Categories
Bid process

To bid or not to bid?

We’ve found ourselves in an uncertain period during the COVID-19 pandemic and lockdown. Now that businesses and procurement are starting to ramp up once more, suppliers may be tempted to bid for more tenders than they should or would normally, to get their foot in the door again.

However, bid more does not mean win more. You should only submit a tender response when you have a strong chance of winning, at a competitive rate (yet still financially viable), at a balanced risk to your business – AND when you have continually assessed and proven the justification to continue. If you’re bidding for everything, are you wasting resources on marginal, or even unwanted opportunities? Would you still have enough resources to bid if that really strong opportunity comes along at the same time?

We have probably all encountered those stakeholders who want to bid for an opportunity because they know the Chairman’s brother from school, or because they met the procurement lead at an event and it would “look bad” if we didn’t bid, even if we don’t want to win it. However, wouldn’t it look worse if you bid with no clear, relevant, or cost-effective solution for the client? With no experience in their field? Without a suitably skilled and experienced team? The likelihood is this would damage your relationship with the client more than choosing not to bid for valid reasons.

The most successful organisations eventually pursue less than 30% of their pipeline and achieve win rates of more than 70%

The APMP Body of Knowledge (BOK) sets out six decision gates on the path from qualification to submission. Note that the first gate, market entry, is not related to a specific opportunity but to your engagement with a particular market, so for this article, we’ll assume that gate has been passed!

The decision to bid or not bid should be core to your business development activity. According to APMP, the most successful organisations eventually pursue less than 30% of their pipeline and achieve win rates of more than 70%. Decision gates shouldn’t be thought of as something to just “get done”. They should be carefully planned and diarised; bringing together the key people in your organisation to decide whether to allocate or remove resource from an opportunity, and thus avoid over-investment in low-probability tenders. What this means is that appropriate time and resource should be allocated to the process. At a previous defence organisation, we spent more time and resource proving why we shouldn’t bid a particular opportunity, than that spent on a much stronger opportunity!

The bid decision gates described in the BOK, and the core questions you should be asking at each, are:

  • Opportunity qualification: is the opportunity worth using our resources to research and assess it further?
  • Bid pursuit: should we develop opportunity plans and allocate time and resource trying to influence the customer to prefer us and our solution?
  • Bid/no-bid decision: have we positioned ourselves favourably enough to justify planning to develop a proposal and having a good chance of winning?
  • Bid validation: is the opportunity still worth pursuing, and a proposal worth preparing, now we know more about it?
  • Final review: should we submit, considering the anticipated financial reward and level of risk?

Did you spot where the RFP was released? Would/did it surprise you to learn that it’s actually later than you might expect through the business development pathway, between the bid/no-bid and the bid validation decision gates?

If your business development cycle is working effectively, your account (and often your project managers if you are bidding as an incumbent) should know – and more importantly, truly understand – enough about the customer and the opportunity for a decision to be made before the tender documentation is even released and the bid team gets involved.

At all stages, the core questions you should be asking are: do we know and understand this customer? Do we understand what they want and need? Do we have proven, demonstrable, experience in this area? Do we have the right team to deliver? Can we offer something no competitor can? Would our solution provide real value (not just a cheaper option) to the client?

If the answer to any of these questions is no, you should seriously consider not bidding. No matter how good a friend the Chairman’s brother is.

Leave a Reply

Your email address will not be published. Required fields are marked *