Time is precious. Working efficiently and effectively is a must in today’s fast paced competitive environment – but how do you make time to get better at doing things when there are always new deadlines and business initiatives to meet?!
Running tenders is complex. From breaking down the questions, to defining the scoring criteria and managing the selection process and contract negotiations. For public sector organisations you have the added complexity of governance and strict internal processes and procedures to navigate.
One of the most common challenges we hear from our clients about their procurement processes, is the time it takes to run a tender process. In fact, 9/10 of them reported that they would outsource the practice of running tenders, simply to avoid the time it takes to manage this process!
9/10 clients report that they would outsource the practice of running tenders, simply to avoid the time it takes to manage this process!
The issue? Well, they know they need to run a well-planned and thorough process, to ensure that they select the best possible service provider for the long term, but they simply don’t have the time, resource or experience to run the process the way they want to. In some cases, they lack a dedicated procurement team to manage the process, or the team doesn’t have recent relevant experience of running a tender to procure that service.
It is left to the heads of various business units to attempt to pull together a coherent response, without the expert knowledge needed to full understand the requirements. Often supplier and potential bidders are called upon to assist write the tender, which needless to say leads to tenders biased to their solution!
As procurement consultants, we at eXceeding run tenders for our clients on a daily basis. We work across both the public and the private sector, with contracts values ranging from tens of thousands of pounds into hundreds of millions! So, we thought it was about time we shared our top tips on running tenders.
eXceeding’s top tips for running tenders
- Involve your procurement function at an early stage.
Procurement teams should build working relationships with internal departments to be seen as a positive and proactive function of the business. Many procurement functions are seen as roadblocks and hurdles to business units carrying on with projects. Internal procurement teams need to deliver strategic value, not just tactical execution. Often this is because objectives are misaligned and procurement functions are brought in at a late stage. By this point they are unable to offer strong positions to either (a) recommend cost saving measures or (b) negotiate a better deal for the business.The best procurement teams work on building those relationships to be pulled in at the beginning stages whilst the requirements are being solutioned. That way they can offer support and guidance to the business units, while they develop the specification and search for potential suppliers. This support can prove to be quite fruitful at the end of the project.If there is no procurement function in place, or you need specific subject matter expertise for the procurement consider seeking expert help from procurement consultants early on to guide the team through the process.
- Understand your tender and procurement needs
Know what outcome you want – this sounds easy but actually it can be quite challenging to identify the features you really need. Consider breaking down your needs by whether they area) essential
c) ‘we have always asked for this, but we don’t know why’.You should review your tender documents every time you plan to run a tender. It’s highly likely that what you need now has changed significantly – even if this tender process is to renew services already provided.
- If timelines allow, test the market.
Testing the market is a very useful way of identifying and answering questions you may have before committing to a particular approach and tender specification. Soft market testing can be a stand-alone activity that works as a proof of concept on its own or a procurement function can use it as part of an expression of interest to understand which suppliers would be open to the tender process. An organisation should treat this procurement activity with respect as this could potentially be your first interaction with a supplier. There should be a healthy balance to test the waters and not to exploit the supplier, by asking questions around commercially sensitive information. Procurement teams and internal stakeholders should also look at this as an opportunity to make any necessary adjustments to the specifications based around the conversations with the suppliers.If a more in-depth market review is required in order to understand whether you are receiving best value, and ‘best in class’ service from your incumbent, you might consider a benchmarking exercise instead.
- Have a clear tender and procurement strategy.
Define an approach that is right for your organisation. Consider the following questions:
a) Who is responsible for each element of the tender within your organisation? What do you need from them and how do you plan to manage this centrally?b) Who will you approach? Do you get three quotes, do you go sole source, is this something for a purchase order or a contract?c) Do you have clear procedures in place for procurement to ensure that best practices are being followed?
- Have a detailed plan.
Develop a detailed plan of action with stakeholders, including defined timelines and stakeholder sign off procedures. This will ensure the business units have an understanding of next steps, and of their own responsibilities. It will also enable you to ask questions and make any necessary changes at the beginning rather than at the end. Suppliers will be impressed to have so much information at the start of the discussions. This allows the supplier to plan the proposal submission, based on correct information and not an ‘ideal’ situation. It also ensures that you remain in control of the process and enables you to project manage the activity in a professional manor.
- Clearly lay out your requirements.
This is critical to ensure that the bidders fully understand what is required of them. A common cause for frustration amongst bidders, and unnecessary time wasted amongst the buyer organisations, is confusion as to what is needed to win the contract. Clearly planning out what you need and what is expected from the winning supplier, will enable you to be very specific about what you expect within the suppliers’ responses. The result will be more focused responses from bidders, which will help you to compare various bids and evaluate the responses more fairly.You will need to define meaningful weighting criteria and be sure that bidders understand this. It should be tailored to the needs of your entire organisation, as opposed to what just the procurement guy, or the financial controller want!
- Always be sure to check your price.
Where possible, it is best to be clear about your price before going out to tender. Pricing is often an afterthought when the tender is created. In our experience it is often scored below 50% in the scoring criteria when this is not a true reflection of its importance. It is best to consider all options when the initial discussions are taking place, to ensure that the project allows for any adjustment to the pricing. Be careful when comparing prices between suppliers. Ask suppliers to state their pricing assumptions and make it very clear what is being priced, ensure it can be compared at a granular level. Make sure you are able to compare ‘apples to apples’ and not ‘apples to oranges and bananas’! This will cause a problem in the scoring evaluation and possibly present challenges at award stage, or worst an abortive procurement.
- Allow for a clarification period for suppliers.
Tender clarification allows contact between the procurement team and the potential supplier/s. Its purpose is to clarify any aspects of the tender which might be seen as ambiguous, inconsistent or unusual. Dependent upon the nature of the clarification, procurement teams may pull in all clarification questions and then reply to all participating bidders with the answers to the questions. If it is commercially sensitive in any way, procurement teams should respond on an individual basis. The process should remain fair and transparent and allow for an audit trial to be maintained by the procurement function.
- Learn from your tender successes and mistakes.
Take on board feedback from the suppliers who bid as part of your tender processes. Note the questions they ask – as this can be a sign that you are not providing detailed enough instructions. It’s important to strive to continually improve the way you do things – capture the experience and feed it back into your processes.
- Centralise the process.
Often different areas of an organisation will run tenders separately, but it is best practice to share your experiences centrally. These learnings can help to feed into a procurement policy which standardises the way your organisation runs tenders and procurements moving forwards. This saves time and ensures a smoother process in the long-term.
Help with running tenders more efficiently
We hope that these tips will help to improve your processes when running tenders. But sometimes you need more help; maybe your procurement team is under resourced, you lack a dedicated procurement function, or perhaps you are running a tender for a new product or service.
This is where we can really add value. Our procurement consultants can work with your internal teams to manage the tender process. Whether it’s offering training to enhance your procurement function, drafting the tender documentation or running the entire process though to transitioning and onboarding the new supplier, or ongoing contract management we can help.
Take a look at our running tenders page for more detail on this service or book a free appointment to speak to us about your specific needs.