A bid/no-bid decision answers one question before your estimators start counting fittings: is this job worth the cost of pricing it, and would we be glad to win it? The simplest reliable tool is a weighted scorecard of eight to ten factors, scored in ten minutes from the tender package and what you already know about the customer. Jobs that score high get your best estimating effort. Jobs that score low get a polite decline, and your team's hours go somewhere more useful.
Why bidding everything costs more than it looks
Estimating time is overhead, and it is expensive. Suppose a mid-sized commercial bid takes your estimator 30 hours, and an estimator's loaded cost is $70 an hour. Each bid costs about $2,100. If you win one in six, every won job carries $12,600 of estimating cost from the jobs you lost.
Cut the bids that were never likely to win, and the arithmetic changes. Bid four jobs you are well placed for and win one in four, and the estimating cost per win falls to $8,400. The same estimator now has time to price the remaining bids more carefully, which tends to improve margins as well.
The bigger cost is winning the wrong job. A project that fades from 18% margin to 5%, ties up a crew for six months and pays slowly can wipe out the profit of several good jobs. The scorecard is mostly there to stop that.
The ten factors
Score each factor from 1 (poor) to 5 (excellent), multiply by its weight, and add up. The weights below are a starting point; adjust them to your business.
| Factor | Weight | What a 5 looks like |
|---|---|---|
| Customer payment history | 3 | Pays to terms; no disputes in past jobs |
| Relationship and fit | 2 | A GC or owner you have worked with well before |
| Scope fit | 3 | Exactly the systems your crews do best |
| Crew capacity in the job window | 3 | Crew-weeks available when the job needs them |
| Margin potential | 3 | Scope and competition allow your target margin |
| Competition | 2 | Few bidders, or bidders who price sensibly |
| Contract terms | 2 | Fair risk allocation, reasonable holdback and payment terms |
| Location and travel | 1 | Within your normal service area |
| Design quality | 2 | Complete drawings, clear specifications |
| Strategic value | 1 | Opens a new customer, sector or skill you want |
The maximum score is 110 (22 total weight × 5). Many firms set bands like this:
- 85 and above: bid with full effort
- 65 to 84: bid only if the estimator and owner agree, and cap the hours
- Below 65: decline, unless there is a written strategic reason
A worked example
A general contractor you have not worked with sends a tender for the mechanical package on a mid-rise residential building, two hours' drive away, due in nine days.
| Factor | Weight | Score | Weighted |
|---|---|---|---|
| Payment history | 3 | 2 (unknown; other subs mention slow pay) | 6 |
| Relationship and fit | 2 | 1 | 2 |
| Scope fit | 3 | 4 | 12 |
| Crew capacity | 3 | 2 (overlaps your busiest season) | 6 |
| Margin potential | 3 | 3 | 9 |
| Competition | 2 | 2 (open tender, many bidders) | 4 |
| Contract terms | 2 | 3 | 6 |
| Location | 1 | 2 | 2 |
| Design quality | 2 | 3 | 6 |
| Strategic value | 1 | 4 (a sector you want to enter) | 4 |
| Total | 57 |
At 57, this is a decline under the bands above. The strategic value is real, but the job lands in your busiest season with an unknown payer, far from home, against many bidders. A better move is to call the GC, explain that the timing does not work, and ask to be invited to their next project in a quieter window. That keeps the relationship option open without risking a crew and a season.
Before you score: the knock-out questions
Some issues end the conversation regardless of score. Ask these first:
- Can we meet the bonding, insurance and safety prequalification requirements?
- Do we hold the provincial licences or certificates this scope needs? (If unsure, check with your province's technical safety regulator; we can point you to the right one on our areas pages.)
- Is there an unacceptable contract clause, such as unlimited liability or pay-when-paid terms you cannot carry?
- Can we produce a proper estimate in the time allowed?
A "no" to any of these is usually a no-bid, whatever else is true.
After the bid: closing the loop
The scorecard gets better only if you check it against results. For every bid, record the score, whether you won, the winning price if you can learn it, and for won jobs the final margin.
After a year, look for patterns:
- Do high-scoring jobs actually close at better margins?
- Which customers score well but never award you work?
- Is one factor, often payment history or crew capacity, a better predictor of trouble than the others?
Adjust the weights accordingly. Jobs you win then go into your job costing routine, and their final margins feed back into your estimating rules.
Common mistakes
- Scoring after the estimate is done. By then the hours are spent and everyone wants to submit. Score first.
- Letting hope score the capacity line. Use your capacity plan, not optimism.
- Bidding to keep crews busy. A thin job taken to fill a gap often runs into the next busy season and blocks better work.
- Never declining a regular customer. A good relationship survives a polite "not this one".
- Not tracking hit rates by customer. Some customers use your price only to check someone else's.
A shorter version for residential quotes
Residential replacement and renovation quotes do not need ten factors. Four do most of the work: travel time from your shop or the nearest crew, job size against your minimum, how the lead reached you (a referral or repeat customer scores higher than a lead-sharing site) and whether the homeowner is collecting several quotes. Score each from 1 to 5. Anything under 10 out of 20 gets a quick phone estimate or a polite pass rather than a site visit.
Where to go from here
Copy the table, adjust the weights, and use it on your next five tenders. If you would like help setting weights from your own bid history, or connecting bid decisions to capacity and pricing, the service-versus-construction mix work usually covers it. More long-form material is on the guides page.
Frequently asked questions
What is a good hit rate on bids?
It depends on your market and the kind of work. Rather than chase a benchmark, track your own hit rate by customer and job type. A rate that is very high may mean you are too cheap; a very low one usually means you bid too widely.
Should we bid jobs just to stay on a general contractor's list?
Sometimes, but do it knowingly. Score the job, and if you bid for relationship reasons, cap the estimating hours you spend and say so internally. Then check whether that GC ever awards you work at a fair margin.
Who should fill in the scorecard?
The estimator who would do the work and one other person, usually the owner or operations manager, independently. Compare scores. Big disagreements are worth a five-minute conversation.
Does this work for residential quotes too?
A simpler version does. For residential replacement and renovation quotes, the key factors are travel distance, job size, how the lead found you, and whether the homeowner is getting several quotes.