Project Acquisition Cost: the number every contractor pays and nobody tracks

Every trade contractor knows their bid-hit ratio. Win 1 out of 5, 1 out of 8 — whatever it is, you can recite it.

Actually, most can't. In a survey of more than 5,000 general contractors and subcontractors by industry coach George Hedley, fewer than 6% knew their bid-hit ratio and tracked it.

And bid-hit ratio is the easy number. It only tells you how often you win. It says nothing about what winning costs you.

The construction industry has never had a name for that number. So we're giving it one.

Project Acquisition Cost (PAC): the total cost of pursuing work, divided by the number of projects you actually win.

Software companies have obsessed over their version of this metric — customer acquisition cost — for twenty years, because a business that doesn't know what a customer costs to acquire can't price, can't scale, and can't tell a good quarter from a lucky one. Contractors face the same math with thinner margins. Yet almost nobody in construction calculates it.

Let's fix that.

The formula

PAC = (Total cost of all pursuits in a period) ÷ (Number of projects won in that period)

The key word is all. Not just the bids you won — every bid you chased. The losing bids don't disappear from your books because the project went to someone else. Their cost gets carried by the jobs you win, whether you account for it or not.

What goes into the numerator:

Estimating labor. Takeoffs, counts, quantity surveys, vendor pricing, scope review, and the redo when addendum #3 drops two days before bid day. Material takeoffs alone typically consume 50–80% of the bidding process — making estimating labor the single largest component of PAC for most trade contractors, usually by a wide margin.

Estimator overhead. Software licenses, plan room subscriptions, and the portion of office costs tied to the estimating function.

Pursuit costs. Pre-bid walks, GC meetings, RFI time during bidding, bid bond premiums, proposal preparation.

Business development. Association memberships, relationship time, the lunches. Real costs, but for most subs, small next to the estimating line.

This has actually been measured — once

In 2014, Professor Will Hughes at the University of Reading studied 179 construction firms — the only serious academic look at what pursuing work really costs. The findings, reported by Construction News in 2015:

• Contractors spent an average of 22% of operational turnover on tendering (based on firms winning roughly one in five pursuits).
• Across winning and losing bids, tendering costs averaged 0.57% of project value — a figure uncomfortably close to typical contractor profit margins.

A UK contractor, Evolution5, recently ran the amortization math on one of its own bids: at a one-in-four win rate, the pursuit cost recovered per successful project worked out to roughly 3.5% of project value. That's Project Acquisition Cost — calculated a decade before anyone gave it a name. The research exists. The industry just never turned it into a metric contractors track.

A worked example

Take a mechanical sub doing commercial work in a competitive market like the DMV:

• Average estimating time per bid: 30 hours
• Loaded cost of estimating labor: $65/hour (mechanical estimators in Virginia average about $87,000/year — roughly $96,000 in DC — which lands at $55–65/hour once you add a standard 30–40% labor burden)
• Direct cost per bid: ~$1,950
• Win rate: 1 in 8 (industry benchmarks put subcontractors at 5-to-1 on private bid work and 7-to-1 to 11-to-1 on public work, per ENR — so 1-in-8 is a normal competitive market, not a struggling shop)

Every won project carries the cost of eight pursuits:

8 bids × $1,950 = $15,600 per project won.

Add pursuit overhead — bonds, site walks, software, plan rooms — and a realistic PAC lands between $17,000 and $20,000 per project. Right in line with what the Reading data predicts: on a $500,000 contract, 3.5% of project value is $17,500.

Now put that against the job. At a 10% expected margin on that $500,000 contract, you're planning to make $50,000. More than a third of it was spent before your crew touched the site. On smaller jobs, PAC can quietly consume the entire margin — meaning you won the work just to break even on the act of winning it.

This is why two shops with identical field productivity and identical margins-on-paper can end the year in completely different financial positions. One is paying a much higher toll to get work in the door, and neither is measuring it.

Why estimation dominates PAC

Every component of PAC matters, but they are not equal. Estimating labor is the dominant driver, for three reasons:

It scales with every pursuit. Business development is mostly fixed. Estimating cost multiplies with each bid you chase. Chase more work, and PAC grows linearly unless win rate improves with it.

It's rework-prone by design. Drawings change. Addenda land late. Scopes shift between bid packages. A single project can require the same takeoff to be touched three times before bid day. None of that rework shows up as a line item anywhere.

It's still mostly manual. Field labor has been squeezed for productivity for decades — tracked to the hour, measured against budgets, optimized relentlessly. Estimating has largely escaped that scrutiny. In many shops, the counting and measuring at the heart of every bid is done the way it was done thirty years ago, just on a screen instead of paper.

That last point is the uncomfortable one. Contractors track field hours religiously and estimating hours almost never. The result: the most expensive part of winning work is the least measured part of the business.

What PAC changes once you know it

Measuring PAC isn't an accounting exercise. It changes decisions.

Bid/no-bid gets a real threshold. If your PAC is $18,000, a project whose realistic margin is $22,000 is not a "small win" — it's a coin flip that costs you money on average. PAC turns gut-feel bid decisions into arithmetic.

Win rate becomes a cost lever, not a vanity stat. Moving from 1-in-8 to 1-in-6 on the same bid volume cuts PAC by 25%. Passing on bad-fit bids isn't leaving money on the table — it's directly lowering your cost of growth.

Estimating efficiency becomes a margin strategy. Cut the hours per bid from 30 to 15 and PAC drops by nearly half — without changing your win rate, your pricing, or your field operations at all. No other single function offers that kind of leverage on margin.

Growth planning gets honest. Want to add $5M in revenue? Divide by your average contract size, multiply by your PAC, and you now know what that growth actually costs in pursuit spend — and whether your current estimating capacity can even produce that many bids. The Reading study's 22%-of-turnover figure is what unmanaged growth-by-bidding looks like.

How to calculate yours this week

You don't need new software to get a first number. You need four figures:

1. Bids submitted in the last 12 months (your bid log has this)
2. Average estimating hours per bid — if you don't track it, have your estimators log one typical week and extrapolate; an honest approximation beats a missing number
3. Loaded hourly cost of your estimating staff (salary + 30–40% burden ÷ working hours)
4. Projects won in the same period

Then: (Bids × Hours × Rate) ÷ Wins. Add 15–20% for pursuit overhead if you want the fuller picture. As a sanity check, compare your result against the research benchmark: roughly 3–3.5% of average project value.

Most contractors who run this calculation for the first time get a number two to three times higher than they would have guessed. That reaction — "it costs us WHAT to win a job?" — is exactly why the metric needs a name. You can't manage what you've never measured, and you won't measure what you've never named.

The bottom line

Project Acquisition Cost is the price of admission to every job you build. It's real, it's been documented by the only academic study ever conducted on it, and for most trade contractors it's dominated by one function: estimating.

The contractors who win the next decade won't just be the ones with the best crews or the sharpest pricing. They'll be the ones who know their PAC — and drive it down while their competitors keep paying it blind.

Know your Project Acquisition Cost. Your margin already does.

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Sources: George Hedley contractor surveys via Bridgit and ENR; University of Reading tendering-cost study (Prof. Will Hughes, 2014) via Construction News and Evolution5; ENR bid-hit ratio benchmarks (2010); Salary.com mechanical estimator data for Virginia and DC (2025–26).

Biltix builds AI that does the expensive part of winning work — takeoffs, counts, and bid preparation — so trade contractors can chase more work without their acquisition cost chasing them. Learn more.