The original of this report was written in 2008 and it is certainly a different world now in 2013. This new report reflects the changes that have occurred in this competitive environment. I genuinely hope that it provides some insight into what clients and their procurement evaluators are looking for and that this enables you to improve your chances of success in what is a highly competitive and challenging economy.
One of the most challenging aspects of running your business is ensuring a steady stream of profitable contracts. The trouble is your competitors are also putting in a lot of effort in finding the best customers and the best projects to bid for. As the economy continues to stagnate, then in mature markets such as construction or IT services, the competition gets even fiercer. It is not uncommon to see over 100 organizations chasing the same opportunity.
With so many applicants, customer procurement teams face a daunting task to draw up a short list of bidders who are best qualified to undertake the project or program. They all want to do this efficiently and as a result the initial emphasis with the pre-qualification process is on the speedy elimination of unsuitable applicants who clearly do not meet the minimum requirements and would introduce too much risk for the customer.
This is followed by the difficult task of finding a short list of the best organizations to bid for the contract, those who can manage risk and add value. The difference between success and failure often comes down to just a single percentage point.
Over the last ten years it has been noticeable how much more difficult it is to pre-qualify to tender for an opportunity let alone winning the contract. The bar is getting higher and higher. A few years ago scores of just over 70% would normally carry you through to the next stage but today you need to be scoring 90%. If you successfully pre-qualify to bid for a contract then not only do you have to be competitive with your price but you also have to continue to demonstrate how you can maximize value and minimize risk for your customer.
Many tenders, particularly for public sector contracts are awarded on the basis of the most economically advantageous tender. That means that the customer selects on best value rather than lowest price, although in today's economic climate more weighting is being given to the price. The method for determining value is usually through a requirement for bidders to complete a quality or technical questionnaire or prepare a quality or technical document that is submitted alongside the pricing schedules. Customers assess these against pre-determined scoring criteria.
You'll need a proven system for preparing and presenting your answers to the questions posed in the pre-qualification questionnaires (PQQs), invitations to tender (ITTs) or requests for proposal (RFPs) documentation. Otherwise, you could find yourself way down the pecking order and fail at the very first hurdle. Despite these challenges, there are companies just like yours who consistently win a steady stream of lucrative contracts and long-term framework agreements with some of the best customers in their sector. I call these companies the Elite Bidders.
1. Elite Bidder is a label that David Harrison has given to those who follow his advice! It is explained at the end of Part 3 of this paper.