You are good at winning bids and performing the work you do. You wouldn’t be in business if you weren’t… BUT… are you as profitable as you could be? If you are already efficient with performing the work, it may be time to step back and look at the jobs you are winning. Monitoring key performance indicators (KPIs) enables you to evaluate the current health of your business and quickly take action on potential issues. But they also reveal information that can help your company set future direction.
KPIs can be used to your advantage when looking for new and better ways to win work. They help you identify your business strengths and trends. You may be an unconscious competent when it comes to your strengths and the trends, but you may be missing out on opportunities to guide other areas of business: marketing, sales, and bid strategy. This will enable you to go after the most profitable projects for your business.
KPI #1: Project bottom line
Go after the projects that meet or exceed your profit goals. Experts indicate that contractors who have clear profit targets and goals make significantly more profit than companies who don’t.
KPI #2: Project net profit margin
Measure your profits to find your highest return. Tracking profit margins across projects helps you to identify areas of work where you are more competitive and have the least financial risk.
KPI #3: Project bid-win ratio
Bid wisely and focus on the most profitable opportunities for your business. This KPI tracks your ratio of acceptance of the bids you’ve submitted (example: for every six bids you’ve won one job, 6:1 bid-win ratio). Analyze this ratio in conjunction with project net profit margin. Why? Because even a 1:1 bid ratio doesn’t guarantee profit.
How to Win Best-fit Jobs
- Determine your profit goals
- Track and monitor KPIs like project bottom line, project net profit margin, and project bit-win ratio
- Analyze KPIs by project type, geographic location, customer characteristics, duration, or other project components to uncover trends
- Identify and prioritize areas for improvement
- Adjust your business development and bid strategy to win best-fit jobs
Much of the information you need to get started should be readily available if you have a construction-specific software solution.