{"id":2522,"date":"2021-01-10T20:52:59","date_gmt":"2021-01-10T20:52:59","guid":{"rendered":"https:\/\/www.exceeding.co.uk\/bidding\/?p=2522"},"modified":"2024-02-09T15:51:22","modified_gmt":"2024-02-09T15:51:22","slug":"to-bid-or-not-to-bid","status":"publish","type":"post","link":"https:\/\/www.exceeding.co.uk\/bidding\/blog\/to-bid-or-not-to-bid\/","title":{"rendered":"To bid, or not to bid"},"content":{"rendered":"

There are a number of key things to consider when assessing whether or not to bid for a new contract. This is your \u2018bid or no bid\u2019 decision.<\/strong><\/p>\n

When presented with what seems like a great opportunity, it can be hard to think about turning it down but sometimes this is exactly what you should do.<\/p>\n

You need to have clear criteria for assessing opportunities in order to decide on whether you pass on an opportunity, or whether you have a good chance of winning.<\/p>\n

These criteria need to be established so that you only bid for those tenders that are the right fit strategically, provide you with the returns you desire and you have the capability of beating the competition.<\/p>\n

Profitability cannot be the only factor by which you assess a tender – your criteria for your \u2018bid\/no bid\u2019 decision also needs to be strategic.<\/p>\n

For example, will you sacrifice profit to secure business from an entrenched incumbent, or to get your foot in the door with the view of securing more lucrative contracts down the line?<\/p>\n

Some of the questions you might ask include:<\/p>\n

    \n
  1. Will you be able to deliver a profit?<\/strong> If you will be able to deliver a profit, then great, if you can\u2019t, are simply bidding for the sake of bidding?<\/li>\n
  2. Is it worth it?<\/strong> If the pricing schedule is forcing you to bid low, is the return that you will receive worth it? Could there be better ways use your resources? Could these resources be better used elsewhere?<\/li>\n
  3. How much will it cost to fulfil the contract?<\/strong> You need to know how much it will cost to create, prepare, evaluate and submit the bid.<\/li>\n
  4. How will it affect the rest of your workload?<\/strong> If completing this contract will take up a vast majority of your workforce\u2019s time.<\/li>\n<\/ol>\n

    So, investment vs profitability and resource are common themes.<\/p>\n

    How can you determine the resources required to respond to a bid?<\/strong><\/h2>\n

    As a starting point, take a look at the length of responses<\/a> requested. Often character, word, or page limits will be stipulated and compliance to these require strict adherence. However, we advise our clients that these limits can also give you an indication of level and depth of response expected.<\/p>\n

    A four-page limit would suggest the buyer is seeking an in-depth response with enough detail to instil confidence in the buyer that you are the supplier of choice.\u00a0 Whereas a 2000-character limit suggests a summary response which will require a different approach.<\/p>\n

    These factors inform the estimates of effort involved and subsequently affect the investment made in responding to an opportunity.<\/p>\n

    How much should you invest in responding to a bid?<\/strong><\/h3>\n

    Getting the right team together is key to winning the bid. This will offset the investment, rather than losing a bid and adding a cost to your overhead. But how do you justify the cost of these resources?<\/p>\n

    There is no magic equation to determine how much you should invest, but typically\u2026<\/p>\n

    We advise our clients that a 1%-3% of the contract value is the average investment in a winning proposal.<\/p>\n

    This comes with the caveat that it will depend on size, complexity, sector and value of the contract being pursed. Even so most organisations would be looking at a win rate of around 35%-50%.<\/p>\n

    Where investment increases to around 6% the win rate shoots up to around 60% on the basis that the team that is responding have all the right skillsets and have been pulled together specifically to respond to the opportunity. This ensures senior management involvement, the right balance of subject matter experts and bid writers working collaboratively to produce a winning proposal.<\/p>\n

    Is it ever ok to offer a lower cost option?<\/strong><\/h4>\n

    There are some instances when bidding low could be part of your organisational strategy. Companies who want to get a foothold in a region dominated by a competitor, for example, might decide to put in an intentionally low price so they can establish a presence. Once the contract is underway they will leverage this to win more profitable work \u2013 hopefully.<\/p>\n

    What are the keys elements to a successful \u2018bid\/no bid\u2019 process?<\/strong><\/h5>\n

    Having advised hundreds of organisations on the best way to determine whether to bid or not, we have developed the following questions to help you determine whether or not to respond to a bid request:<\/p>\n