Deciding to bid for a contract is a significant strategic decision for any business; it requires the commitment of a considerable amount of time, effort and resources. The cost of making the wrong bid / no-bid decision can be huge, in particular for Small Medium Enterprises where productivity is critical. To prevent making the wrong decision, we recommend considering the following before allocating resources:
Does the tender fit our strategic direction and the overall business plan?
By this, we mean would winning this specific contract help to better position your business against competitors in the long term? If, for instance, you are aiming to grow your business by diversifying across multiple areas then consider if this contract would facilitate that ambition. If you are considering diversifying into a new service/sector, make sure that you can answer the technical or quality elements of the tender. If questions are heavily focussed on previous experience, then this may inform your no-bid decision.
Equally if you are currently delivering multiple works areas but aim to specialise in the more profitable areas of your business activity, consider how delivering this contract would impact your long-term goals.
Tailoring your bid decisions towards the long-term aims helps to create positive, sustainable growth.
Do we have an existing working relationship with the client and, if so, is it positive?
If you have an established positive working relationship with the client, for instance as the incumbent contractor or having previously delivered similar works, that can be invaluable when tendering. Knowledge of the client’s bespoke requirements and preferences, and evidence that you have previously delivered them, is a huge competitive advantage over other bidders.
If, however, you are aware that you are not the preferred contractor for the service, it is worth reconsidering the decision to bid. To clarify, if a relationship is strained due to performance or delivery issues, by implementing specific, measured, achievable and timely targets you can massively improve your current working relationship and chance of future success.
Do we have a competitive advantage?
Competitive advantages look different to each business; in essence it refers to your ability to deliver better value than competitors across the same scope.
Public sector tenders are awarded based on the best value proposal with regard to competitive pricing, efficiency and effectiveness. With that in mind, depending on your business model and the industry in which you operate, a competitive advantage could be:
- Location – Particularly with reactive services, it is a huge asset if you can demonstrate local availability.
- Environmental awareness – With environmental targets becoming a key consideration for local authorities, demonstrating a commitment to reducing your carbon footprint can have a big impact.
- New technology – For example improved reporting or contract management software mitigates the chance of human error impacting your service delivery.
- Highly skilled labour – Employing operatives that are more highly qualified than the minimum industry requirements demonstrates a commitment to quality and competency.
There are many more potential competitive advantages that you may hold, which should always be considered in terms of the value you can offer to the client.
Do we fully understand the client’s requirements and, crucially, can we commit to delivering them in full?
The tender documents will outline the client’s requirements, but it is important that you understand how they would fit within your processes and systems before deciding to bid. For example, if a client mandates a specific timeframe for attendance, then your decision to bid should be heavily influenced by your level of certainty that you can deliver as required. In this blog, we explain how researching and understanding the buyer from their perspective when tendering can strengthen a bid.
If you are unsure, or feel that any requirements are ambiguously worded, then raise a clarification question with the authority as soon as possible and decide when you have better information.
What is the level of business risk involved in bidding?
The inherent risk associated with bidding for a contract can be measured in multiple ways. When evaluating risk, it is important that you consider:
- The importance of the contract to securing the business’s long-term future
- The likelihood of success, including by looking at how the bid is evaluated. For instance, if the price weighting is high, can you compete with national businesses in reducing costs?
- If you can deliver the contract if successful – winning a tender is only the first hurdle. If you cannot deliver services to their requisite standards, or do not have the resource or experience to deliver the contract, the ongoing risk to your reputation and future bidding capabilities should be seriously considered.
- The potential business impact of being unsuccessful, having invested significant time, effort and resources.
Each business will ultimately have its own perspective on acceptable or unacceptable risk levels, which will impact their bidding operations.
Executive Compass will always offer an independent, informed, and experienced appraisal of the tender process. We prioritise ethics and accountability in our service and will advise honestly on the suitability of your business to tender for any given contract.
To see how we can assist you in tender success, fill out our contact form and one of our bid team will be in touch to discuss your requirements. Alternatively, you can call us free on 0800 6125563.
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