About three years ago, Ray Gaines noticed that his company, Gaines Construction, in Easton, Conn., was only winning 50% of the projects it bid on. Then that figure dropped to 25%. Losing out on some sizable projects made him question his policies. After scrutinizing his subcontractors' estimates, Gaines noted that over the years, subs bids were making it increasingly difficult for his company to remain competitive. “It's an ongoing battle to make sure everyone is giving us the best prices,” he says.
In recent years, Gaines had gotten into the habit of asking just one sub per trade for an estimate on a project. To make estimates more competitive, he decided to change his policy. He wrote a letter to all his subs explaining the situation. “I intend to scrutinize my pricing and markups more closely,” the letter read. Gaines let them know that he would be requesting bids from two subcontractors per trade, but since he did not want to lower the quality of work, he would choose companies equal in size, quality, service, and longevity. He would also discuss each sub's estimate with them to make sure he was being fair in his comparison.
“All the subs read the letter and appreciated it. Only one felt I should not have written it because I was putting pressure on them,” says Gaines, who was Big50 in 2006.
The new policy and letter worked. Gaines Construction began winning more bids. And Gaines says the additional work keeps all of his subs busy and competitive.
