Focusing our Investment in Bids

Marketing Works - Training for the Construction Industry

The MarketingWorks 2014 Bidding Cost Research programme, developed in association with Professor Will Hughes of the University of Reading, sought to identify successful work winning behaviours and understand how MarketingWorks could use that insight to help our clients.

We have already looked at feedback on why bids have been won or lost and how bidding behaviours influence bid outcomes. We will now look at the investment in bids reported by the survey participants.

The Investment in Bidding

The survey shows that winning bidders invest more in their bids.

However, losing bids still consume significant amounts of staff hours and other costs.

Average costs across the complete sample of <£2m projects to >£250m projects Won Lost
Contractors £60k £44k
Consultants £24k £24k

Participants in the survey were asked to give their estimates of the total time their company spent at different (defined) stages of work-winning activities. These hours were then converted to a value and added to other costs identified for each stage, giving a total cost for each stage and for the bid as a whole.

As the survey results indicate that the median number of bidders is five (four losing bids plus one winning bid) the projects submitted to the survey may account for only one in five of the total number of bids submitted to the client. This means that the actual cost for all of the bidders who put in submissions will be significantly more.

Focusing Investment

The survey shows that it is not just the gross amount of time or money spent that result in winning bids; it is also important that this investment is focused on the activities identified as those creating a winning bid.

Looking at the sample, the differences in behaviours between those that won bids and those that lost bids are evident.

Apart from strategy and PQQ, the winning contractors spent significantly more across the board than the losers, but especially on:

  • Decision to bid (double the time)
  • Selecting/briefing bid manager; strategy setting
  • Planning and pursuit; intelligence gathering; meetings to distil client objectives; relationship building
  • More time but less external inputs on identifying proposal requirements
  • Editing boilerplate, and writing bespoke content and more external inputs
  • Finalising CVs, case studies, graphic design and document production
  • Internal reviews/governance; post bid evaluation; dissemination of lessons learnt
  • Interview rehearsal; interview/negotiations
  • Slightly more time on identifying/ agreeing cost requirements, final review

Losing bidders spend more externally, possibly due to winning bidders investing in in-house resources, or possibly the former are more likely to put increased emphasis on “production qualities” than research and bespoke content, i.e. style over substance.

For consultants, the winning bidders spent more overall on:

  • Strategy
  • Intelligence gathering
  • PQQ (slightly)
  • Meetings to understand needs
  • Appointing bid team
  • Understanding proposal requirements

For consultants, the winning bidders spent less on:

  • Graphics, refining CVs and case studies
  • Interview
  • Shaping generic content, etc.
  • Internal reviews
  • Rehearsals + interviews

Several of the points mentioned in the narrative, like graphics, refining CVs, etc., are not seen in these numeric tables, due to the this level of detail being consolidated into broader groups to aid analysis.

Observations

This data deals with headline results across a complex industry with many variables and different behaviours may result in different outcomes for diverse project types. This supports the MarketingWorks approach to work winning:

  • It is important to understand your market and how your organisation’s success is influenced by your approach;
  • Bidders need to understand the relative importance of early engagement vs presentation, for example, and use this information to prioritise their efforts, in their work winning planning, bid selection and bid management decisions.
  • In effect to budget the cost of winning.
  • The diversity of the industry means that it’s not as simple as to say everyone should put more effort into X or Y. However, we can say from this data that consultants who won invested more than those who lost and, significantly, contractors who won invested on average 25% more on their bids in this sample than those who lost.

The MarketingWorks Approach

The MarketingWorks programme Facilitating Improvement of Work Winning Processes, Behaviours and Cultures follows a very practical approach and has helped many clients to achieve significant improvements. We break down the complete process of work winning into inter-connected stages and apply inclusive diagnostic approaches to identify opportunities for improvements in each stage that beneficially impact the process as a whole.

Through involving the work winning teams, buy-in to new approaches is generated and once companies have immersed themselves in the MarketingWorks programme, they achieve impressive business improvements:

Mini Case Study

Example (right) of improvements when using a weighted bid/ no bid Selectivity Tool and applying improved, client-centric work winning approaches and behaviours

A UK regional contractor has shared their own bid cost analysis that underpins the impact that focusing on bid selection and work winning behaviours and focus had on their 2013-2014 results vs 2012-2013 results. Win rates improved from 1:5 to 1:2. Bid costs were only captured towards the end of the 2012-13 period, but were captured throughout 2013-14.

Illustration of a Typical Regional Contractor Bid Costs Using a weighted bid/no bid selectivity tool and applying improved, client-centric work winning approaches and behaviours
July 2013 – May 2014
No. Project Value millions Bid Cost £k
Total submitted 26 £570 2,583
Average £22 99
1 Does not include preconstruction / overhead costs
2 Bids 26 – secured 14 – a hit rate of 1:11.85(1:2)
Illustration of a Typical Regional Contractor Bid Costs When not using a weighted bid / no bid selectivity tool and before adopting improved, client-centric work winning approaches and behaviours
July 2012 – June 2013
No. Project Value millions Bid Cost £k
Total submitted 27 £361.2 565 (partial)
Average £13
1 Bid 27 – secured 5 = a hit rate of 1:5.4(1:5)
2 Bids costs don’t include preconstruction / overheads

MarketingWorks is a leading business development management consultancy, specialising in work winning in the construction industry. The company provides an array of tools, guidance and mentoring support that helps construction organisations to embed client-centric work-winning behaviours, processes and culture which ensures they win more work. MarketingWorks has provided services for over 1000 construction firms, including 9 of the top 20 contractors and 5 of the top 10 consultants.

Follow Philip Collard @Win_Work

Contact Philip Collard on 07973 501599 or philipcollard@marketingworks.co.uk

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