Large construction projects carry greater risk. Professionals at The Hartford share how you can bid on the right sized projects to help protect your business.
When construction companies develop a history of successful projects, they often consider bidding on larger projects. However, larger projects can carry greater risks.
If your company has successfully completed numerous $10 million projects and is considering a bid on a $100 million project, there are several factors to consider before submitting a proposal. That is because bidding on the wrong project could potentially put you out of business.
If a contractor fails to complete a project, it can have dire consequences, including bankruptcy, Holicky explains. “A large, unprofitable job is the quickest way to go out of business,” he adds.
Before bidding on a larger project, Holicky recommends reviewing this checklist of ten items to consider. “This list gives contractors a good idea of what to think about when bidding larger jobs,” Holicky says. If you are not sure whether to submit a proposal, he offers this advice, “A contractor should have at least five of these items locked down before considering a large bid.”
Determine if the Project Is a Good Fit
Let experience guide the type of large-scale project you bid on. For example, if you have built a two-mile bridge and are considering a bid to construct a project for a 10-mile bridge, reflect on what your company has done in the past to scale up its experience and capabilities.
“We encourage contractors to look thoughtfully at their past experience and reflect on the progress of successful jobs to ensure this leap isn’t too big,” he instructs. Is that success scalable for the large project being considered?
In addition, he warns that in our current economy, a normal-sized construction job is going to seem larger because of inflation. “What you used to do does not cost the same. Inflation is driving the costs of larger projects.”
Assess Your Capabilities
Carefully consider your own skillsets as a leader as well as the capabilities of your company before bidding on a larger project. “Don’t bite off more than you chew,” Holicky says.