Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

We will take a look at factors that go into your bid and ways to ensure you are hitting your target profit margin.

There are many factors that go into creating a profitable bid on a construction project. They include:

• The scope of the work

• The location of the project

• Material costs

• Labor costs

For most construction companies, their estimators are well versed in all of the areas mentioned earlier and yet despite their best efforts, an unforeseen circumstance may occur and drive up the cost of a project, resulting in reduced profitability or a loss on the project.

One area that is often overlooked, but controllable, is the impact insurance has on the profitability of the project. The question to ask is how prepared are you and your staff to address the following questions:

Do you have the required insurance, coverages, limits, and terms in place to meet the contractual requirements of the project? If not, what will be the cost to add those requirements?

Will the project overlap your insurance renewal? If so, what changes in your Experience Modification Rate (EMR) can you anticipate and what will be the dollar impact?

What changes in your General Liability and Excess Insurance rates can you expect? 

Working with your insurance advisor on the above is a necessary step is helping to create a better opportunity for profitable jobs. At Rancho Mesa, we follow strict Best Practices and have prescheduled meetings with our insureds throughout the policy term, but additionally conduct a focused pre-renewal meeting 120 days prior to policy expiration.

Those meetings allow us to:

• Keep our clients aware of changes in the insurance marketplace that may impact their business.

• Project their EMR for the coming year and discuss how this might influence your bidding process.

• Review industry workers’ compensation trends in both Pure Premium Rates and Expected Loss Rates and their impact on workers compensation costs.

So, work with your insurance advisor and uncover those overlooked insurance costs to minimize risk and maximize profitability. To understand these factors in more detail or to look at our new KPI Dashboard that puts this information at your fingertips you can reach me at 619-486-6900 or ccraig@ranchomesa.com.