Submit a tender that is higher than the lowest price and you are likely to lose. Submit the lowest price well below the second, and you have missed an opportunity to make a bigger profit. Getting the tender price right is vitally important to be a profitable contractor. This guide walks through the full pre-construction process — from identifying opportunities to submitting a winning bid.
Stage 1: Identifying Opportunities to Bid
Outside the domestic market, the number of clients or buyers is relatively few. Clients and their representatives do not need to search out companies to do the work — the contractors find them and ask to be included on the tender list. Your marketing strategy should clearly identify the segments you are to pursue and therefore which communities you are going to be part of.
Opportunities can be found by searching planning portals or the government’s find-tender service. Paid-for services such as Barbour ABI, Glenigan, Planning Pipe and Landcycle each have a place in the market depending upon your targets and depth of pocket.
Stage 2: Initial Engagement and Using a CRM
Once you have your leads, make initial contact. A CRM tool is useful at this stage to keep track of conversations. Generally, there are two outcomes: either it is too early and the tender list is not being compiled for some time, or the list is already compiled of companies who have been used before. Persistence and the right attitude are key to getting on the list for the project found, or the next one the contact has coming up.
Stage 3: Pre-Qualification Questions (PQQ)
Pre-qualification is a formal stage in public sector tenders. You will have to pass the PQQ before being Invited to Tender (ITT). Questions typically cover the business: last three years’ accounts, insurances, safety policies, equality and diversity, modern slavery, etc. Having a library of such information is useful. In the private sector, relationships and references also play a significant role, so having case studies available and a website that resonates with potential clients is important.
Stage 4: Completing the ITT (Invitation to Tender)
In the most complex bids, there will be a need to coordinate many parties: designers, planners, technical bid writers, a graphic designer, and the commercial team. A bid responsibilities matrix and programme should be drawn up, with all interdependencies clear. Someone should be appointed as bid manager to coordinate the teams and develop a bid strategy.
Stage 5: Tender Settlement
The direct costs of carrying out the project are derived mathematically. To these, a percentage is added for overheads — derived from the accounts and forecasted turnover — to give the breakeven sum. Finally, the profit is added. The mark-up for profit takes account of how much you want the project, the project and contract risks, and what the market will bear. The decision falls to the business owner, and there is a method for maximising your price yet still being in a position to win the project — one that requires discipline and a small amount of time analysing tender results.
Stage 6: Post Submission
Once submitted, there are invariably clarifications. Final contractors might be asked to present their bid to the client’s team. If you are a losing party, it is worth asking for feedback — and in a public sector project, rules apply about giving losing parties time to challenge the result. Regardless, a review of your submitted tender should be undertaken.
Stage 7: New Marketing Collateral
Assuming the project is secured, a well-managed project not only provides another case study to demonstrate experience, but there will be opportunities to capture information to put into the quality section of future bids. More importantly, relationships developed with all other parties can make them advocates for you to get on the tender list of future schemes.
