If you cannot make a profit from a project, then there is absolutely no point in bidding it. If the chances of winning a project are low, then you are wasting your resources and should not be bidding it either. Whilst many business owners see every opportunity to bid as a possibility to win the reality is that they are getting sucked into the ruinous trap of the race to the bottom on price, to gain work by bidding everything they are offered or see.
The alternative is to be selective about what you bid and to secure work that is profitable. The work should be the type that you excel at which will enhance your reputation for that type of work. It will put you on the radar of other clients in that sector who are selecting suitable organisations to include on restricted tender lists to ensure their project is delivered successfully. The cycle then becomes a virtuous one.
Instead of starting from the position of bidding everything, you should start from the position that you will only bid what you can win. A Bid-no-Bid policy should be established. Considerations when generating such a policy are:
Decide which business sectors or activities are likely to be in decline or a growth phase in the future. You are looking for sectors which will be sustainable for the next few years
Review your existing portfolio for gross profit by sector, client, geography and see which are the most attractive segments of the market. Having a clean set contractors accounts is necessary for this
Agree what types of projects the business can deliver well and which types you do not have the capability for.
How many others are you willing to tender against?
Do you have a preferred type of procurement route or contract type?
What are the upper and lower limits for the value of projects you will do
How far are you willing to travel and which locations you will not go to?
What criteria must clients meet before you will work them and are there any you will not work for?
What is the minimum number of people do you need to know on the procurement team?
Having established the rules of engagement a scoring system can be established and there are multiple examples of Bid-no-Bid tools on the internet. None will fit your business exactly, but they can be used for ideas for developing your bid-no-bid scoring matrix. The beauty of having such a tool is that your marketing and business development people know exactly what is required and will not waste their time on leads which should not be pursued.
When a bid-no-bid system is set up for the first time and the current projects in the pipeline reviewed against it, pipeline anxiety is likely to set in as the number of projects to take forward will undoubtedly reduce. But be realistic, if the project has failed pass your bid-no-bid criteria then the chances of winning are so slim you are wasting your time bidding and chasing dreams by being a busy fool. Concentrate on those which can be won and put every effort into securing them.
Apart from the severely reduced number of projects in the pipeline, pipeline anxiety maybe real in terms of the size of the market available to you. There simply might not be enough projects in the market of they type you require to satisfy your forecast. To increase the pool of opportunities, a strategic review of the market is required, where you examine the market in more detail by looking at your competitors, service offering and what your existing clients are asking you to do.
Get in touch if you want help with developing a bid-no-bid policy or a strategic market review.