Reducing the Real Cost of Bidding
How many bids do you produce in a year? If you’re like most system integrators, it’s in the hundreds. Producing bids uses lots of company resources. In an inefficient organization, the bidding process can strangle day to day operations because the resources needed are disproportionate to other company functions and needs. Understanding and reducing this cost makes a company more profitable while being able to do more with the same resources.
At db Integrated Systems the average bid over the past several years was around $300,000 and would take roughly four days to complete. Not bad for a small company, but very inefficient. "On a normal bid, we would have an engineer do the take-off while the administrative assistant would input the data from the spec," says Tina Wicker, company Vice President. The administrative assistant had been hired specifically to support the estimating process.
Then a project engineer would have to estimate the labor hours and match take-offs to the bill of materials in the spec, and estimating would then price the project calculating margin, bonding, warranty and risk variance. This totaled four people touching the estimate over four days, taking away from normal operations. "In a busy week everybody was over stressed trying to get bids out," added Wicker.
In January 2009 db Integrated Systems began using OnTrackPro, the Job Cost and Management software from Ceden Technologies. The software was installed and product pricing was imported from as many manufacturers that provided their pricing in electronic form, and every employee was given customized access based on their job description. Current projects were not re-entered, only new projects were entered starting with the estimating process.
With the new software came a new process. The estimator would input the data from the specification and fill in the program’s fields for bonding, customer information, and warranty. The software automatically populates product descriptions and pricing. Instead of multiple employee days, this part of the process alone was reduced to one day. Once the data was entered, engineering would access the project data for a take-off comparison between the automatic bill of materials and the drawings. As the engineer reviewed the list, he would enter labor hours plus any missing materials. This process change reduced engineering hours from one to two engineers for four days, down to one engineer for three days.
"Before we reached the end of the second week of use, we realized we no longer needed an administrative assistant," admitted Wicker. Remarkably the company had reduced the number of employee hours required for an average bid estimate from as much as sixty four hours down to around twenty-eight hours. Management immediately pulled the ad for a third project manager.
"There are other less tangible results of this software," Wicker summed up. "As bids were completed and jobs awarded, everyone in the firm became a player in how a project was handled. And the biggest payoff was that GC’s and consultants were complimenting our work, how bids looked, and appreciated the detail we provided. In the long run, this turned out to be huge."
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