The three levers I could find

A few years ago my CEO put a number in front of me. We had just finished the best year the company had ever had, and he wanted the next one twenty five percent bigger. I had myself, one other estimator, and two takeoff techs.

I thought it was possible. I also thought it was going to be very hard. What I did not have was any way to tell him which.

The three levers

I sat with it a while and could only come up with three ways to move that number.

Add an estimator. Go after larger jobs. Win a higher share of the jobs we already bid.

Maybe there are more. Those are the three I had. More lunches, better proposals, faster turnaround, none of those ever felt like a fourth lever to me. They are ways of pulling on one of these.

The first is a cost question. The other two are the same question asked twice.

The cost question

You cannot decide whether to hire until you know what the people you already have cost you.

So I added it up. Salaries, the takeoff techs, burden, the truck, the phone, the computer, the desk, vacation pay. Then I turned it into a break even. If the department costs this much, what does it have to bring in before it pays for itself, and what is fair to expect from one estimator above that in a normal year.

Run it on your own shop. It takes an afternoon, and it changes how you hear a sales goal, because you can finally hold the number you were handed up against the people you actually have.

If you do not know your numbers, and you have not set a goal against them, you have no way of knowing whether you are on the right track. You are just busy.

The customer question

Bigger jobs and a better hit rate both come down to one thing. Do you know which of your customers actually give you work.

Not do you like them. Do you know, with numbers.

I did not. For six years I did not.

When we finally pulled the history, it took one of our guys three days and me another day on top of that, to answer a question that should have taken three minutes. Nine hundred and forty two bids. More than seven hundred and fifty million dollars priced. Ninety nine won.

Thirty eight percent of those bids went to contractors who had never once given us a job. One general contractor alone: seventy five bids, ninety four and a half million dollars priced, three awards.

I had a gut feel for who was worth bidding. My gut never caught that one, because the contractors who cost you the most are rarely the rude ones. They are pleasant, they take your calls, and they still do not hire you.

What you do with it

We got deliberate. We cut back on the projects we bid and on the contractors we bid them to, and aimed at the jobs where the probability was real.

Our bid count fell from about one hundred fifty seven a year to about one hundred twenty. We won more work. Our hit rate went from roughly one in ten to roughly one in four.

We bid a quarter less and sold more, and it was a decision rather than a good market.

That does not mean we have it solved. Count jobs and our hit rate is about one in four. Count dollars and it is closer to nine percent. When those two numbers sit far apart, it means you are winning the small work and losing the big, which is exactly the lever we are still pulling on. The difference now is that I can see it.

It changed the conversation upstairs, too. When your CEO asks for more, you are not guessing. You can tell him which lever is available and what it costs. And you can tell your estimators the same thing in numbers, instead of asking them to try harder.

Where to start

You do not need software. You need two columns.

Pull the last two years of bids and group every one by the contractor you sent it to. Count bids, count wins. That one list told me more about our business than anything else I did that year, and I had never made it before.

Then ask three questions about the names at the bottom. Have we ever won here. Do we know why we lose. And if it is price, and price is our only lever with them, is there any version of this where we win.

I had six years of the answer sitting in my own files and never once looked.

If you go to make that list and realize you have nowhere to make it from, no clean record of what you bid, who you bid it to, and what came back, that is the thing we built Pursuit to fix. It is what I run my own bids through now. Either way, go make the list.