To bid or not to bid?
I have worked within the pre-contracts and estimating world for quite some time now, across all sectors including Tier 1 contractors, asset owners and small to medium (SME) businesses.
The one question I come across regularly with my clients in the SME sector, is whether or not they should bid on a project. Having led go/no go assessments for all types of businesses, there are some simple questions you can ask yourself to determine whether or not a project is right for you and your company.
Your decision-making process should be thought provoking and drive your decision with hard data. Some of the key areas that you should be looking at when assessing whether to bid or not, are as follows:
SKILL SET
Do we have the skills required to perform the works and do they align with our strategic goals?
Do we have the plant and equipment to perform the work?
What about specialist trades? Or can we self-perform?
What about our personnel? Do they have the capability and experience to complete this type of work?
Do we have access to specialist plant?
THE DOLLAR VALUE
Do the financial components stack up?
Does the total value of the project sit within the company’s target project size?
What about the securities and up-front material costs? Will they effect the company cash flow?
What is the expected profit margin for the type of work?
Are we experienced in the delivery contract type? Schedule of Rates, Lump Sum...?
THE TENDER
What specific items of the project could affect the success of the bid?
What is the level of content required in the bid itself? Do we have the resources to complete it?
What level of risk are we exposed to and how do we manage it within the bid?
Who are our competitors? What do they do well? How can we be competitive?
Are there a lot of bidders?
How many items require specialist subcontract resources?
As the saying goes, “it is best to have many irons in the fire” and this is especially true when it comes to tendering. Having just one large project underway can be a recipe for disaster if something goes amiss, compared to having several smaller projects.
Notwithstanding this, opportunity sometimes knocks and assessing the tender correctly can take a company on a process of growth and/or a change in direction.
Written by John Broad, Senior Civil Estimator