Should the Construction Industry fear Digitalisation?

Digital Futures

The construction industry is experiencing profound efficiencies and cost savings following the advent of digitalisation.

In a recent report by Kenneth Baker – the past Cabinet Minister – he outlined his fears of the future, positioning up to 15 million jobs being at risk by 2025.

What does it mean for the construction industry?

“From big data to ultra-fast robots, the digital revolution is already happening”

Whilst this is a valuable and seminal document, it is also a wakeup call for all industries to prepare for tomorrows economy, and the training and education of tomorrows youngsters.

Given the construction industry has experienced an ongoing trend of young people lacking the motivation to enter our industry, I challenge that this revolution will offer a mixed blessing.

Might we now get the pick of the crop?

Digital Futures

Kenneth’s report predicted that the type of jobs that will be in demand in the near future are in technical management. Whilst his predictions show net change in employment declining in Construction, technical management is the exact premise that our entire industry revolves around.  Given that this is in complete alignment with the report recommendations, we should as an industry see benefit from the changing economy and employment structure.

Current and future skills the construction industry needs

Here is a list of the core skills required to work in our industry, now, and tomorrow:

–          Reasoning

–          The ability to examine and solve problems

–          Experience of working in teams

–          An ability to make data-based decisions – being ‘data savvy’

–          Social skills – particularly the confidence to talk and engage

–          The skills of critical thinking, active listening, presentation and persuasion

–          Practical skills: the ability to make and do things for real

–          Basic business knowledge

Baker’s report also comprehensively positions that education should adopt a new curriculum, similar to that currently offered by University Technical Colleagues (UTC’s). The syllabus blends traditional academic subjects with technical specialisms and project-based learning. The close ties to universities and employers ensure that students see the relevance of what they are learning: thanks to employers, their learning becomes authentic.

As an approach, this concept of education works commendably well for us in Construction, and should increasingly make us as an industry, more attractive to the young students of the future.

What does it mean for Pre-Construction?

For my part, I see digitalisation offering profound improvements in Pre-Construction. I see significant efficiency gains in bid team performance, that will start to become the expected norm.

As the use of cloud based bid management tools takes off, digital collaboration technology magnifies the importance of bid team expertise and judgement.

Digitalisation enables Knowledge Workers to perform at their highest level, and consequently become an integral part of business growth, not as all too often seen as an unnecessary operational overhead.

What is most important, is that digitalisation will increase the time available for bid teams’ solution development and problem solving. Through reducing the waste spent catching up and duplicating information across multiple systems and spreadsheets, more quality time can be leveraged to develop skills.

What is more, the time gained allows for the all-important relationship management communications, which is fundamental in successful bid management.

Those in Pre-Construction should not fear change, but enjoy a less frantic, less stress full work winning environment, where quality and professionalism count for more than the numbers of bids pumped out each month.

Kenneth’s report fills me with optimism, not dread.

Pre-Construction professionals who understand how to drive bid performance in a digital manner will be in great demand, and I look forward to the revitalised and efficient industry that is now on its way to us.

If you want to know more about how we can help your bid teams achieve profound win rates, please get in contact today at www.myconsole.co.uk.

https://www.data.org.uk/news/the-digital-revolution-lord-kenneth-baker-s-new-report-and-8-point-plan-for-education/

Revolution 4.0

Key to success is learning to harness the new source of power

The opportunity that digital transformation gives the Construction Industry is immense

If you are concerned with the future prosperity of your firm; driven by a need to win more work with a greater level of certainty, an ever-increasing level of efficiency, then my informed blog series are designed to inform your thinking.

An industrial revolution is happening right now, its number 4.0. Just as the first industrial revolution enabled unheard of power to be easily harnessed, the same transformational change is happening now. 250 years ago, we drove all sorts of previously manual or horse powered machines from printing presses, jack hammers, water pumps and looms, into machines and processes to aid delivery and process.

This new revolution is following these exact same principles, albeit digitally. The new power source is not steam or electric, but instant access to immense quantities data.

We have potential to change every area of modern business behaviours, processes, and culture.

Once we realise that today’s digital transformation is history repeating itself, we can use this understanding to shape – and understand – our journey into the future. The first cars ‘cut and pasted’ bicycle technology to drive rear axles with a chain and sprocket; engineers developed efficient methods to transfer engine power via drive shafts, universal joints and early rudder based steering mechanisms, that quickly rehashed rack and pinion technology from ancient water clocks circa 270BC. This same technique reworked differential gearing invented in 1720.

Innovation clearly drives change, but doing so is reinventing and reshaping what went before. Steve Jobs did exactly this with his products, by combining tools that already existed in exquisite, user friendly, and efficient ways.

That being said, the parallels between both revolutions are clear. Either you embrace change and try and get a competitive advantage, or get quickly left behind. Just because a firm already has the latest computers, and larger accessible servers supported by full internet connectivity, does not mean together they combine and align to leverage leading edge thinking.

90% of the worlds data has been captured in the last 2 years. This source of power is immense, though without the tool of pattern recognition algorithms, this power is meaningless.

Further, with the innovative onset of existing digital tools and data analytics, valuable knowledge is available to your staff. Unfortunately, often existing behaviours, processes and culture limit access to such data, through silos that stifle collaboration and creativity.

What is more, key information is often delayed, important feedback on performance and practices may take weeks and months to be uncovered. When this is combined with poor behaviours – such as cognitive dissonance – the value of accumulated knowledge is masked or denied, allowing the collective culture to carry on much as it always has done.

So, we are asking an important question. What if all teams, and all individuals in those teams, could have instant access to analysed data that immediately informs their own decision making in an aligned, collaborative way?

What if whilst doing their job, they could access data via dashboards that provide recommendations, suggests adjustments and offers or prompts and improvements to their behaviours instantly? What if this information could enable instant efficiencies that previously were simply impossible to compute, synthesize diagnose or conceive, let alone access or act upon. It is this logic leap that fundamentally underlines this industrial revolution; the digital transformational revolution.

Clearly, there will be a great deal of best practice information on digital transformational information exploding out from other industries. As I see it, we need to play ‘catch up’ on how to apply these to our own Construction industry.

I feel fortunate to be in a unique position. Because for me, I totally get it! Change is hard, revolution is harder. I understand the challenges of digital change from the blood, sweat, and tears I have spent over the last two years developing a digital collaboration platform. This is why I feel that I can contribute to help others. To help them understand the changes and opportunities that are to come, and the immense opportunities that are to come from it. It is in this void, where I will share my own hard won insights from my efforts to navigate the challenges of constructing myConsole, (our own digital collaboration platform) for a wide range of clients.

So I hope these briefings will prove to be helpful and informative in shaping your own digital journey. Please do contribute your own thoughts and experiences so we can communicate and collaborate together.

Please contact me on 07973 501 599 or philipcollard@marketingworks.co.uk if you would like to discuss this in more private detail.

Why the bid cycle lends itself for digitalisation

Crucial steps

 

The key stages of work winning are a series of interlocking steps; phases of a process and links in a chain. Every stage must work, or the bid can’t succeed. In the heat of multiple tenders being submitted, and a fragmented working environment, the average rate of success for bid submissions is 1 in 5; a result which can improve significantly when monitoring and managing each of the interlocking steps.

As various stages become more reliable and provide an increase in confidence, other key steps that might fail, become an area that is no longer left to worry about. So, if you are not measuring and monitoring all the essential steps, stages or phases that can fail, then winning the bid becomes dependent on potentially the weakest link.

Digitalisation strengthens the chain.

There is now an immediate solution to the weak links in the new-found power of data and cloud based analytics. By digitising your entire work winning process, your bid team’s dashboards can easily identify how to exploit creative strengths, address weaknesses and achieve comprehensive bid productivity growth. Our cloud based collaboration tools developed in myConsole increase the scope for what is possible, and ensure that improvements don’t happen by accident. Once this improvement is managed, the results can be delivered every time, and failure drifts into being a thing of the past.

In a bid scenario, it really doesn’t matter if everything else is working well; one weak area results in failure. This management concept is called the “O” Ring Production Function, and a metaphor derived from the Challenger space craft crash, that took the lives of seven astronauts.

Whilst a failed bid clearly doesn’t have such an earth shattering impact, I draw a parallel purely because an average bid takes 350 man hours and costs typically £50k (see this link to our research with Reading University). Let us bear in mind also, that an average business unit needs to process 5 bids to win one. If you capitalising on marginal gains concepts across your entire bid process through monitoring and measuring each critical step, stage or phase then you don’t know where your weakest links are. Making this change will be critical to business growth and potential.

Call the myConsole team on 0330 365 0110, to discuss how to digitise your bid cycle.

Wake up and smell the digital coffee!

building-blocks

The evolution of digital collaboration is happening, right now!

How do I know, and more importantly, how is this going to affect us? Well, over the last two years, we have been working hard to develop a digital collaboration platform for Construction Industry work winning teams. We have partnered with some of the most forward-thinking talent in our country to create a product that is truly future proof.

From inception to completion, our mantra was Steve Jobs vision; “that it is not about having great technology, and looking for places to use it,” but a need for technology to deliver “an intimate connection with the feelings of the user”. We believe that with this mentality, the industry can stop being blinded by the unknown concept of digitisation, and instead embrace it to enhance our everyday successes.

For the last 25 years, I have worked closely with hundreds of work winning professionals, whilst working for a wide range of contractors and consultancies. I feel my understanding and expertise in this arena is vast. We witness every user perspective, and need, from Estimators, to Bid Managers, Planners, Design Managers, Divisional Directors, right up to Board Level and Executive Directors. We listen, diagnose and provide solutions to the everyday hurdles which hold everyone back.

So, my mission was to design a digital collaboration platform that instantly empowers every type of work winning user. To deliver a solution to the misread, misinformed, unrecorded information in driving business growth. What we have come up with is myConsole.

We provide everyone with their own individual workplace dashboard, unique and specific for construction industry work winning teams. They can access and use a wide set of collaboration tools, as an integrated part of their working day. They can visualise and plan their team approach to securing, and delivering, excellence.

CRM and Excel Spreadsheets do not provide enough. BIM has the potential to unlock the future, but does it start early enough in the procurement process? For Steve Jobs, he recognised that delivering excellence through technology was first about understanding the feelings and motivations of the user, and this is the gap that myConsole aims to provide in the Construction industry.

Work Winning approaches and activities can be seamlessly delivered via a cloud platform. We can automatically provide real time data insights, in a dynamic collaborative efficient and effective client centric way. But it needs individuals willing to embrace change, to truly realise the potential of making this leap.

Check out the myConsole website for more information, on merging your work winning needs and digital capabilities.

How to Win More

ClientManagement

In 2014, I decided to invest our resources in updating our MarketingWorks 2003 research, evaluating how bid cost investment affects work winning within the construction industry. Over many years, it has been my mission to help construction organisations to uplift their win rates and become more effective in their work-winning activities which, in turn, improves win work efficiencies. So I wanted to see what we could usefully learn about successful work winning behaviours in 2014 and how we could use that insight to help our clients.
The research programme was developed in association with Professor Will Hughes of the University of Reading and the data was collected by reference to actual projects. It was analysed to discover what can be learnt, not only about the cost of bidding for work, but also how different behaviours and approaches have influenced whether a bid has been won or lost.

In addition to providing some interesting indications as to how and why a bid is successful, the survey also reveals that many companies fail to capture bid cost information and to fully evaluate their own specific market and processes. This has a real impact on profitability and, if addressed, could deliver significant value to the industry.

Uplifting Win Rates

There are many variables influencing how effort or bid spend affect outcomes for different types of project, so it is important for contractors and consultants to be analytical of their market and rigorous in the management of their work-winning and bidding behaviours. The resulting knowledge can be applied to enhance their effectiveness.

The research reinforces our view that there is potential for this type of data to help in decisions which could identify:

  • Where to invest effort (in activities that will win the work)
  • How this varies by client/ sector/ procurement route
  • How to exploit selectivity to maximise profitability
  • How this would influence strategic organisation

In most cases activities focused on the specific client (i.e. client-centric, aligned activities) win the most work, in the most cost effective manner.

Work winning efficiencies are achieved through a combination of improved effectiveness (resulting in fewer abortive bids) and increased rigour in selectivity and focusing of available resources. The 2014 survey gives pointers on where winning bidders focus their resources and the MarketingWorks Work Winning Solutions help organisations to apply this learning for greater work winning effectiveness.

Sample

  • The total project value of the bids submitted with data is £11.3 billion of which £8 billion has full cost data. Significantly this includes £4.3 billion of winning bids.
  • The sample represents a large proportion of the construction work carried out last year in the UK and is a good representation in the key areas of measurement.

Key Findings

  • The approximate cost of a contractor’s average winning bid is £60k in 2014 and consultants average £24k.
  • In 11% of bids won and 15% of bids lost, the reasons for winning or losing are apparently unknown.
  • Price was given as the single reason on 50% of losing bids but only 30% of winning ones.
  • Almost 40% of winning bids identified a combination of factors as the reason for the win, compared with 21% of losing responses citing a combination of factors for the loss.
  • Winning bidders invest more in their bids.
  • The investment of time or money needs to be focused on the activities identified as creating a winning bid.
  • The activities identified as helping to create a winning bid are those that are client-focused.
  • The bid cost worked out, across winning and losing bids, to be 0.57% of the total project value.
  • The bid cost percentage has significant impact on a contractor’s retained operating turnover.

So, as different behaviours may result in different outcomes for different kinds of project, it is vital to create and manage the bid process to capture good feedback, learn from past mistakes and apply the knowledge gained to maximise success in future bids.

In the survey, we asked ‘What reasons were given as to why you won or lost the bid?’ As this was an open question, we took the reasons given and grouped them under broader headings (Graph 1) and where a combination of factors was given, we then analysed them further in Graph 2 (below).

Feedback and Continuous Improvement

The survey found that for 11% of bids won and 15% of bids lost, the reasons for winning or losing are apparently unknown (See Graph 1 above). It is our experience that, without a clear, fact-based understanding of why bids do or don’t succeed, companies can’t make improvements for the future. Losing bidders may repeat mistakes and may be bidding for projects they could never win. Winning bidders may not be proactively applying to future bids the factors that have in the past led to success.

Long-standing government guidance advises governmental bodies to provide feedback to both winning and losing bidders as a matter of good practice. Anecdotal examples from the industry suggest that in some cases clients do not provide clear and accurate feedback whilst in others the bidders fail to ask. This leads to the conclusion that the industry as a whole (both sides of the work-winning process) are not valuing the role that feedback plays in improving the efficiency of work-winning approaches and behaviours.

Focusing on Price can be Self-Fulfilling

Half of reasons given for losing the bids in this survey were price related (Graph 1). In practise, the suggestion is that price is often a default position: if all bidders are aiming to win on price or are differentiating in similar ways, then clients will revert to price as the most clearly defined way of choosing the winning bid. This result could also imply that these bids were lost because the bidders’ focus was purely on price.

Whilst there were other single, overriding reasons given for losing, it was extremely interesting that 21% of responses identified a combination of factors. The picture is quite different when reviewing the reasons given for winning. Here, whereas single, overriding factors were also mentioned, with almost a third of responses being price related, in almost 40% of responses, a combination of factors were given as the reason for winning.

Focusing on a Combination of Winning Factors

We have broken down the responses mentioned within the category ‘combination of factors’ in Graph 2, to see the frequency with which different factors are mentioned. When we drill down into the combination of factors we can see that whilst price was mentioned in 25% of cases for winning bids and 27% for losing bids, many other reasons were also given.

The important thing to take away is that contractors and consultants shouldn’t try to win on one single thing, but that a better winning strategy would be to focus on a combination of winning factors. This requires an empowered and enthused team focused on understanding their clients’ needs and objectives and then developing the right combination of key themes that will be successful for that client and project. This will significantly improve win rates and thus reduce the associated cost of abortive bids.

The conclusion that clients tend to consider a range of factors in their decision also raises one more consideration in the bidding process – if it is not possible for the bidders to score highly across all elements, should they be bidding at all?

Conclusion

The survey data deals with headline results across a complex industry with a lot of variables. This highlights the opportunity for an ongoing research programme addressing bid assessment in the context of a company’s own market situation, thus offering benefits in achieving greater effectiveness and efficiency in work-winning tools, processes and behaviours.

MarketingWorks offers a range of solutions to help our clients achieve these objectives including:

  1. Creating bespoke win work flow processes and guidance that support company-wide adoption of a work winning culture with embedded client centric behaviours and attitudes that improve win rates and work winning efficiencies.MarketingWorks works with you to identify desirable changes in behaviours and processes and then works with your teams to uplift their capability, achieving rapid buy-in to desired behavioural change resulting in dramatic and immediate improvement.
  2. Bespoke easy-to-use bid selection tools that help contractors and consultants to quickly evaluate their bidding opportunities, enabling consistency and transparency in decision taking.By using MarketingWorks’ Selectivity and Reporting Tools you will be able to avoid waste by refocusing resources and effort on enhancing the quality of those bids where they have the highest chance of winning.

To discuss this further, contact:

Philip Collard, Managing Director, MarketingWorks Training & Consultancy Ltd, Business development solutions for the construction industry
Telephone: 07973 501599
Email: philipcollard@marketingworks.co.uk
Follow: Philip Collard @Win_Work

Active Supporters of the Bid Cost Survey 2014

Barbour ABI, Building Magazine, CIOB, Construct UK, Constructing Excellence, Construction News, Designing Buildings WIKI, Glenigan, KMS, RIBA, RICS, Satellite mpr.
Simon White, Head of Business Development, Arup. Reviewer and contributor to the analysis and interpretation for the 2003 and the 2014 Bid Cost Surveys.

Focusing our Investment in Bids

Training

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

The Cost of Bidding

Consultancy

One aim of the MarketingWorks 2014 Bidding Cost Research programme, developed in association with Professor Will Hughes of the University of Reading, was to understand more about the cost of bidding for construction projects.

MarketingWorks encourages clients to capture this important data on an ongoing basis, rather than relying on isolated surveys. We provide them with capture tools and processes as, when analysed, it delivers invaluable information at a company level.

In this article, I outline the key cost findings, the relationship between bid costs and project size and what this means to us in practical terms. I also encourage the industry to consider the influence of the number of bidders for projects on the cost of bidding to the construction industry and its customers. When the cost of losing is significant and the typical length of a tender list in this survey means there will be 3-5 organisations that invested resource with no return, I ask if it is time for a new approach to achieve greater cost efficiencies for all parties.

Looking at the bid cost as % of project value

From this survey sample, in 2014 the average cost of bidding was calculated at £60k for contractors and £24k for consultants. However as those average bid costs cover a broad range of project values from <£2m projects to >£250m, we decided to also calculate the bid costs as a percentage of the project value as this gives an alternative and more revealing perspective.

The bid cost worked out, across winning and losing bids, to be 0.57% of the total project value.

Bid result
Overall results Lost Won Total
Value of bids with cost data £3,767m £4,288m £8,055m
Overall cost of bidding £2.57m £4.60m £7.17m
Cost as % of value 0.48% 0.65% 0.57%

Overall this data set indicates that when consultants and contractors invest more in the work-winning process on a bid, they are more likely to win. In this sample, the investment in bids that won is 25% greater than for bids that lost, with the average cost of bidding for losing bidders being 0.48% and for winners 0.65%.

The significance of these figures in practical terms

Whilst these percentages may not seem significant at first glance, where contractors sub-contract a large proportion of the construction work, these figures can make a significant impact on the retained operating turnover.
For consultants the key number is how much of the project value is actual fee. It would be worthwhile for consultants to look at the cost of bidding in the context of fee income as the project value does not give a true picture.

For smaller projects (less than £5m) the proportion of bid cost to project value is highest.Here the win rate will have a considerable influence on the pipeline/ cost to win/ processing systems, especially if there are many, smaller bids. Clearly, efficiencies and a methodical approach to selectivity are crucial to avoid unfocused activity and unnecessary spend.

Equally it is vital that all companies manage their opportunity pipeline; the number and nature of the opportunities and the likely costs to win them. This is particularly the case where there are many, smaller bids.

Companies have to be sure that they have the necessary processes, systems and tools in place, with people mobilised, empowered, enthused and with the right skills to create winning bids.

Is it time for a new approach?

These results challenge the industry as to whether it is still a relevant strategy to have so many bidders. The more bidders, the greater the cost to the industry as both winning and losing bids represent a significant investment by the industry.

For the bids submitted to this survey, the median number of bidders is five, which aligns with the typical length of a tender list (between 4 and 6). There are slightly fewer competitors in the private sector and more bidders (and therefore more losing bids) in the public sector.

This may well be challenged by procurement advisors, but if the industry genuinely wants to lower costs, then exploring viable alternatives to current approaches would be advisable as there would be a significant saving for the whole industry and its customers in having only three bidders.

In our opinion, it is a concern that so many respondents were unable to identify how many competitors they faced as this would be expected to be part of a bid selection decision.

The importance of being selective

Given the cost of winning work, the single, most important tool organisations should deploy or revitalise is one that dynamically enables more effective selectivity

It is a timely reminder that, whereas the focus of companies in the recessionary market has been on managing a diminished number of opportunities, as the number of opportunities increases, the industry faces more complex choices and decisions. The activities undertaken to win bids also need to adapt accordingly

Bid selection will become increasingly complex, with many variables, so companies need to evaluate further their own specific markets, processes and governance to manage this effectively. There is a huge opportunity to better manage this investment in the industry, but from this sample we can only make general statements across a broad range of project types and sizes, of organisation types, of sector types etc.

The survey outcomes suggest that organisations should delve deeper into the cost of bids and where time is being spent on various elements of a bid, especially if it can be related to or taken together with the information on reasons for winning/losing bids. This will help the organisations and the industry to identify areas for improvement.

This knowledge would equip them to make more consistent bid/ no bid decisions and inform them where best to focus their investment.

Solutions to achieve more consistent bid/ no bid decisions

MarketingWorks offers a range of solutions to help our clients achieve these objectives including bespoke, easy-to-use bid selection tools that help contractors and consultants to quickly evaluate their bidding opportunities, enabling consistency and transparency in decision taking.

By using MarketingWorks’ Selectivity and Reporting Tools you will be able to avoid waste by refocusing resources and effort on enhancing the quality of those bids where they have the highest chance of winning.

Observations on the bid costs submitted to the survey

The sample represents a large proportion of the construction work carried out last year in the UK and is a good representation in the key areas of measurement:

  • Sample value vs market value: £8bn costed bids submitted in £11bn total value of bids submitted
  • Total value of contractors’ (only) winning bids with bid cost data is £4.09 billion – 3.7% of 2014 construction market value (£110 billion quoted as the 2014 value of the industry. Source: Office for National Statistics Output in the Construction.)
  • 179 respondents; 118 with cost data.
  • Almost even mix of won / lost bids in the sample.
  • Good spread of procurement routes, project values, selection methods, sectors (broadly in line with planning data* for new starts by sector 2014)

The fact that 61 of the participants who provided a great deal of data nevertheless were unable to provide estimates of time and cost invested in the bid indicates that many construction companies probably don’t have enough data easily available to contribute to a survey such as this. This may be because they do not consistently capture what overhead is being spent (and where) on work-winning activities. There were also other gaps in data provided by some contributors. For example: how many competitors they had on the bid; the sector; the procurement routes. The assumption being that either not enough was known, or that this information on the bidding environment was not shared. This information should have been captured as part of a bid selection decision.

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.

We can work with you to identify desirable changes in behaviours and processes and then with your teams to uplift their capability, achieving rapid buy-in to desired behavioural change resulting in dramatic and immediate improvement..

Philip Collard, Managing Director, MarketingWorks Training & Consultancy Ltd Tel: 07973 501599
Email: philipcollard@marketingworks.co.uk Follow: Philip Collard @Win_Work