The Deadly Duo: Over-Promising and Under-Bidding
In the world of contracting, two of the most common pitfalls are over-promising and under-bidding. These practices can lead to disastrous outcomes, both for the contractor and the client. In this blog post, we'll explore the dangers of these practices and provide actionable steps to avoid them.
The Dangers of Over-Promising
Over-promising occurs when contractors make commitments they can't realistically keep. This often happens in the sales phase when trying to close a deal. Contractors, driven by the desire to secure a job, may promise outcomes that are overly optimistic or even impossible.
Example:
Imagine a contractor who has only built two decks in five years but tells a client they can build a complex deck by a tight deadline. The contractor is not the most qualified for the job, and unforeseen issues can easily derail the project.
Consequences:
Client Dissatisfaction: When promises aren't met, clients are left disappointed and frustrated.
Reputation Damage: Failing to deliver on promises can harm a contractor's reputation, leading to fewer future opportunities.
Financial Strain: Over-promising often leads to rushed work, which can result in costly mistakes and rework.
The Pitfalls of Under-Bidding
Under-bidding is when contractors price a job too low, often to win the contract. This can be just as damaging as over-promising.
Example:
A contractor bids on a pool installation project, underestimating the costs and time required. Midway through, they discover a sinkhole that requires additional resources and time, which were not accounted for in the initial bid.
Consequences:
Financial Loss: Under-bidding can lead to significant financial losses, as the contractor may have to cover unexpected costs out of pocket.
Project Delays: Insufficient funds can cause delays, as the contractor may not have the resources to address unforeseen issues promptly.
Quality Compromise: To stay within budget, contractors might cut corners, leading to subpar work and dissatisfied clients.
The Ideal Approach: Under-Promise and Over-Bid
The best strategy for contractors is to under-promise and over-bid. This approach sets realistic expectations and ensures that there are sufficient resources to handle any surprises.
Benefits:
Client Satisfaction: By setting realistic expectations and then exceeding them, clients are more likely to be pleased with the outcome.
Financial Stability: Properly bidding ensures that all potential costs are covered, reducing financial strain.
Quality Work: With adequate resources, contractors can focus on delivering high-quality work without cutting corners.
Action Steps
1. Set Realistic Expectations
When discussing a project with a client, be honest about what can be achieved within the given timeframe and budget. Avoid making promises that you can't keep.
2. Bid Appropriately
Ensure that your bids account for all potential costs, including unforeseen issues. It's better to bid higher and explain the reasons to the client than to under-bid and face financial difficulties later.
3. Communicate Clearly
Maintain open and honest communication with your clients throughout the project. If issues arise, inform them promptly and discuss potential solutions. This transparency builds trust and helps manage expectations.
Over-promising and under-bidding are common pitfalls in the contracting industry, but they can be avoided with the right approach. By setting realistic expectations, bidding appropriately, and maintaining clear communication, contractors can ensure successful projects and satisfied clients. Remember, the goal is to under-promise and over-deliver, ensuring a positive experience for everyone involved.
Resources
Grab Brad's tell-all book: The Contractor Profit Blueprint
