FEA Randal And Train
Bookkeeping Trial Test Drive
Outsourced Accounting
Contractor Bookkeeping Templates For QuickBooks And Xero
Construction Accounting Academy

    Do You Recognize The 10 Early Warning Signs of Bad Contractor Bids?

    Posted by Randal DeHart on Tue, Jul 09, 2019

    Estimating and submitting bids are one of the most stressful and nerve-wracking sides of your construction business. It is essential to keep in mind that "break-even" in the construction business is challenging to calculate because most projects are one-of-a-kind custom jobs. Proactive contractors have systems and cost libraries with pre-priced assemblies for bidding, which works in conjunction with Strategic Construction Accounting to provide management with progress invoicing, job costing, and job profitability.
     
    With poor bookkeeping, misguided judgment, and clerical errors come bad decisions on what projects to bid and not to bid on until eventually, you'll run out of time and money. This is why some construction projects fail or worse, construction companies get bankrupt. 

    Business people checking plan on construction site-1

    Whenever someone decides to have some work done they get several bids from competing contractors because that is what they heard someone say a long time ago. There are two things to consider:

    #1 The Low Bidder
     
    • Good / Fast / Cheap - Choose Cheap & Fast or Cheap & Slow! Expect the project to Late and over budget!
     
    • Base costs - Taxes, fuel, cell phones, nails, glue, and small parts are the same for all contractors; no savings here.
     
    • Labor - Cheap labor makes mistakes and causes damage because they are learning, by experience, on your project!
     
    • Material - Price is King! So they buy and install cheap material!
     
    • Tools - Cheap tools take more time, and the finished product may be hard on the eyes, but they have to cut costs!
     
    • Trucks - Rickety old trucks and vans may break down, which means the job may take longer, but costs have to be cut!
     
    • Office - They work out of their house or truck; so called no-overhead
     
    • Cheap Construction Manager - Biggest, "baddest" construction worker. Also, the bill collector. Also acting as a "Working Project Manager," which means the company is attempting to save money in the short run and ends up losing money in the long term. Assembling parts and building something takes a "Tactile" mindset. Running a project is "Strategic." Put another way no man can serve to masters as he will hate one and love the other, and the inevitable outcome is the Peter Principle, which leads to a construction train wreck.
     
    • Invoices - Make no sense, the total cost may exceed the bid, and you will pay the contractor to avoid violence!
     
    • Warranty - Cheap contractors cannot afford warranty work because they are "One-Hit-Wonders" never to return
     
    #2 The Other Bidders
     
    • Good / Fast / Cheap - Choose Good & Fast or Good & Slow! Expect the project done on time and on a budget!
     
    • Base costs - Taxes, fuel, cell phones, nails, glue, and small hardware are the same for all contractors
     
    • Labor - Skilled labor costs more, produces more work faster with fewer mistakes, which means a quality project.
     
    • Material - Quality and reputation are King! Skilled labor can install quality material faster than cheap material.
     
    • Tools - Quality tools and equipment cost more and will produce a product that is easy on the eyes and lasts longer.
     
    • Trucks - Reliable trucks and vans mean the job is done quicker and with fewer delivery issues
     
    • Office - Skilled staff and office equipment provides for effective communication
     
    • Qualified Construction Manager - Has a construction background and formal training in project management. Most professional construction companies with good reputations will have people with credentials like PMP (Project Management Professional) assigned to oversee projects.
     
    • Invoices - Are Pay Applications that make sense because they show a history of costs and payments made. 
     
    • Warranty Work - Is a marketing cost because the first project is the beginning of a relationship.
     
    In conclusion:
     
    Never hire the lowest bidder. The sweetness of low price fades quickly while the bitterness of poor quality lingers on. When hiring a contractor, discard the low bidder because you will get what you pay for and sometimes less than what you paid for. See to it that you have enough time to review subcontractor pricing and make clarifications from the project manager, architect, or owner in case there's anything you are unsure of. This is where writing down a list and checking it twice will come in handy. 

    About The Author:

    QuickBooks-Trainer-Randal-DeHart-PMP-QPA-Fast-Easy-AccountingRandal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, and QuickBooks For Contractors Expert. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and Construction Accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.

    Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes. 

     

    OUTSOURCED ACCOUNTING FOR 
    THE BUSY CONTRACTOR
    IN A MOBILE ENVIRONMENT

                                Bookkeeping Trial Test Drive  Contractor Bookkeeping Templates For QuickBooks And Xero

                                Outsourced Accounting  1-800-361-1770

     

    Download the Contractors APP today from the App Store or Android Store

    Access Code: FEAHEROS

    Click here to download the App on Android:

    Click here to download the App on iOS:

    Simply scan the QR code or search for ‘MyAccountants’ in the App Store and enter the Access code: FEAHEROS to utilize the powerful App features and capabilities, and benefit from having our Construction Accounting App at your fingertips, 24/7."

    PS: Even if you are not a Construction Contractor you will find a plenty of benefits in the app so we invite you to download it too! It's Free so why not?

     

    Topics: Payment Collect, Contractor, Contractor Tips, finance, Contractor Operating Tips

    QuickBooks Setup And Chart of Accounts For DIY Contractors
    Download Our Free App For Construction Contractors

    click to download the Contractors APP now from the App Storeclick to download the Contractors APP now from the Android store

    Access Code: FEAHEROS

    accounting articles

    Subscribe by Email

    How Can We Help?

     
    Contractors Bookkeeping And Accounting Services

    Who We Help

    How We Help

    Next Step

    FAQ's

    Contractors Bookkeeping And Accounting Services

    Outsourced Construction Accounting Services For Contractors All Across The U.S.A. By Fast Easy Accounting 206-361-3950

    Serving Construction Contractors
    Across The U.S.A
    Including Alaska
    And Hawaii

    Podcast On iTunes
     
    Click Here To Listen In iTunes
    Contractor  Success M.A.P.
    Contractors Bookkeeping And Accounting Services

    Remote Access Your QuickBooks  Using Secure Servers

    Outsourced Bookkeeping Services For Contractors At Fast Easy Accounting

    Contractors Bookkeeping And Accounting Services

    T Sheets Pro Advisor Fast Easy Accounting

    Mobile Time Cards 

    Eliminate the job site to office paper shuffle

    Start My Free 14 Day TSheets Trial  

    Contractors Bookkeeping And Accounting Services

    Fast Easy Accounting Construction Accounting Specialists Member Of National Association Of Home Builders NAHB

    Contractors Bookkeeping And Accounting Services

    mbamember

    Join Our MBA Network

    Most Popular Posts

    Read the Latest:

    Browse by Tag

    badge

    Blog Suggestion Box

    We Remove Contractor's Unique Paperwork Frustrations

    Quickbooks certified proadvisor

    Xero-Accounting-Services-Fast-Easy-Accounting

    Financial-Intelligence-And-Performance-Reporting-Tool-Fast-Easy-Accounting Hubdoc-Document-Collection-and-Management-System MBA Member Fast Easy Accounting 206-361-3950
     
    contractor-success-map-podcast-listen
     
    Don't forget, you can hire our services at FastEasyAccounting.com
     
     
    How To Use Our Services