Management

Five ways to reduce bid costs

26 June 2017 | By Philip Collard

Do you know how much you spend on tendering for contracts? Philip Collard suggests it’s significant - and what’s more, it can be reduced.

Tendering and bidding is an essential step in the construction cycle, from the multi-nationals to small local firms. It’s an area that is so embedded in the industry, yet it has escaped serious analysis.

Recent research from MarketingWorks, conducted with Professor Will Hughes from the University of Reading, uncovered some startling findings about how winning and losing bidding behaviours impact on overall bid costs and win rates.

Philip Collard is running a webinar on on this topic on 1 June at 2pm. philipcollard@
marketingworks.co.uk

http://marketingworks.co.uk

Taking the average percentage of bid cost (and allowing for the fact that there are typically five bidders per tender), then applying it across the £110bn industry, indicates that between £2.5bn to £3bn is spent on bidding every year.

It is from this £3bn annual spend that small improvements in bidding behaviours and processes will make a significant impact on margins.

Out of our research we’ve identified five ways to improve your work winning capability. These can be executed in good, old-fashioned ways, albeit perhaps not so effectively and efficiently. But when combined with the power of digital technologies, they will deliver significant profit margin increases. 

1. Peak performance requires planning

Before initiating formal bidding processes and preparing a tender for submission, your business unit needs to make some clear, focused tactical plans.

This planning starts by identifying new clients who closely align with your target market and your preferred contracts. Careful planning at this stage means less time wasted pursuing ill-matched clients and tenders.

The advent of digital tools that crunch large volumes of data means that business planning and decisions are based on hard facts and previous business performance, rather than instinct.

2. Invest time in the right relationships

Carefully select a few key clients that closely align with your business values and people. Initiate engagement activities which focus your team’s energy, time and resources on building strong relationships with client stakeholders in these organisations.

New technology can not only help manage and coordinate these interfaces via virtual client teams, but instant real-time performance analysis brings a deeper understanding of clients’ needs and objectives.

3. Be brave – pull the plug

Rather than processing bids you slowly realise you can’t win, early selectivity allows you to drop bids sooner in the cycle, so you can focus your energy on more suitable tenders. This will free up time which you can reinvest in the bids you have more chance of winning. 

New technology gives us real time monitoring and measurement analytics that provide insights that inform decisions about which bids to focus on.

4. Well-defined checks and balances

Do you have strict governance across all the critical stages of your bid? Gateways need to be defined and passed through in order for a bid to proceed. This ensures that you constantly limit exposure to project risks and ensure only the very best tenders are processed.   

Digital tools have embedded reviews and governance reporting to identify blockages and barriers to success.

5. Constant evaluation and analysis

Monitoring, measuring and analysis must be completed throughout the entire bid cycle. Although it is important to collect accurate feedback for winning and losing bids, it is also essential to constantly analyse the bid. These insights and learnings will help to keep your bid on track and make sure you are focusing resources in the right areas.

The ability to collect and analyse this level of data in real time is only possible using the latest technology. The power of digital can capture new levels of data insights and provide analysis of this information, making real-time changes that improve your chances of winning.

Philip Collard is managing director of MarketingWorks Training and Consultancy and CEO of myConsole

Comments

Given the prevailing bidding processes Philip, this is great advice to bidders.

There is also significant potential to reduce this cost if clients would take a different approach to tendering and contracting entirely.

Selecting a collaborative project team, if done well, can significantly reduce the amount of time taken by both bidders and the client in selecting.

Much of the time taken is in proportion to the amount of detailed work involved, and the potential contractual risks if the estimate is significantly out. Collaborative contracting and project alliances should reduce the amount of detail needed, for example in reviewing detailed designs to prepare a fixed-price bid.

Ian Heptinstall, 11 May 2017

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