THE BID-HIT RATIO EVERY SUB SHOULD BE TRACKING.
Bid-hit ratio is jobs won divided by jobs bid. A ratio above 35 percent on competitive bids usually means the overhead rate is too low. Below 15 percent usually means the overhead rate is too high, or the bids are going to the wrong GC relationships. Tracking it by work type separates the signal from the noise.
Less than 6 percent of construction contractors track their bid-hit ratio. The ones who do have a leading indicator that tells them whether pricing is at market before the P&L shows the damage. That's the whole value of the number: it moves months ahead of margin. When the overhead rate drifts below what the business is really spending, the win rate climbs first, and the compressed margin on all those won jobs turns up much later. By then the work is bid, booked, and being built.
WHAT IT MEANS.
Bid-hit ratio is the percentage of bids submitted that result in a contract award, calculated as jobs won divided by jobs bid times 100 percent.
The number is only useful if you split it. Negotiated work, where the GC has already chosen you, wins at a much higher rate than a cold competitive bid against three or four other subs. Blending them together produces one figure that describes neither, which is how a contractor watches a healthy looking win rate for a year while the competitive side of the book is being underpriced.
WHERE THE NUMBER GETS MISREAD.
Not tracking it at all
You can't manage what you don't measure. When the overhead rate drifts below actual costs, the drift is invisible until the P&L shows compressed margins. By then dozens of underpriced jobs have been won and worked, and the only remaining choice is how to build them at a loss.
Blending all bid types together
Negotiated work has a naturally higher win rate than cold competitive bids. Blending them produces a misleading overall win rate. Track the competitive bid win rate separately, because that's the number that reflects actual market pricing.
Reacting to win rate instead of investigating it
When win rate drops, many contractors reduce prices. The correct response is to investigate the cause first, whether that's a change in the overhead rate, a move in market pricing, or a change in the GC relationship. Cutting price to chase a falling win rate turns a pricing question into a margin loss.
WHAT IT LOOKS LIKE IN DOLLARS.
On clients whose win rate was above 35 percent at engagement start, the overhead rate has been understated by an average of 5 to 8 points. That's 5 to 8 points of margin given away on every job won at the old rate. Once the corrected rate is applied to new bids, the win rate normalizes within 60 to 90 days.
HOW TO USE THE NUMBER.
Competitive bids are jobs where you're bidding against three or more other subs without a preference relationship. Negotiated means the GC has chosen you. Track the competitive bid win rate on its own, because that's the number that tells you whether pricing is at market.
Bid-hit ratio is jobs won divided by jobs bid in the period, times 100 percent. Calculate it monthly to see the trend. Calculate it by trade type as well if you do multiple types, since each one has different competitive dynamics.
Win rate dropped from 28 percent to 18 percent, so investigate before cutting prices. Win rate rose from 22 percent to 40 percent, so check the overhead rate immediately. Something changed that your overhead rate didn't capture, and finding out what changed costs nothing.
When the win rate is high, run the overhead rate calculation. It almost always finds an understatement. When the win rate is low, verify the overhead rate is correct and audit whether you're bidding on the right GC relationships.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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