A civil contractor with 40 staff · Tender Pricing and Commercial Response
Winning a $2.4m tender at a price that made money
The business was winning council work but its margins were thin, and a $2.4m road rehabilitation tender was due in twelve days.
$146,000 of traffic management and plant standby was missing from the usual price, which would have cut the margin from a 9% target to under 3%.
Insight
A cost build-up from the contractor's own rates showed traffic management and plant standby had been underpriced by $146,000 in its usual method, which would have taken the margin on this job from a target of 9% to under 3%.
Advice
Price the risk items properly, show the council the traffic management staging as a value point in the commercial response, and bid 3% higher than the old method would have.
Opportunity
$146,000 of margin protected on one job, and a pricing tool the estimator can reuse on the next tender.
Results
The tender was won at the higher price, and the job finished at an 8.5% margin against the 3% the old pricing would have produced.