How good are you at estimating jobs?

My latest business experiment was to give a bid to dozens of software companies. I was straight forward with them and told them that we gave this bid to many companies and not to take too long doing the bid. I was able to do a quick software development bid accurately in my head in a few minutes. I am not even a software developer, yet I was able to do this task quickly. What I couldn’t understand was how professional software development firms with decades of experience took hours and days to do a quick estimate and came up with double, triple, or quadruple the amount of hours that my local programmer (20 years of experience) and I thought were necessary.

It took me about four minutes to come up with a figure of 40 hours. I realized there might be small issues that I overlooked such as customizing pages for the different browsers, and what if there is a problem, etc. But, this project was very simple, and there was not a lot that could go wrong. I asked my current programmer (who is too busy to do much work, but is very smart). He took a few minutes and also said 40 hours. I was amazed that he got EXACTLY the same figure I did, and within minutes. Smart people think alike — either that or I made a lucky guess!

So, why did many other companies need 280 hours to do the job? Were they using complete beginners or were they cheating us? Or both? That is 7x the necessary amount of hours. Then, we got a lot of bids around the 80-100 range which is more reasonable, but still price gouging or overestimating.

There were several factors in my dismay. Only 20% of software development companies worldwide came up with reasonable sounding bids which is very disappointing. But, better than 0%. I was also disappointed that you have to wait and wait and wait for these companies to answer an email and get back to you. The average company took two days to do this four minute bid. Many never responded back to us at all, while a few even got angry with us. Unbelievable.

Many had more questions and wanted all types of details for a preliminary bid. All of the critical specifications were in the bid request paperwork. We also had programming companies start bidding on the artwork which was never mentioned in the paperwork. They ASSUMED that we might want artwork. Would it hurt to ask before you assume? They even threw in some artwork into their bid which we never asked for. If something is not written in a bid request, do not assume that someone wants it. Just specify that your bid does NOT include design work. Lastly, there were companies who started talking about pre-fabricated programming which we never asked for.

The bid experiment revealed that many BPO companies just cannot follow simple instructions and can not get simple tasks done. Many others expect you to just hire you after they give a criminally high bid. Some have endless requests for unnecessary clarifications. But, most bids were just completely unreasonable.

Software companies need to be efficient at doing bids. You will alienate your clients if you take too long to do simple tasks. It is proof that your company is inefficient if you can’t even bid without having the client pull teeth to get it out of you! Remember, what you do before you get a client on board matters a lot. If you blow it for some stupid reason like being a slow bidder, the client will easily seek greener and faster pastures!

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