Proactive Labor Cost Strategy for Integrators: How to Solve Labor Shortages & Protect Margins 

You’ve won the project. The contracts are signed, and the deadlines are set. But as an integrator or machine builder, you know that winning a fixed-bid project is only half the battle—the real challenge lies in delivering it on time and on-budget with tight labor constraints.  

I’d like to share a solution you may not have considered before that can ensure you reach your goals. 

The Current (Reactive) Fixed-Bid Project Landscape 

Many integrators operate under fixed-bid project models, where internal labor costs form the basis of quotes. This approach works well under ideal circumstances, but it becomes less viable when internal capacity or expertise is limited, and external engineering support is needed. This is because external labor rates typically exceed internal cost assumptions, causing profit margins to plummet.   

The results of this? You make less money (or lose money) on projects, or your customers get less value from the work — or both.  

Furthermore, you create a purely transactional relationship where you can only rely on your contracted engineer as a stopgap rather than a strategic resource. You lose out on the technical capabilities, leadership, and soft skills they can contribute to a project.  

Shifting to a Proactive Pricing Model 

I’ve seen many of our clients at DISHER break out of this cycle by including modified labor rates (a blend of internal and external labor rates) into project quotes upfront, rather than after the work is won. By doing so, you too can create a win-win situation for your company and your clients by:  

1. Maintaining Profit Margins 

Including modified labor rates in project quotes ensures that contracted resources don’t tank project profitability, whether they contribute to a portion or the entirety of the project.  

2. Expanding Project Capacity 

If internal labor constraints are limiting your team’s ability to take on more projects, including modified labor rates in quotes upfront, you can remove that blocker. When rates are included, you make room for your team to confidently (and profitably) take on more work, scale your operations, and even expand your market presence.  

3. Enhancing Customer Relationships 

Beyond project profit and company growth, this change can help you position yourself as a trusted integration partner for customers. Demonstrating resource planning foresight and providing cost transparency can build trust, foster long-term loyalty, and highlight your ability to manage complex projects effectively.  

How to Get Started  

This change may not happen overnight. It requires a mindset shift in more than one area of your organization to make it successful. But if you and your team stick with it, the benefits can really pay off.  

A great way to get started is by capturing standardized rate tables for your contracted engineering providers. Once you have these rates, share them with your sales, estimating, and finance teams so the external labor can seamlessly become a part of the quoting process, or even pre-quoting or sales forecasting discussions. 

Deliver Projects on Time & on Budget with Help from DISHER Experts 

With a more proactive resource planning strategy, you can reduce stress on your internal teams, deliver projects more effectively, and position your company for sustained success in a competitive market.  

At DISHER, we want our customers to succeed in the marketplace just as much as we wish this for ourselves. Our award-winning team of 150+ experts strive to be the best choice in contract engineering for quality, delivery, and cost. Get in touch to learn what a project might look like with us. And check out some of our past projects to get a better idea of what we can achieve together.