Bidding activity is up in the construction industry, surpassing pre-pandemic levels. Our recent report, based on external economic data and aggregate, anonymized BuildingConnected product data, found that bidding activity reached its peak in January 2021. This growth is largely due to economic shifts and increased competition among construction firms. While the economy is still in recovery due to the pandemic, leading construction firms are capitalizing on industry shake-ups to outpace the competition.
Our recent guide shares strategies for staying just as competitive in today’s market.
Let’s explore some of the top insights from the guide.
How to Manage New Requirements to Increase Competitiveness
The pandemic has already left its mark on the construction industry, with new construction for nonresidential buildings down an average of 24% in 2020. Manufacturing, lodging, and amusement and recreation were the hardest hit, with projects down over 40% for each of these sectors. These statistics shed light on the changing nature of the bidding landscape. Firms have fewer opportunities for new projects, making the competition that much fiercer. New requirements and increased expectations add even more layers of complexity.
One of the biggest keys to remaining competitive is effectively managing new requirements. What’s causing requirements to shift? Owners have diversity and inclusion efforts, sustainability standards, and general economic uncertainty on their minds. These changes dictate decisions about projects.
Projects today include more diversity requirements. Diversity has long been an issue in the construction industry, with the Bureau of Labor Statistics reporting that only 9.9% of construction professionals are women, 6.2% are Black, and 2% are Asian. Yet the companies that do prioritize diversity are more likely to have higher profitability. In order to meet diversity requirements and bring their benefits to your firm, leverage a diversity network solution. Tools like BuildingConnected allow you to filter through lists of subcontractors by various indicators such as women-owned or veteran-owned businesses. That way, you can build diversity and inclusivity right into the requirement management process.
Job creation is another important element to managing new requirements. Out of the 22.2 million jobs lost in 2020, only 42% have been regained. There is immense pressure on public officials to prioritize job creation. Demonstrating job creation on bids can offer a competitive edge.
Staying Competitive through Accurate, Attractive, Transparent Bids
In today’s competitive market, many contractors feel the pressure to race to give the lowest bid. This approach may seem like a simple way to win more bids, but inaccurate bids cause delays, lost profits, and headaches that make winning the project not worth it after all.
A more effective approach is to focus on providing the most accurate bid. Find ways to highlight your firm’s competitive differentiators and leverage technology to create more accurate bids and win more overall. A cloud-based platform optimizes estimates and communication to improve cost accuracy. These tools eliminate the risk of scope gaps, ensure the easy management of quantities, track costs down to a specific change, and monitor budget trends through access to real-time data for IPD projects.
These same platforms are also beneficial for showing owners that the firm can provide a transparent process from preconstruction all the way to project completion. This level of real-time collaboration continues to grow in importance as owners look for process transparency. Platforms that allow owners, general contractors, estimators, designers, and stakeholders to collaborate anywhere at any time can help create a competitive bid.
Using technology strategically can also help you increase your pool of potential subcontractors. To gain the trust of owners for the first project, you need to be able to provide the most attractive bids with the ideal subcontractors on every project. A bid management solution can help you access a larger pool of subcontractors. These tools are designed to increase the speed and simplicity of the bid solicitation process by aggregating your communication so you can find contractors in new markets or trades with ease.
Finally, use technology to identify ways to mitigate risk. The preconstruction phase is the most important of all for risk mitigation. Starting with a robust qualification process during the bidding process is critical for lowering risk. This process should include a comprehensive risk analysis before the subcontractor is invited to bid. A qualification solution can help to create a data-rich, effective qualification process. This process helps to build your network of qualified subcontractors, improve communications with stakeholders, and leverage historical data to make strategic decisions.
Set Your Bid Strategy for 2021
While every industry is still feeling the effects of the pandemic, it can be said without a doubt that remaining competitive is key to succeeding in the construction industry. Purpose-built technological solutions can help you take a strategic approach to constructing winning bids. To get started creating or updating your bid strategy, download the Constructing Winning Bids in 2021 ebook now.