4 Factors for Estimating in a Competitive Environment

Follow this advice to improve your project estimates and add money to your bottom line.>

CI Staff

Following is an edited excerpt from NSCA’s “BizSkills for Project Managers.”

When managing an integration project, tremendous pressures affect price, including competition, customer expectations, budgets and you.

Competition — Under the pressure of deregulation, utilities are diversifying into the systems integration business. Manufacturers attempting to develop a competitive advantage are establishing direct offices. Data systems integrators are beginning to provide voice and video solutions. The list goes on.

Regardless of whether the competition is new or old, it is imperative that you study your competition. Get to know their product offering, market penetration, strategic positioning, and pricing history. Consider preparing a data sheet on each competitor and the niche business they pursue. Consider how your company can leverage its strengths to best compete with that company on a project.

Customer Expectations — It is important to understand a customer’s expectations for quality and service. Some customers are very price-sensitive while others are more conscious of quality. Some customers are less concerned with price as long as the service they receive is impeccable. Still other customers are being influenced by an excellent relationship with your competition. Each of these factors and more will determine how you price a project.

Project Budget — Customers are famous for getting contractors excited about an opportunity, only to explain down the road that their enthusiasm is not supported by their pocket book. If you are aware of the budget, it makes you more valuable to the customer.

You — Ultimately, you must weigh each of the unique factors and price the project. You must determine whether you have differentiated your solutions to support the price. Your company should have a pricing strategy. You should understand what your bottom-line markup is. That means that your company understands its cost of doing business and must price its services accordingly.