Question

“To bid, or not to bid, that is the question.” It ain’t exactly Shakespeare, but the decision to bid on a project shouldn’t be taken lightly. You invest a great deal of time and resources into putting together a bid, so it’s important to make sure you are carefully identifying the right projects to go after. One way to do this is by conducting a thorough bid/no-bid analysis that meets your company’s goals and is in line with your long-term strategy. How does your company do bid/no-bid analysis? Please comment. Thanks.

Please no hand-written answers.

Answer 1

To bid, or not to bid

Bid or no bid decision process is a formal, rational decision making process undertaken by contractors in order to determine whether to submit a bid or a no bid letter in response to an invitation for bids.

In order to make the bid/ no bid decision, there are number of factors to consider to make an objective decision.

Profitability

The first criteria to make decision is whether it is profitable or not. Make sure you have a comprehensive account of annual labour cost, equipment costs, and all other incidental costs and variable costs to determine what it will cost you to complete the project. Then compare the costs and income to determine whether to bid or not to bid.

Capability

Once you feel that you can earn some amount of profit from the project, you have to consider the capability that you have and whether it is able to complete the project. While determining the same you have to consider the committed projects and upcoming economic changes to make sure that you can provide the manpower, equipment and other resources to commit to the projects.

Historical Analysis

In order to submit better bids and win more work, you should keep records on all your bids, both the successful ones and the ones you didn’t won. It is important to have a clear records of what caused you to lose out on a bid to improve yourselves.

Long-term Strategy

As every company has long term strategy, the project that are going to bid should be compared with the strategy. If the project is in line with the long term strategy of the company it’s better to go for bid rather than not to bid. Regardless of what your company’s long term strategy is, make sure you are identifying and going after projects that align with those goals.

Risk Assessment

Before deciding to bid a project should carefully identify all the potential risks that could arise on the project. There are many factors which affect projects which include economic factors, legal policies of the government, cultural and social factors, international policies and globalization. Common risk includes incomplete documents, unknown site conditions and safety concerns. Prioritize the risks taking into account how much time, money and work each risk will require to manage effectively.

Conclusion

It’s clear from the above, the process of Bid or not to bid decision making is a long term one and have to look from all the aspects to decide whether to Bid or not to Bid. If the benefits outperform the risk, decide to Bid otherwise move on to your next opportunity.