot's of time - and running a contracting firm is tough enough without wasting hours preparing quotes that don't generate work. And yet, if you don't deliver the estimates, you're virtually guaranteed not to get the work.
So what do you do?
Well, perhaps there are other reasons - not-so-noticeable reasons - that hamper your success. The goal of this article is to offer the sub-contractor a better insight and understanding of the motive forces, operations, and needs of the commercial general contractor (CGC). Armed (or re-enforced) with this new knowledge, the sub-contracting professional can more efficiently and effectively plan, strategize, and execute a marketing and sales effort geared specifically towards the CGC's. And though this information targets the residential sub who's already had some experience with commercial work, these same methods can also assist the (purely) residential sub who's considering a venture into commercial venues.
The Commercial General Contractor (CGC)
Let's first discuss the CGC. This is a relatively easy task for me because (as they say) "I is one". More precisely, I'm senior estimator and project manager for a medium-size commercial GC in the Midwest. For many years, I've evaluated, hired, and negotiated with scores of sub-contracting firms; most of them good ... and some of them not. I've also received, analyzed, and deciphered thousands of sub-contractor proposals and (discernibly) found that there was a tremendous chasm between the best proposal and the worst.
We'll talk about the differences between a good and bad proposal later in this piece, but for now, suffice it to say that through these trials and tribulations, I've come to realize and define many of the reasons that ultimately guide my decision to choose (or not to choose) one sub-contractor over another. And no - it's not just low price. Remarkably, it has more to do with a rather general-sounding attribute known as professionalism.
"Great", you say. "What does professionalism mean?". Well, we're about to discuss that, but before we do, it's important to understand one thing right off the bat: despite what you may believe, commercial general contractors want to employ you. We spend far more time trying to figure out how we can use than how we can't. We don't make any money wading through quotes - we make it though action. Always, lingering in the back of our minds, is the hope that the proposal we're examining right now is the one that's clear, complete, and competitive enough to meet the demands of the project - thereby allowing us to move on to the next course of (profitable) action.
But enough cheerleading - let's get started.
Hello - Am I Out There?
First, if you haven't done this already, target the CGC's with which you want to work and make sure they know you're around. If you aren't receiving bid requests on a regular basis from a particular CGC, try the following:
Work up a 1-page introductory (or re-introductory if need be) letter telling a little about your company. Don't make if too long or it won't get read. Include your current address, phone/fax numbers, principals, key people, e-mail address (if you have one), and the types of services you offer. Be specific about what you do. If you offer other services besides your perceived specialty (such as the HVAC sub who also does architectural sheet metal and standing seam roofing), list it in your letter. Don't assume they know everything about you and your company.
Follow up with a call to the prospect. Most CGC estimators keep a file (computerized or written) of sub-contractors. These files are commonly broken down by trade and, when a job is bid, the estimator uses these to send out postcards or bidfaxes to those subs who are effected by a particular job being bid. When making the call, a good opening line is: "I just called to update my information for your sub-contractor list". The estimator will almost never just take the info and hang up (unless he's on a bid deadline - in which case you don't want to take up his time). A conversation normally ensues and gives you a chance to feel him out about potential work opportunities.
When it comes to increasing your sales with the CGC, the goal is to give them a reason to choose you. Of course, low price catches a lot of attention but, I can assure you, it's not the sole determining factor. Many times I've chosen to go with the 2nd or 3rd highest number simply because I felt more trusting and confident in their ability to get the job done. This isn't just rhetoric - and the CGC mind-set is really relatively easy to understand. When weighing a (perhaps) $70,000 sub-contracted line-item, 1-2 thousand dollars is peanuts compared to the money that would be lost for non-performance or for the correction of poor work. Beyond this extra work, there's also the drop in (the CGC's) credibility that tends to lead to other concerns on the part of the project owner.
So, with the cost consideration (at least) neutralized, here are a few other suggestions that can increase your odds for the sale:
Offer to give "budget" numbers. CGC estimators work up budget numbers for clients all the time. Having your budget number used up front increases the odds that they'll call you come "hard" bid time - for the simple benefit of not having to repeat a lot of information.
Subscribe to a reporting service such as F.W. Dodge or CMD (Construction Market Data). These reports tell of upcoming construction projects out for bid in your area. The bidding CGC's are normally listed (* check this again come bid time, names will have been added) and information about the project is included. There are also reports on contract awards, work in planning stages, and also negotiated work where sub-contractor proposals are requested by one specific CGC.
Now, these services can be quite costly. If you don't think you can afford it (or just want to see what you'd be getting), ask a local supplier or lumber yard (who often subscribe) if you can see their reports. Most of the time, they don't mind. If you bid a lot of work, these services may be well worth-while. Armed with information from the reports, you'll be aware of what's out there to bid, who's bidding, and what CGC's are getting all the work.
Most contractors hate this one, but get out there and practice the age-old art of the "cold-call". This, of course, is where you walk in unannounced just to let them know your around. Most people find this difficult to do, but never underestimate the power of social skill. I've seen it work too many times. Anyone - no matter how staunch and business-like they may appear - wants to work with someone who they consider friendly. It's simple human nature.
A little sidebar to this is that you may also pick up work just by being there. Here's how it works. Many times, for the commercial builder, the importance of getting the job done "right now" far outweighs any minor advantages in price that may be gained through bidding. I'm still amazed at how often I give work away simply because the person was standing in front of me at the right time (thereby dispelling the age-old belief that we scrutinize every number).
Make an effort to become familiar with, and even solicit, area manufacturers, hospitals, and public utilities (who often have their own construction departments). The benefits are two-fold. You'll not only pick up any work that these concerns choose to bid direct, but you'll also often find out about upcoming construction projects that will be coming out. They may even ask if you know a good CGC. Pick a CGC you like and give them a call to let them know. The CGC would be hard pressed to not be grateful and obligated, should the job come to fruition.
Your written proposal says as much (or as little) as you want it to about your expertise, attitude, and abilities. Besides the actual work itself, the proposal is the most important tool you have to impress (and eventually win over) a prospect. In the mind of a CGC estimator, a sloppy proposal translates into a sloppy contractor. A complete, organized, and competitive proposal (that follows the rules) shows a sub-contractor who has his act together - and cares about his work and profession.
So let's discuss the proposal. Here are a few things to consider when creating yours:
Be professional. There's that "P" word again ! I know you're a blue-collar kinda' guy, but a little refinement at the proper times can spell the difference between winning and losing the job. Type the proposal (or have someone type it for you) - no hand-written quotes. Use professional letterhead and make sure your phone and fax (you don't have a fax ? - get one !) numbers are on there.
The phone number is important. It's quite common for an estimator to have last-minute questions on a bid as the bid deadline approaches (checking quantities, brick allowances, addenda items, etc.). This is a very hectic time and he doesn't have time to search the phone book for your number ! Also, there are still a few of you out there that do not have an answering service or machine for when you're out of the office. During working hours, somebody (or something) should always answer your phone and/or be able to reach you.
Address your proposal to the CGC and the estimator by name. Yeah, I know this one sound's petty, but it shows the CGC that you care enough about establishing a working relationship with them to not just throw your number out on the streets to anyone who will take it. Now, this doesn't mean you can't bid to more than one CGC at a time - we fully understand that you need to do that. Personalizing your proposal simply shows the CGC that you hold him in importance.
And this is significant. CGC's look for subs who are loyal (within the realities of the contracting business) and who genuinely appear to want to work with them. It can be these small, personal touches - Christmas cards, extra attention and effort, and the occasional favor (loan a lift, tools, etc.) that creates an atmosphere of comraderie - and raise the chances for garnering future work.
During the bid period (when the bids are being created), get a copy of the actual CGC bid form. The bid form often asks for breakdowns, unit prices, and alternate pricing. Your quotation isn't complete until you've assigned costs to all of the items on the bid form that effect your scope of work. Don't assume this is optional. The CGC is normally required to fill in every line on the bid form or face being disqualified. Also, don't assume some other sub-contractor will provide them for him - that's part of the service that you want to perform!
Speaking of bid alternates, a common mistake is to take their importance too lightly during the bid process. Alternates are very common in bid packages and many awards are decided on a combination of the base bid and any manner of alternate scenarios that may be concocted. With bid deadlines fast approaching, it can be quite tempting (and human) to focus on the base bid, and pay less attention on the alternates. In extremely hot times (or with many alternates), you may also find yourself taking a "conservative flyer" - otherwise known as a "guestimate" - at the alternate price. The problem of course is that this could cost you the job, so try to stay calm and address them as completely as possible or (if possible) complete them early on, so you're not wrestling with them at bid time.
Addenda. Addenda are changes in the bid documents that happen after the bid documents have been let out to those quoting the project. Generally, addenda are generated by the architect as the result of questions and clarifications flushed out during the bid process by those firms doing the bidding. If your bid proposal doesn't include all addenda, it may not be complete or accurate. It's not uncommon for addenda to come out deleting/adding an item(s) to your scope of work. By missing these (often significant) changes, you lose all coming or going. If you miss something that should have been added, you either A) eat it or B) argue it out with the CGC - not fun either way. If you miss something that should have been deleted, you're quote is probably high because your competitors don't have it in their proposals.
At some point in time, the CGC will probably ask you to break down your bid into component numbers or submit your bid earlier than the bid day and time. If this happens to you, don't get defensive or paranoid. As a matter of fact, be as helpful as possible. This is another one of those "trust-building" things (you want as many of those as you can get !). Don't fall into the trap of becoming overly concerned about being "shopped" (your number leaked to the streets) by the CGC. This is small-minded thinking and simply doesn't happen as much as most people think. Contrary to popular belief, most CGC's are quite ethical when it comes to keeping your number a secret. Of course there are some bad apples, but do you really want to construct your methods around a minority.
But (as much as we'd like to think so) it's not just the ethics that drive the decision to keep quiet . It's also good business. We're not idiots. We know if word gets out that we've been spreading numbers to competitors, our sub and supplier bids (our life-blood) will dry up. The logic is straight-forward enough: No bids, no competitiveness, no work, no money, no CGC.
Remember, we may employ some of our own trades, but we still need outside help. Lots of it!
Most of you have probably seen, or are familiar with, CSI (Construction Specification Institute) division numbers (and its many sub-divisions) found in the specification manuals that accompany most commercial (and some residential) construction working drawings (blueprints).
When preparing your proposal, find the divisions that pertain to your scope of work. This information (along with the plans) gives you the basis for generating your quotation. Only when you've satisfied the requirements of the plans and the specifications, can your proposal really be complete. Another note: no matter what CSI division's pertain to you and your scope of work, there's still another important specification division to read and understand - "Division 1: General Conditions". This division outlines everyone's responsibilities concerning the project and performance of the work. These responsibilities can include insurances, bonds, warranties, scaffolding, staging, winter weather protection, and much, much more. Of course, all these added responsibilities can cost you money - so should be accounted for in your bid.
Obviously, none of what we've discussed is worth a dime if you can't perform the work skillfully, completely, and on time. Project schedule is extremely important in commercial construction. Commercial construction contracts commonly serve up substantial penalties for the CGC if the schedule is exceeded. Be prepared to deliver proper procedure, quality-control, safety, and professionalism. Also know that the business we're in is a learning process that never ends or gets easier. But keep it up. By practicing and implementing the items we've covered, you will create new opportunities, increase your sales, and go on to enjoy greater success.
About the Author
Richard G. Ensman Jr. is a free-lance writer based in Rochester, N.Y.