When to bid for a new contract
When you come across the chance to bid for a new contract there are more than 30 factors to think about - especially if your recent success rate is worse than one win out of every four bids submitted.
First there are the factors that reflect whether the contract is desirable or not. The main one is profit potential. Then there’s likelihood of major contracts to follow. There’s the expected size of the final order. And the chance of you being awarded favoured supplier status. Then there’s the credit rating of the prospect, and so on.
Rate each factor for value
Each of these factors may carry a different value and should be rated accordingly. You could give up to 20 points for profit potential, down to five points maximum for something like status of prospect. High profile organisations look good in your client list.
Add up the points and you get a score for Desirability. The higher the score, the more desirable this contract is. With a score of less than (say) 60, you really shouldn’t bother.
Now look at the many factors that reflect your Likelihood of Winning. The main one is weakness of competition. In other words how strong are the outcomes you can offer that your competitors cannot match? This is an acid test of whether you have skills, technology, flexibility or economies that stand you well ahead. In the bid document, you will have to make these benefits crystal clear and compelling.
The next factor to do with winning is the professionalism of the chief decisionmaker. If you have doubts or think that the contract might go to the guy who plays golf with the chief decisionmaker, now is the time to face up to it. Then there’s the question of certainty whether the contract will be placed with anyone. This is a real risk. Local bodies, for example, may can a scheme because they hadn’t thought it through. Then they come back with a revision some time later with no apology for all the bidders’ time they’ve wasted.
Somewhere near the bottom of the list is whether you’ve visited the site and found it favourable. And whether you’ve met the full decisionmaking team and found them rational. As with the first group of factors, you should rate value out of a maximum possible score for each.
Some factors will appear on both lists and need rating twice. For example clarity and competence of contract specs, and opportunity to discuss contract specs, are both important. They strongly affect both the desirability of the contract and your likelihood of winning.
Check facts and input data
Scores from rating each factor should be challenged. How good are your data? How real are your facts? My advice is to be very thorough with the evaluation process and have it working smoothly. Some sound research is needed if your conclusion is to be valid. Too much guesswork and you’ll make mistakes.
The evaluation process works best as a team effort. There are technical issues, financial issues, corporate issues, marketing issues and personnel issues. To deal with these in a small company, maybe you’ll need to wear several hats. A good plan is to use a separate rating sheet for each person on your evaluation team. Only factors relevant to a person should be on his or her evaluation sheet.
The factor straightforwardness of the engineering requirement is clearly for the technical people to decide on. But the factor no adverse conditions of contract could affect people from technical right through to personnel. If the buyer limits you to just filling in a questionnaire, everyone should probably rate him very poorly.
So now you can add up all the final scores to arrive at a grand total for this bid opportunity. By keeping your score sheets and comparing with results you will learn where the cut-off score is, below which you opt out.
Investigate wins and losses
Knowing that your evaluation process is sound depends in part on what you find out when you organise a follow-up on won and lost contracts. If you won you should confirm that your thinking was correct. Maybe you won for reasons you never dreamt of. If you lost there is every reason to find out where you went wrong. If it turns out you were sunk from the start, adjust your evaluation process so as not to sink again for the same reason.
Before you bid for a new contract, evaluate your bid opportunities quickly on a smart rational basis and you will have more time to spend on winning the contracts that really matter.
Chapter 10 reprinted from Tom's book, "Winning More Profitable Tenders" - published 2007.
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