CPA & Business Advisory Blog

Contractors, Think Twice Before Reducing Your Bid

In today’s economic conditions, many contractors have decreased their bids in order to win work and pay their employees.  However, price reduction is not always the answer.  Contractors that decrease bids to increase top line revenue rarely see it translate into an increase in profitability.  This can be primarily attributable the operations management of the contractor. 

There are six steps to streamline your operations management process and increase profitability:

  1. Assemble a cross-functional team of employees
  2. Document the business operations processes of the company
  3. Identify problems in the business operations and ways to improve the processes
  4. Narrow the list of problems down to a manageable level and trace the problem back to the source
  5. Determine the cost savings associated to each problem, if resolved
  6. Solve each problem recognized in Step 5 and implement the change into the processes

Think twice before reducing your bid and take the time to improve your operations first.

For more information on bids, post a comment below or contact our Real Estate & Construction Group at 440-449-6800.

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