Electrical Contractors are in a battle of attrition!

In Electrical Contracting Articles, ramblings by David Parden

There is much despair in the electrical community today because of the current economic situation. I hear stories from electrical contractors everyday about their competitors bidding jobs below the actual cost. They want to know what they can do to compete against it. Unfortunately there is no magic bullet.

Today more so than ever electrical estimators are being asked to bid more and more projects. They are being asked to bid jobs outside of their comfort zones. Estimating has always been a numbers game. You bid enough jobs and the law of averages will catch up with you and you will land a job. The averages have gotten much worse in recent years. Owners and managers should be careful about heaping too much work on their estimators. You do not want to tempt your estimator to throw the fastball over the plate for some general contractor to knock a home-run out of the park at the expense of the electrical contractor.

Estimators should work to make their estimates as tight as possible. They need to understand the scope like never before. They need to take advantage of every allowance the specifications may offer. They can write great scope letters and develop relationships with the general contractors they are bidding the project to. They can offer value engineering voluntary deductives at the time of the bid but beyond that there is not much an estimator can do to combat what is going on. Estimators need to stick to their tried and true methodologies! 

The company itself needs to analyze ways to cut it’s overhead. The company needs to look at it’s labor pool. Perhaps it is time for the labor pool to make sacrifices. Pay cuts are happening everywhere. What is worse, take a pay cut or go on unemployment? Look at different types of work to bid on. Consider working out of town. Rural areas have large jobs come up from time to time and there is no local electrical contractor to bid on it. Government jobs have set wages so ideally everyone is bidding labor on an equal footing provided your company is has apprentices in a recognized apprenticeship program.

Electrical contractors are in a battle of attrition! This is a painful time for our industry. You simply cannot compete against the electrical contractor buying a job to keep billing going. If you hold to your principles and make smart business decisions there is a very good chance you will still be standing when the economy recovers. Much of your competition today will not be around when this happens. A former boss once told me that “they are broke and don’t even know it”. Perhaps the electrical industry will be a better place without these contractors.