If you work in the construction industry, then you’re probably familiar with the term bidding (or tendering). Yet, bidding is generally not very well understood, even though at some point, no matter which department you work in you will probably be involved in one.
What is bidding?
There are many interchangeable terms for bidding: tendering, proposals, submissions, RFIs and PQQs. Although there are subtle differences, generally these terms all relate to the same thing. Bidding is the competitive process through which contractors can bid fairly for a specific project or package of works that has been put out to market.
Bidding is a common practice across a range of industries including pharmaceuticals, IT, defence, education, and accounting to name a few – not just construction. At a very basic level there are two types of bid, either private sector or public sector (government funded) and how you should approach them is quite different. Public sector bids are (usually) far weightier and there are stringent rules to ensure that it is truly a fair competition, while private sector bids vary in size and complexity and they are often less formal in terms of client communication.
Construction bids usually follow a two-stage process. The first stage is referred to as the PQQ stage (Pre-Qualification Questionnaire) and usually requires basic company information, financial records, company experience and ability to complete the works. However, this is often the most competitive stage as you can be quite easily knocked out of the race if you do not qualify. It is important to take these PQQs seriously, as one incorrectly ticked box could mean disqualification. The second stage is known as the ITT (Invitation To Tender) and is where the bulk of the work is required – including the all-important price.
What does a bid actually look like?
Essentially, a bid is reminiscent of coursework at school. There is a deadline which you must meet otherwise you are at risk of not passing, aka winning. The tender is split into sections, namely the quality section (which is where the written responses are) and the pricing section. The majority of the time you will told by the client what their priority will be when marking – for example, the public sector is usually far more balanced between quality and price, whereas for private sector clients the best price is often favourable, although, value-for-money is still a key driver for both private and public sector clients.
The size of the bid usually increases with the value of the contract and the complexity of the project, although sometimes this is not consistent and projects that are relatively low value can be quite demanding in what they ask for at bid stage. This is when a stringent ‘bid or no bid’ process is valuable and your business should assess whether you are likely to win and if the investment of time, and ultimately money, is worth the outcome even if you don’t. One of the common misconceptions of bidding is that to win more you must bid more. A scattergun approach to bidding will allow for less time to dedicate to each tender, and so success is unlikely.
The quality section is often the most cumbersome and requires dedication from a wide range of people. Each question will be marked by the client and scored out of a predetermined marking criterion. Sometimes the client will actually share the criterion that they will be using with you, and so you have further insight into what your response needs to say or do to receive a top score.
The quality responses are regularly limited by a word or page count. If this is not dictated in the tender documentation, then do not ask. Clear and concise text is best but having more room to play with is always a good thing. Conversely, if a word/page count is given then it is imperative that it is complied with as the response past the word count will simply not be scored.
Just like in any other competition, the highest score wins. Each response score is totalled up, and the price is also evaluated against a criterion. Interestingly, it is not simply the lowest price that wins. Clients will usually look for the price that falls in the middle (“the sweet spot”) – common sense screams that surely the lowest price cannot also provide the highest quality.
Where to find opportunities to bid on
Ultimately, the best way to get involved in an opportunity is to have some form of pre-existing relationship with the client. Networking – or, having good market intelligence – is highly beneficial when taking part in regular tenders. This means that you will know when a bid is likely to be released, and so you have time to prepare beforehand. Again, just like in school, planning is really key to a successful tender.
There is of course still equal opportunity to take part in a competitive tender even when you don’t know the client directly. There are a number of portals and job boards where RFPs (Request For Proposals) are posted, such as the OJEU (Official Journal of the European Union – all tenders from the public sector which are above a certain value are legally required to be published here) and CompeteFor. Generally, each authority has its own portal and so there are services that mine these and send a daily round-up (e.g. Tenders Direct). Setting up a generic email address for the work winning team (bidding team) to register with these portals is a good idea as it eliminates the risk of an individual missing an email with a key business opportunity.
What are clients looking for?
To put it simply, there is no simple answer. But understanding what clients really want is key to submitting a successful bid. As with a piece of coursework, showing that you understand the question and what is being asked of you is essential, but proving a deeper understanding of the nuances is what will receive the top marks.
Having a good background knowledge of the client is key. This includes their favoured contractors for previous projects aka your competition, their budget, their concerns, who the decision makers are and who will be marking the bid. Putting together a research document is always a good idea at this initial stage – preferably before the tender has been released. Google is your best friend and there really is a wealth of information available on companies via local online newspapers, their own website, and through social media.
You can also learn a lot just from looking at the bid when it lands. The quality section of a tender varies but typically there will be sections on health and safety, environment, sustainability, risk, design and anything else that the client wants. However, it is interesting to look at the weighting between each section. If there are 12 questions on sustainability and only five on health and safety, then this particular client looks more concerned about sustainability and so you should pay attention to these responses. However, sometimes this will not be apparent from the volume of questions in a particular area but instead from the marks available. For example, although the sustainability section might have 12 questions, they might only be worth three marks each, whereas those five questions for health and safety might be worth 10 marks each, meaning that the health and safety section is more valuable.
It’s also important to remember that the client will usually tell you what they are looking for in the tender documents. Obviously, there are subtle details that will be apparent with your research and market intelligence. But it is highly important to ensure that everyone involved in the tender has read the documentation provided by the client. If some people, particularly Subject Matter Experts, are too busy to read all of the documentation, it is a good idea to prepare a factsheet with the key information.
How to prepare for a bid
A really useful tool at the planning stage is a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Not only is this important for understanding the competition, and the client, but it is also really important to understand the strengths and weaknesses of your own business. This will allow you to highlight your strengths throughout the tender and explain how you will compensate for any weaknesses that you have. If you know who your competitors are likely to be then it is also useful to complete a SWOT analysis on them. What will their offer look like? What are their weaknesses? What are their strengths? It is even more valuable if you take the SWOT analysis further and prioritise the most important factors – this will allow for flexibility later down the line when word counts may start to be a concern.
Win themes are extremely important to any bid and are a key part of your strategy. These win themes can be made up of your strengths, key concerns of the client, or key factors of the project. For example, if a key concern of the client is likely to be budget because you know that their last contractor went bankrupt on a project, then you will want to show how strong and secure your financials are and how they will receive true value for money with your offer. Or, if the project is being built in a beautiful and natural landscape, and there are lots of environmental groups showing concern, then you would do well to demonstrate how you would protect the natural environment as much as possible whilst carrying out the specified works. These win themes should filter through every appropriate response and will ensure that your submission looks like a joined-up and well-constructed proposal.
Common sense should be applied here to ensure that the preparation work is relative to the value of the contract that you are bidding for. A full workshopping session on the bid strategy, win themes, and detailed documents produced with information on competitors are all ideal but if the project is quite small then consider just allocating a couple of hours instead of days. It is important to always have robust intel before starting any bid – no matter how small the project.
Top tips when writing a bid response
- Read the questions clearly and thoroughly – ensure that you are actually responding to the question given and not just copying and pasting something from a previous bid.
- Plan each response carefully and get direction from Subject Matter Experts wherever necessary.
- “Keep it simple, stupid” – Do not assume that the person marking your response will have prior knowledge in what you’re writing about. For example, do not use industry-specific acronyms without explaining them first. • Do not get carried away using the synonyms function on Word. Clear, concise and simple language is often the best approach.
- Do not assume that it will be just one person marking the entire bid, it is often split into sections for a variety of people to mark, and so cross-referencing is usually a no go.
- Use key words from the question throughout the response to show that you understand what is being asked and that you are actually answering the question. It’s quite common to get sidetracked by a topic and tell the client everything that you know rather than telling them what they want to know.
- Use subheadings to signpost to the information clearly and break up the text. This is easily done by breaking down the question into parts, as it often asks more than one thing, and using these as your headings.
- “A picture tells a thousand words” – graphics are particularly valuable when dealing with a tight word/page count. Tables, graphs, charts and images are all useful too.
Glossary of terms
A generic term for the document that you will submit in order to be considered as part of the competition. But also, the name given to the entire competitive process.
An organisation that is competing for the available contract.
The organisation that is buying the goods, services or works at part of the tender.
EOI – Expression Of Interest
An expression of your interest to take part in the tender – advises the procurer that you will be taking part.
PQQ – Pre-Qualification Questionnaire
Typically, this is the first stage of a tender and will allow the buyer/client to eliminate bidders that are unsuitable at an early stage. This is usually a quality-based submission rather than commercial.
ITT – Invitation To Tender
The package of tender documents issued to bidders that have been invited to tender for a contract. This is also a formal request for a proposal / invitation to tender.
RFI – Request For Information
A formal request for a proposal. This can be used interchangeably with ITT.
BAFO – Best And Final Offer
Once the ‘final’ bid has been submitted there is often scope for feedback from the client. Following this, bidders are sometimes required to submit their ‘best and final offer’ which is then subject to no further feedback or discussion. After the BAFO is submitted this is when the final decision is made.