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Operations Management Best Practice

Winning Commercial Tenders

by Damian Merciar

Executive Summary

  • Winning commercial tenders is a key component of success for professional services firms.

  • In order to win, your firm must invest time and resources in gaining knowledge that provides a competitive edge.

  • Relationships are vital: remember that you are not aiming just to win one contract, but to establish a long and mutually beneficial partnership with your client.

  • Use tendering strategically; when successfully deployed, tendering can be the catalyst for developing new skills and exploring new markets.

  • Understand the power and scope of your pricing principles. These can garner greater profit than simple pricing techniques and exploit market positioning for the bidder.

This chapter refers primarily to professional services firms, though the application lends itself more widely across the commercial, if not the manufacturing, sectors. The chapter will follow the headings of an appreciation of what it is that the client is after, followed by an analysis of the market and then the competition. Vendor selection will be discussed and of key consideration, the role of price in formulating a bid.

Determine the Desired Outcome

Before a vendor or bidding contractor can consider whether his or her deliverable output is aligned with the client’s desired outcome, the client must fully understand what it is they want to achieve by the project. A clearly defined project will greatly assist the vendor in removing the element of second-guessing the client.

Fundamentally, the scope of a project comes down to three things:

  • Understanding the client: Appreciate where the client is relative to his or her competitors, and where, with existing resources, he or she would like to be.

  • A plan: To get them from their current position to where they would like to be—even if the aim of the project itself is simply to gain greater knowledge of the competitive marketplace. Such insight could be a development milestone and lay the groundwork for implementation.

  • Implementation of the results: the application of the operational and strategic recommendations that arise from successful completion of a project.

Of course, the fact-finding may result in a fuller understanding of the client’s environment, and so a better proposition than the client originally requested. Firms that are able to outline this additional benefit are more likely to be selected by potential clients.

Analyze the Client

Knowing all about the buyer is crucial—have they been in the market for this type of project before and, if so, who did they use last time? Did they act on the vendor’s recommendations? Is the client easy to bid for? Are they likely to have clear expectations, or is the initial bidder selection going to be a time-wasting process because the client has left areas open to interpretation? Do you, as vendor, know how receptive the client may be to recommendations? Is there scope for the client to use your services further—for example to implement the project or to identify and develop an additional plan?

Of all these questions, this last is the most important. Time spent bidding for contracts is vital to winning new work, but time misspent in bidding for the wrong contracts can waste valuable resources and distract attention from more appropriate and winnable contracts.

Analyze the Competition

Develop a comprehensive database of your competitors’ activities. Find out the number of bids they place and their success rates. Knowing the client and the brief, would you expect to see your company on a list of bidders? Aim for objectivity—seen through the eyes of a competitor, how would you rate your company’s chances of success? Do you have employees who have worked for companies on your list of other bidders, and if so, can they be mined for tactical advantage?

If not, search through public information about the competitors you expect to be bidding against. Break down the search by industry sector and by geography. If time permits, take a calculated view and include an outlier on your shortlist: new companies come to the fore for a reason—can you spot who may be on the ascendant? Include reputation and reliability, cost, and a view on their persuasiveness as a vendor. Do you know how many clients have acted on his or her respective recommendations?

Vendor Selection

Frequently, vendors are disqualified for not following the brief—the college mantra of “answer the question” applies here. Have you answered the question? Consider simple but decisive issues such as proofreading your document for clarity and presentation. Are you going to get it done on time? Be comprehensive—do you cover everything fully in the terms of reference, expression of interest, or invitation to bid?

The qualifications of your team need to be part of how you persuade a potential client to use you. Have you got the right people, and if not, can you get them? If you can get them, does it make commercial sense to do so—how will it affect your margin? Using external contractors presents both risks and rewards: at what stage do you decide which is a risk and which an inspired choice? Is there scope for bringing in additional people or swapping people once the project is underway? Can the project be used as a testing ground for potential collaborators? Are those collaborators part of your potential future revenue stream, bringing additional contacts and likely insights with them?

Present the strengths of your team members to the vendor. Promote their relevant experience in a way that will appeal to the client. If necessary, rewrite team member’s résumés, concentrating on what they can deliver—this is easier said than done, but it can be worth the time spent. Simple visual tricks, such as leading the eye with paragraph alignment, can help to highlight these skills. Remember that you may have just seconds to stand out.

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Further reading

Books:

  • Freed, Richard C., Shervin Freed, and Joe Romano. Writing Winning Business Proposals: Your Guide to Landing the Client, Making the Sale, & Persuading the Boss. 2nd ed. New York: McGraw-Hill, 2003.
  • Lewis, Harold. Bids, Tenders & Proposals: Winning Business Through Best Practice. 2nd ed. London: Kogan Page, 2007.
  • Weiss, Alan. Million Dollar Consulting: The Professional’s Guide to Growing a Practice. 3rd ed. New York: McGraw-Hill, 2003.

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