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Six tips on tenders

Posted on Nov 2, 2015

For organisations with medium to long-term service contracts, winning and retaining these contracts is critical to their future prospects and growth. When responding to tenders, many organisations fall down in the same areas. The six points below address some of these common pitfalls and attempt to go some way in assisting organisations in preparing quality tender responses.

Should you be bidding?

Before beginning work on the proposal you must first consider whether it is worth the time and resources responding to the tender. Producing a quality tender proposal takes significant effort, can be expensive and should be considered against the contract value and likelihood of success. In deciding whether to respond to a tender you should consider the following:

  • The level of effort required
  • Your capability to complete the scope of work
  • Your demonstrable experience on similar projects
  • Your ability to compete on price
  • Your ability to win over other potential respondents
  • Your strategy and value proposition

Start earlier (start straight away)

The preparation for many tenders starts well after it ideally should have. With the day-to-day tasks of the organisation continuing, allocating sufficient and appropriate resources to tenders can be difficult. On top of this you may be bidding against larger competitors who have dedicated bid teams at their disposal. Starting early allows any issues to be recognised as early as possible and should include the following activities:

  • Documentation of all key dates and deadlines
  • Checking of mandatory criteria
  • Preparing a list of tasks required
  • Assembling the bid team
  • Identification of any gaps in delivering the scope of service or the bid team
  • Assigning responsibilities and tasks
  • Asking questions of the customer

Build the right bid team

The bid team should include a mix of people with the expertise to prepare a solution for the scope of work as well as prepare a well written, appropriately priced bid response. Most bid teams will require a project manager, technical and operational expertise, financial and commercial experts, tender writers and legal expertise. A project manager will keep the different elements of the bid on track and work with the team to resolve issues. Technical and operational team members understand the delivery of the scope of work required and will work with the team to develop the solution. Financial and commercial team members will be responsible for calculating the operating, capital and financing costs required to execute the solution and the appropriate margins to arrive at pricing. Tender writers will ensure the tender response is written in a manner that addresses all questions, is compliant with the tender requirements and is persuasive, competitive and professional. The contract should also be reviewed by a lawyer to understand any risks and exposure from a legal perspective. If these roles and expertise don’t exist within your bid team you need to engage subcontractors or consultants.

Read the RFP, understand the RFP

The RFP needs to be read thoroughly in order to understand the requirements and the risks. In reading tender documentation the organisation must understand:

  • What is required to be completed and lodged
  • The scope of work required
  • The evaluation criteria
  • The terms of the contract and associated risks
  • The calculation and timing of payments
  • Any KPIs Bidders should make every effort to get face to face with the customer.

RFPs do not always communicate the real interests and issues of the customer well, which can often come out in a face to face discussion.

Understand the evaluation criteria

You may have the highest quality solution but have you understood the evaluation criteria?

If the tender is focused on lowest price and your bid pitches highest quality, then you may have missed the point. The first step in understanding the bid criteria is to check that any mandatory criteria can be met. Beyond any mandatory criteria tenders will usually have specific evaluation criteria on which the bids will be assessed. These commonly include price, experience, team members and approach. The evaluation criteria must be taken into account in formulating the bid response.

Don’t neglect service variation rates

Many service-based contracts request that total pricing be provided for a specified level of service as well as a per unit service variation rate should the specified service level change.

Example: the tender for a catering contract specifies that the bidder provide a lump sum annual payment for the provision of three meals a day to 200 people. Separately the tender also requires that a per person per day rate be provided should the requirement for daily meals increase. Often the bid team will be focused on pricing the expected level of service and in the rush to meet deadlines, service variation rates are neglected and can be poorly costed. This critical error can later see a material change in service crippling an otherwise profitable contract. Alternatively, an overpriced service variation rate may see you lose out to a competitor.

David Fennell is senior manager at Pitcher Partners Consulting