How to Improve the Contracting Industry

We often see contractors underbid jobs and then fail to execute the project safely or with quality as the main focus. It hurts the entire industry. Photo courtesy of the author.

In the contracting world, all too often we see companies that, when bidding a job, simply check the boxes on safety, quality and paperwork in general. We often see these same contractors underbid jobs and then fail to execute the project safely or with quality as the main focus. It’s aggravating to see these contractors underbid – which hurts the industry – and then underperform on all fronts. It hurts the entire industry by creating a bad stigma around contractors and negatively moving prices down below profitability standards.

How can business owners help to change the bid-selection process to focus on quality, safety and the “craft?”

1. Stop making it all about price – Make it about quality of work, your skill and your follow-through.

2. Focus on value – What does your company bring to the table that others do not? What do you do differently than the typical low-bid contractor?

3. Focus on the relationship – Over deliver. On what? Everything.

4. Focus on your “craft” – You are passionate about what you do. Market that and share that passion. Focus on creating an experience in which the customer begins to appreciate your craft and your skill.

5. Call out the low-bidder mentality – Remind the customer, you get what you pay for. It is almost always true.

6. Again – stop making it all about price – Quality of workmanship is what matters, and it’s your job to sell that.

Is my business culture important?

Yes, and it’s critical to begin working on a culture based upon safety, doing what is right, customer satisfaction and, above all, continuous improvement. It takes a while to build that culture and people will come and go, but it will be worth it.

Lead from the top. Push for everyone to be fully on board with safety and quality. And practice what you preach.

This culture will eventually show to your customers, and then your business will begin to market itself through great reviews and word of mouth.

This will help to promote the value of your company as opposed to the low-bid company that focuses on price and not the experience.

Be honest with your customer about pricing

If the customer pushes back and compares your pricing to a low bidder who everyone knows underbid the project, call it out. Put your numbers into an Excel spreadsheet and show them how you came up with your number. Ask the customer to come up with the low-bidder’s number and justify how it could be so cheap without cutting corners. Chances are, they will see it was missed or underbid and thus will cost them more in the long run.

In the end, it’s about showing, marketing and delivering value. The focus across the industry needs to be on:

  1. how we provide value;

  2. how we are being safer than before;

  3. how our equipment has advanced; and

  4. how our service is better.

The focus should never be on price alone, so stop focusing and selling on price alone. Market yourself in such a way that price is no longer the most important factor. Overall value is more important than pricing.

And then, once you get the customer, over deliver.

Brent Oberlink is president of Lanracorp, Inc., a nine-year TCIA member company based in Brownstown, Illinois, that specializes in pipeline and utility maintenance.

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