Whilst there is a palpable sense of relief across the construction industry that the economy has picked up, my personal view is contractors should be very cautious. This good news obviously translates into larger opportunity pipelines for all members of the supply chain. However, it also comes with the likely temptation of trying to process more bids through the already lean and over stretched work winning teams.
The obvious reaction is employing more bid staff to help with this demand and the recruitment pages have plenty of jobs on offer. However, whilst rebuilding the work winning function is a good “first fix”, I would still advise caution on processing too many bids as this spreads good resources too thinly. My personal mantra has always been “bid less and win more” which relies on being extremely selective as to which opportunities to pursue.
We, with the University of Reading, are currently updating a large industry-wide bid cost research programme whose 2003 results showed that the internal OPEX cost of responding to a relatively modest bid started at out around £3k. The average cost of a D&B bid for a contractor, even in 2003, was around £28k. Given the average lose rate is 4:5, it’s easy to do the maths, and realise what their actual cost of losing represents. Selectivity that achieves a reduction in abortive bidding will not only dramatically improve margins but creates happier bid teams, who dislike working long hours on bids they know they cannot win.
Having trained, coached and mentored numerous contractors’ and consultants’ bid teams over a wide variety of procurement routes and types (including HCA, AMP6, Highways Agency, PSPB and PITT type frameworks bids), plus numerous one-off projects for end clients such as Jaguar, as well supporting teams for numerous County Councils frameworks, I now find bid teams are larger and better organised and more time is being spent per bid. In excess of 400 staff hours is now typical.
One team I worked with recently spent at least £500k on one bid. Hence why I believe the 2003 base levels have probably doubled. Most senior team people I speak with say they “dread to think” of what they are actually spending on bidding as it is hidden within the overhead and not captured as a separate metric. I think this denies them valuable insights on how to improve and refine selectivity variables that could minimise expensive abortive bidding. Such data would also inform where long term sustainable efficiencies can be achieved through improved behaviours and effective process and allow limited resources to be focused on the “must win; can win” bids.
So what could public sector clients do to improve efficiency in bidding? This experience of working with numerous contractors and consultants across many public sector procurement routes has allowed me to develop perspective and insights above simply selectivity.
The lack of standardisation of public sector pre-qualification is still costing the supply-chain dearly. Not all public sector clients use PAS 91 or standardised processes such as Construction Line. Enforcing this really would allow suppliers to provide pre-qualification information just once that can then be presented to all public sector clients who have a potential opportunity. Many public bodies still insist on using one-off and bespoke variations, often asking similar questions. It is a huge waste of contractors’ money and resources. A glimmer of light here is the Enterprise Minister Matthew Hancock’s recent announcement of measures to remove the barriers to public contracts by abolishing pre-qualification questionnaires (PQQs) for low-value contracts and mandating the use of core PQQs for high value contracts.
Proper feedback to contractors. After all the time and effort, blood sweat and tears that bid teams put into a bid, it still is frustratingly difficult to get proper honest structured feedback from public sector clients. Despite recognising it can only help them in the long run by helping a contractor address weaknesses and poor bid strategies; very few public bodies provide decent feedback. Contractors often worry that if they pushed hard for any qualitative feedback it might remove them from future opportunities.
Recognise and give credit to contractor’s ideas. Another bug bear from contractors about poor public sector procurement is the lack of recognition they receive for innovative and value-giving ideas. Often great ideas are taken and reissued to other competitors without any appreciation or recognition. No problem if this happens within open collaboration procurement routes. But when in a straight competition, it does not encourage contractors to share thoughts that actually help clients. Ongoing recognition by the professional team of the source of the idea would be a good first step.
Balancing risk and reward. Certain public sector bodies are retrenching from taking and owning risk and hedging towards tried and tested proven approaches. The only problem is that assessment at evaluation stages can score innovation poorly and, worse, drive out innovation entirely. This was a flaw of Highways Agency’s previous CAT scores, which have now been replaced with a truly impressive procurement approach called StART (Strategic Alignment Review Tool). This was developed in collaboration with all stakeholders and is used to test the alignment of key suppliers to the HA’s strategy. It is an exemplar approach.
More competitive dialogue. Leveraging competitive dialogue as a process within the overall procurement approach is underused. Strangely it is the clients themselves that seem to draw back from having this healthy dialogue with one or two members of the supply chain. Because, I think, they may feel somehow this could be inferred as collusive. Could it be that the clients don’t quite understand how this complex process works?
What contractors could do to improve their win rate performance:
- Be very selective, capture actual time and costs and learn from lost and won bids.
- Use a properly designed mapped out work winning process to ensure client centric alignment across all stages of bidding.
- Support bid teams in adopting more desirable client centric bidding behaviours through prompts and checklists to help develop better outputs.
- Offer bid management training / mentoring to help refresh and revitalise behaviours and processes.
- Hold proper internal reviews during the bid to help embed an improved culture. Do not leave reviews until adjudication.
If you want to improve efficiencies within your own bid teams and perhaps stimulate their thinking about better bidding practices, then submit a few Bid Cost Surveys on recent bids. It will also help us refresh this valuable research.