Making good bid decisions is the quickest way to raise your company’s win rate. It is far quicker than hiring better people, improving poor proposal processes or investing in capture and proposal technology. Making better bid decisions brings about an immediate improvement in win rate and, as a bonus, lowers your annual cost of proposal development.
Contrary to popular belief, the key to making good bid decisions is not picking the deals in your pipeline that you are going to win, but instead, it is discarding the deals that you are going to lose. It should be obvious that to raise your company win rate, you must stop bidding deals that you have little or no chance of winning.
To make the bid/no-bid decision, there are several factors to consider.
If you cannot make a profit on a project, you have no business bidding on it in the first place. Make sure you have an accurate and comprehensive account of your annual labour and equipment costs so you can correctly estimate your job costs. When calculating labour costs, be sure to include taxes, insurance, vacation pay, tools and equipment and any additional benefits you provide to your employees.
If you have determined that you can make some money on the project, you need to determine if your company is capable of doing the work. Review your current backlog of upcoming projects to make sure you can provide the manpower, equipment, staff and other resources to commit to the project when construction is expected to commence and complete it within the required timeline.
Consider whether or not the project you are looking to bid on fits in with the long-term strategy and goals of your company. Are you looking to maintain your current level or are you trying to grow your business? Are you looking to expand into new geographic locations or new markets? Maybe you want to start tackling more private work or you want to start taking on larger projects like hotels or hospitals.
Before deciding to bid a project you should carefully identify all the potential risks that could arise on the project. Review the bidding documents, plans, and specifications for the project and rely on historical data from similar projects you have completed to identify risks. Common risks include incomplete construction documents, unknown site conditions, accelerated timelines, safety concerns, etc.
Considering all these factors, seven questions you should ask yourself before making a bid are
Do we understand the customer’s mission and the work to be performed?
Do we have a solution that will help the customer achieve its mission and contract objectives?
Do we have a relationship with this customer through meetings or prior contract performance?
Do we know who we are competing against and can we beat them?
Do we have a teaming strategy and can we get the right subcontractors?
Do we know what price we need to bid to win and can we achieve it profitably?
Do we have a compelling win strategy?
For each bid, find the answers to the above questions and score them on a scale of 1 to 10.
Separate your bid scorecards into categories based on the type of procurement. For example, full and open bids, task order bids, set-aside bids, etc. Next, divide your bid scorecards in each category into groups based on bid outcome. You should have three groups –winners, losers and bids where the outcome has not yet been decided.
Making bid decisions should become a quantitative exercise designed to maximize the likelihood of achieving your overall revenue objective. The value of deals in your bid portfolio and their win probability are keys to computing the likelihood of achieving this objective.