The Story of My First Bid as a Paving Estimator

TL;DR: How productivity misconceptions lead to contractors missing the mark

Fresh off a large successful construction job, I was eager to dive into the core part of our business: asphalt. When a county bid for 25K tons of asphalt and some reconstruction came up, I volunteered as Project Manager/Estimator. An intern and I rode every street multiple times, convinced we had an edge. I believed the patching would under-run by 50%, and we could lay 550 tons a day on the short Bayou roads. At the time, our prep and paving crews desperately needed work.

My boss and I spent a couple of hours reviewing the bid the day before it was due. We then added a 5% margin and submitted it electronically. Bid openings were still conducted in person. Ten minutes after the opening, our Field Engineer called me: “Well, man, we got the job…”

Oh no… How bad?

As he read the numbers, my heart sank. We bid $2.1 million, while the second-place bidder came in at $2.8 million, and the third at $3.1 million. We left $700K or 33%, on the table. Industry average is ~8% and best in class is ~3 to 5% . The bid results were then emailed to the entire company 😬.

The Aftermath

I later realized my mistake. Our paving productions were 350 tons per day, not the 550 I had figured, and the Engineer decided to do every inch of patching. We ended up writing down the job by $500K. Managing this project was a humbling experience. Our main competitor, reacting emotionally to our low bid, secured three nearby jobs cheaply on the next letting. We continued to compete fiercely, and it took a year for the market to stabilize.

What Went Wrong?

1. Promoting Procrastination: Proper estimation reviews must be conducted days before the pricing strategy discussion.

2. Miscalculating Costs: I overestimated our production capabilities.

3. Ignoring Historical Bid Spreads: We rely too heavily on recency bias.

4. Mixing Cost and Margin: Assigning the margin during the bid review was a critical mistake as it let our lack of backlog influence our cost calculation.

Modern productivity advice often emphasizes batching meetings to save time. We rush through cost reviews, internal backlog discussions, competitor analysis, and profit percentage decisions based on gut feelings. This approach is flawed.

The Solution: Two Separate Meetings

To avoid these pitfalls, you need to separate the cost estimation and pricing strategy discussions. Here’s what each meeting should cover:

1. Estimating Meeting:

• Calculate accurate costs far in advance.

2. Bidding Meeting:

• Evaluate the project's desirability, risks, and rewards.

• Align the project with existing resources, backlog, and capacities.

• Assess the competitive landscape and historical pricing data.

• Consider upcoming bids that might impact strategies.

• Determine pricing strategy.

By separating these discussions, you ensure a thorough and deliberate approach to both estimating costs and setting pricing strategies.

Share Your Process

How do you manage your estimating and bidding process today? We'd love to hear your insights!

Delegate & Conquer

✨ Employee Spotlight ✨

Meet Jackson Barrett!

Edgevanta Principal Product Manager

Background and joining Edgevanta: I was born and raised in Nashville, TN, and pursued a Mechanical Engineering degree at Mississippi State. My tech journey began in 2021 as a Product Manager, then Group Product Manager at a Series A Contech SaaS Startup. Keen to advance my career and expand my industry knowledge, I joined Edgevanta as the first product hire to take an impactful solution to new heights.

Attraction to the company: Edgevanta captured my attention because it directly addresses real customer needs, something that's reflected in our customers' enthusiasm. The potential for success here is immense. The company culture resonates with my values, making it a perfect fit for my career goals/growth.

Current role and responsibilities: As Principal Product Manager at Edgevanta, my focus is all things product. I combine what we want and our vision with what our customers need to solve the pain points of the industry. My job is to make sure we focus on the right projects at the right time to really enhance our customer's operations.

Enjoyment at Edgevanta: There are many aspects to my job I enjoy as I genuinely love product, but what I enjoy most is the wide range of opportunities and challenges it offers. Our solutions have a significant positive impact on our customers' operations, which I find very motivating and rewarding in my daily work.

Hobbies and interests outside of work: Outside of work, my activities change with the seasons. During the winter months, I enjoy snowboarding and catching Broncos football games. In the summer, my spouse, our two dogs, Bailey and Blue, and I love to travel in our camper, visiting various National Parks across the country.

Stoic Wisdom Quote:

Snagged this from a client’s wall this week. Credit to AD.

Reflect on this as we embark on another week of bidding and building!

We value your feedback. Tell us what you think about this week’s newsletter below!

Warmly,

Tristan

About the Author

Tristan Wilson is the CEO and Co-Founder of Edgevanta. We make software that helps contractors win more work at the right price. He is a 4th Generation Contractor, construction enthusiast, bidding nerd, ultramarathoner, and paving nut. He worked his way up the ladder at Allan Myers in the Mid-Atlantic and his family’s former business Barriere Construction before starting Edgevanta in Nashville, where the company is based. Reach out to him at [email protected]