By Malcolm “Mudduckk” Campbell
Recently I announced that Mosaic is now subscribing to Bidclerk.com, an project news service, as a key part of its Plan and Spec Marketing strategy. Later in conversation with one of my fellow LOTC’s it became clear that I need to do a series of posts to describe this approach to business generation. So, this post will be the overview of the approach to layout the framework for more detailed posts to come on plan and spec (P&S) marketing.
Here I will layout; what is P&S marketing, what are the key factors contributing to a successful P&S strategy, and references for further investigation.
What is Plan and Spec Marketing?
Plan and Spec marketing is reviewing and selecting projects to bid on in your market as provided by one or more project news services. Utilizing a project news service which aggregates data about upcoming projects in your market area – specifically: project overviews, plans and specifications, lists of potential customers bidding on the project, and the bid due date – marketers in this space analyze the information available (P&S) to tender bids for their work to the list of bidders on the project on the bid due date.
Plan and Spec marketing is LOW BID BUSINESS. Caution, great care must be taken toward estimating in this environment for none will award you work for which you err to the high side but all will reward you for omitting to the low. Diligence and consistency are key.
Plan and Spec marketing is a great way to quickly build a book of business, earn new customers, and gain the attention of countless other potential customers.
Key Factors in Plan and Spec Marketing
Your Knowledge Base
Know your Overhead: How much does your business cost you each year? What are your rents, utilities, salaries, and so on? While this may be surprising to some, many LOTC’s are successful because they are good at what they do, building things, and not necessarily because they are good at bookkeeping and finance. Rather this work may be delegated to a spouse or an outside service where the information exists solely for compliance purposes. But in order to have an effective Plan and Spec campaign, it is vital to get an estimate of the non productive yet essential stuff which makes it possible to do what you do.
Know your Bid to Win Ratio: Contract awards (dollars) divided by proposals value (dollars) for a given time period. Longer time frames such as a year or a quarter are more useful than shorter time frames. What we want to get at is what is your effectiveness at converting sales over the long haul.
Know Your Cost Drivers: For instance with tile work, its primarily about square footage of floor, or walls, or even ceilings, but to a lesser extent lineal footage matters for some items, such as base, or stair treads, and then on the rare occasion an individual item count can matter.
Know Your Historical Performance: Productivity by cost driver. Profitability on Jobs.To know how much you need to bid per year, per month, per week, do the following calculation
Total Bids = Overhead Needed (for time frame) ÷ Profitability ÷ Bid to Win Ratio.
So for instance if you need $75,000 annually to operate and your jobs run 20% gross profitability (25% markup), and your bid to win is 20% then you need to bid $1,875,000 worth of work annually.
$1,875,000 = $75,000 ÷ 20% ÷ %20.
Just a suggestion, try not to bid it all in one week or month. Else you’ll end up with too much work. Rather use this as an annual target. Look at it as advice on how much you need to bid monthly and weekly. Take care to allocate enough time and attention to doing quality bids on an ongoing basis.
Project Selection and Bid Execution
Reconciling Conflicts in P&S:
Standardized “Take off” or Quantity Survey:
Form of Proposal:
Evaluating Bidding Performance and Feedback:
Data Mining: Buzzword. Bid to win ratio I like to segment these by small, medium, and large projects. Other segmentations can include geography, customer, customer type, project type. Productivity segmentation, profitability segmentations.
Revising Your Approach:
References for further review:
Malcolm “Mudduckk” Campbell is a tile installer in Toledo, Ohio. Tilers play in the mud! Toledo is home of the Mud Hens minor league baseball, sometimes call the Mud Ducks. So you know a tile setter from Toledo would have to go by the nickname “Mudduckk.” In fact, there could be many Mudduckks in Toledo, but only one of them is tops in Google Search. That one is Malcolm. Got Tile? Google: Mudduckk!