Construction: Make Sure Your Company is Prequalified!

The arduous task of complying with risk management guidelines has come to the forefront for construction firms, especially subcontractors. In particular, the advent of prequalification software, which more contractors and agencies are using to keep a database of prequalified construction firms. This software makes it easier for contractors and government agencies to launch invitation-only bids for new construction projects, thereby emphasizing the need for small construction firms to make sure they are in those databases.

This news is especially important for smaller construction companies, as the new housing construction market remains hot and the federal government is poised to issue a bevy of new contracts for specialized construction projects due to the passage of the Infrastructure Investment and Jobs Act.

If you’re a small construction company, here are some tips on how to make sure you are included in construction firm and government databases of contractors as a pre-qualified company and stay in the running for new projects.

Up Your Marketing Game

An upcoming surge in federal contracts and the continued strong demand for new housing will benefit the construction industry for the foreseeable future. Basic marketing techniques still apply: you need an optimized website; great content, a strong social media presence in which you target the exact audience you wish to do business with and monitor your web traffic and responses, among other things.

You also most likely need to do more outreach to specific contractors, especially in your vicinity, and government agencies seeking to bid out contracts to make sure your company is on their radar. Setting up email pitches and sequences for potential clients, for example, could go a long way in making sure people know about your company. Do some digging to find out who the decision-makers are at various government agencies that may outsource construction projects (it could be your local municipality, a state government branch or a federal agency) and contact them to make sure you are on their radar screens.

IAmBuilders.com has a great web page on how to market your construction firm, and the video below from small business coach and influencer Mike Claudio also gives great tips. You should follow as many of those steps as you can to make sure your company is visible to the public.

Make Sure You’re Prequalified

The task of prequalifying is complicated, especially now that it’s time for what construction industry experts call the “Great Expiry” – the period between April and June when most pre-qualifications expire and must be done again. The steps that need to be taken to prequalify are involved, but necessary. Clients and contractors want to cut down on the risk of project delays, shoddy work and going over budget.

As the owner of a construction company, you must show potential customers and contractors that:

Your company is licensed for the particular job. Getting licensed for a particular project isn’t difficult in most states. Double-check with the customer or the contractor whether the project requires licensure.
Make sure you have the proper experience. Obviously, different construction projects may require different skills. Constructing a new modern office complex or home for a private customer will require different expertise than, say, building or repairing a road or a bridge for a state or local government. Make sure you have experience to bid on a particular project, and if your company does not, make sure you hire workers who do have that experience. Having experience will give some reassurance to the customer or contractor that there won’t be any unforeseen delays or shoddy workmanship.
Make sure you are following proper safety protocols. This sounds simple but can mean the difference between winning and losing a bid. Make sure you are compliant with the federal Office of Safety and Health Administration’s (OSHA) safety guidelines for construction projects. This means taking steps to prevent fires and explosions, accidental falls and other injuries.
Demonstrate that your company is financially stable. Has your company ever filed for bankruptcy protection? Do you have the assets to pay your workers adequate compensation to ensure that they won’t walk off the job due to low pay? Ensuring this will indicate to your customers that your company has the resources and inventory to complete the job without going over budget.
Demonstrate strong payment history. For any construction project to go smoothly and without delays and extra costs, it’s important to know that subcontractors and suppliers will get paid on time and in full. Legal claims for unpaid construction work, called a mechanics lien, can significantly delay a project. Also, don’t forget that the Little Miller Act requires that prime contractors post a payment bond backed by a surety company that guarantees the finances necessary to complete a construction project. Make sure that this bond is lined up when you apply for a project bid, be it with a private customer or government contractor.
Get your financing lined up. Using financing to ensure that your construction company can complete a project is not necessary for prequalification, but it can ensure that your company is ready to take on a project. Equipment financing is a form of lending that can ensure you have the most modern construction equipment to complete a task. You can also use purchase order financing to make sure that your suppliers get paid on time without restricting your cash flow, and a line of credit can make sure your workers get paid on time. You may also wish to use invoice factoring in case your contractor or customer is slow to pay those invoices.
Respond to Customer Feedback! As we are now living in the “Feedback Economy,” most consumers (including your future clients) will check Google Reviews, Angie’s List, Yelp and other apps in which customers provide feedback on their experiences with businesses. If your construction business has been reviewed, make sure you respond to those reviews. Negative reviews are especially important to respond to – when you respond to them, thank the customer for their feedback and state clearly that you’re making the necessary changes to improve your business based on their feedback.

Get to Know Prequalification Software

Being qualified for a construction job and letting the world know that you’re qualified are two different things. With the increased popularity of prequalification software, you need to get to know what these programs are looking for to be included in bids. Some of the most popular prequalification software packages out there being used by construction firms include:

These software packages emphasize slightly different aspects of the prequalification system. For example, FAST Builder focuses a lot on scheduling and pricing, while ConsensusDocs focuses more on contract details and design. Chances are a contractor or client is using one of them to build a database of qualified construction companies for various projects, so it’s important to learn the best ways to respond to each one so that you can put your best foot forward at bidding time.

Don’t Miss Out!

The construction industry is set to be in even higher demand over the next few years as more government contracts will be coming out for bid. Make sure your company is visible, qualified and ready to go when projects are put out for bid.