Bid or No Bid: Tendering

In response to my previous blog post ‘Tendering: You’ve already lost the pitch!’ a number of people contacted me for tips on how to identify the tenders they should avoid. I’m always happy to help, so here goes part 2!

My last blog was about considering at the outset all the circumstances surrounding a pitch to gauge if you had already lost the pitch. I expressed my cynicism as you know. Being involved in and winning pitches is challenging, but it’s also rewarding. And not just in the financial sense. It’s quite an emotional process; from the camaraderie (and stress!) of building your pitch, to the pride and exhilaration of winning the work.

It’s for this very reason that I detach myself emotionally from the process. You see, pitches need to create an emotional impact to succeed. But what matters is the client’s emotion. Not yours. My biggest issue is that lawyers and accountants can sometimes get overly excited when asked to pitch for work – and then the common sense, the objective and the strategy can often disappear out of the window in the eagerness to put their hat in the ring.

It’s always been my role to provide the cold-light-of-day, common sense element. To ask “Ok, so what?”. My initial instinct is not “How do we win this?”. My initial thoughts are : “To bid or not to bid!”

(For the avoidance of doubt, I am calling the buyer of the legal or accounting service – “the client”!)

To bid or not to bid!

I advise firms to be patient and wait for tender or pitch opportunities that are right for them. The most common reason for a lack of success is poor choice of tender or pitch opportunity. There can often be times when there are more opportunities than firms have the resources to pursue. So firms must prioritise and direct resources to those opportunities that have the highest probability of success versus those that do not.

However, I recognise in this economic environment that opportunities are becoming more few and far between. However, it’s a complete waste of time pitching for business that you are not going to win – whatever the state of the economy.

The decision to bid or not to bid for work should be a carefully considered process, balancing the opportunity against a realistic evaluation of the likelihood of success. A lot of critical information can be gleaned from a scoping meeting (read my article on scoping for law firms and accountants here!). My advice is, be systematic. For every opportunity incorporate a scoring matrix or develop a bid/no bid questionnaire and follow it for every opportunity. This will help evaluate the decision and remove any emotion that may be associated with the opportunity.

I recommend firms ask themselves:

1) Do we satisfy the mandatory requirements?

Usually invitations to tender or pre-qualification questionnaires will stipulate mandatory requirements. For example financial stability, quality accreditations, business probity, CSR, data protection, ethics, HR policies and disaster recovery. The first question to answer is whether you can actually meet them? Clients will usually ask for (audited) accounts from the last three years. Has your firm seen year-on-year growth and if not is there a valid explanation for why not? If requirements are not mandatory then can you demonstrate that your firm is operating to a set of standards that are equivalent? For example, your firm may not be ISO accredited, but may use an internal quality system.

2) Can we show relevant experience? Have we done this type of work before?

Clients like suppliers who can prove they can do the job, therefore references from similar organisations for similar work are ideal. If you haven’t got these, you will need to show you have transferable skills from clients with similar needs. If the experience is not a ‘core competency’ (in other words it represents only a small element your firm’s work) think carefully. If there are some areas that your firm cannot manage, the chances of qualifying or winning the tender are seriously reduced. You may need to consider partnering. I have seen recently extremely large tenders being won by firms who have partnered with niche or boutique firms for specific elements of the work.

3) Who is the competition?

Do you know how many others you will be competing with and who they are? How do your strengths and weaknesses compare with theirs? Does a competitor have an existing contract with the client? Who is currently servicing the work?

You need to consider whether you are able to outwit the competition. You need to be able to analyse all of your competitors’ strengths and weaknesses and your knowledge of their past tender tactics help you identify potential approaches they may use. You need to look for ways to develop new ideas to counteract competitors’ strengths and spotlight their weaknesses. Gain an edge by understanding specifically who the competition is, and what they are likely to be saying and doing to win the work.

Ask yourself:

• How strong is their relationship with the client and others? Which contacts might favour them, and why?
• What experience, expertise and knowledge do your competitors have which might help them?
• Which products and services, ideas and skills do they have that you don’t?
• What approaches are they taking and what impression are they making?

4) Is this work the right size for my firm? Will this clash with existing work?

It’s risky to bid if a pitch or tender value is more than 25% of turnover. Clients will check that the tender contract value will not be too much for your firm to handle. Do not overstretch the firm to the point where service or quality issues will arise.

5) What is the profit potential? What impact will there be on cash-flow?

Winning work can put a strain on a firm’s financial resources. It’s important to fully understand and assess the risk of the working capital requirements of the work and whether your firm can support any peaks that may occur. A careful assessment should be made at this point of the potential profit to be made. Is it likely that you will be forced to bid low? If so, is it still worthwhile to take on the work, even at a marginal price to perhaps reinforce your position in the sector?

6) Do we have sufficient resource to respond professionally within the deadline?

Tender writing is consuming – you will need to invest a significant amount of time and resource to creating a winning bid. There is no minimum limit on the deadline for tenders, but typically the timeframe falls between two and four weeks.

Developing a systematic approach to bid/no bid

Depending on the type of work and the client, the bid/no bid decision can be quite straightforward or may take some consideration, balancing a set of points for and against. To help with the process it is useful to have a consistent procedure in place to ensure that time and money are not spent wastefully on opportunities which are to no economic or strategic benefit. A standard bid/no bid form can be a useful tool to assist with the decision.

If you decide not to bid, and you were invited to do so directly by the client, tell them as soon as possible of your intention. Explain carefully, in a conscientious way, the reasons for your decision, being careful not to prejudice your chances of being invited to bid for other work in the future.

I personally would advise making contact with them personally if you have decided not to pursue the opportunity. I would then confirm by letter. Similar to this one:

Dear

I would like to thank you for inviting [Your firm] to tender for the provision of [services] for [name of organisation]. This is an exciting and highly prestigious project, and under normal circumstances we would be delighted to present our proposals to you.

However, after due consideration I am sorry to have to decline your invitation. This is because a fundamental tenet of our firm’s client service policy is to provide the best match of skills and industry experience for our clients’ businesses. At this time I am unable to release the individuals I regard as the “best team” for [name of organisation] from their prior commitments, and do not believe it would be in the best interests of either of our organisations to present a team with less relevant experience.

I wish you every success with this tender process, and would welcome an opportunity to discuss [Your firm] capabilities with you in the future.
Yours sincerely,
 
Name
Partner

A very basic bid/no-bid questionnaire

I put this together in ten minutes, but your firm should spend some quality time deciding which factors are the most important for you.

If you tick more “No’s” than “Yes’s”, be realistic. You may also want to develop a criteria scoring based upon, a) having a strong competitive advantage, b) neither strong nor weak and c) serious competitive disadvantage.

1) Do we meet the basic tender requirement?

• Can we show relevant enough experience?
• Are the requirements clearly defined and technically feasible?
• Is the proposal and delivery time frame realistic?
• Is the work a core competence of our business?
• Does contract value exceed 20%-30% turnover?
• Have we sufficient trading history?
• Is there any conflict of interest?
• Are there any regulatory or legislative reasons we should not pursue it?

2) Prospect information

• Do we know (and can we influence) the key decision makers?
• Do we fully understand the business need or pain driving this bid?
• Are requirements clearly defined and are they technically feasible?
• Do we know the evaluation criteria and how it will be weighted?
• Has the prospect already made a decision?
• Is cost a major factor in selecting the winning bid?
• Are there penalties for not delivering on time/budget?
• Are the contract terms and conditions acceptable?

3) Firm’s internal considerations

• Have we carried out a credit check on the company?
• Is this opportunity aligned with our business strategy?
• Are there opportunities to sell additional services?
• Do we have strong management support and sponsorship?
• Do we have the resources, skills and will to win?
• Do we have the resources and ability to deliver?
• Can we realistically manage the risks, if we win?
• If additional resources are needed, can we get what we need?
• How well are we known within this business sector?
• Do we have a relationship with this prospect and is it favourable?
• Are partners needed, and if so, will they be easy to work with? Can we demonstrate a previous working relationship?
• Do we have differentiators that will improve our chances of winning?
• Can we afford the investment needed to pursue this opportunity?
• Will winning put any of our existing business at risk?
• Can we contractually protect our intellectual property?
• Will it be a prestigious addition to our client list?

4) Market & competitive considerations

• Are they inviting more than 4 firms to tender?
• Do we know who the other bidders are, if any?
• Is a competitor an incumbent, and does that pose a threat?
• Is a competitor favoured by prospect decision makers or influencers?
• Does the solution involve new or unproven technologies?
• Will winning enhance our reputation in the market?
• Will winning open up new market opportunities?
• Will winning give us an advantage over our competitors?

Conclusion

Effective bid/no-bid decision making requires a firm to conduct an opportunity and risk assessment using a simple yet effective tool and technique like a ‘bid/no bid questionnaire’. Firms should make informed decisions to pursue the opportunity (bid) or not pursue (no bid) based upon the facts. This should be done in an unbiased and objective manner.

The future of a firm depends upon their ability to consistently make good decisions on how to prioritise opportunities and commit resources. Creating a simple, repeatable, and effective bid/no bid decision making process can provide very valuable to help a firm reduce costs and improve both revenues and profits.