What is the bid or no-bid decision making process strategy?
What is a bid or no-bid decision process?
Bid or no-bid decision-making is when service providers (sellers) consider various factors before making an informed decision as to whether or not they should submit a bid proposal in response to a request for proposal (RFP).
What are the benefits of a proper bid or no-bid decision-making process?
Taking up a brand new project is by no easy feat. A lot of work goes into planning the service you will be providing, and submitting your proposal does not guarantee more revenue for your company.
If it were a contract for a construction project, think about the details that need to be considered. The variety of raw materials, the best suppliers, whether or not the materials will arrive on time, as well as the manpower required (and many more).
If you are unable to meet the demands of the project, then why bid at all?
Not all opportunities are created equal. Sometimes, it’s better to let your competitors take on projects you are less likely to be able to handle well. It’s a much better option than biting off more than you can chew. Not only will you be unable to complete the project on time as promised, but you will also end up tarnishing your reputation in the eyes of future buyers.
How not to go about making the bid or no-bid decision?
Many leave the decision-making to sales teams
Sales teams may inherently care almost exclusively about revenue.
That, in and of itself, is not necessarily wrong. The problem here is that this approach fails to consider other objectives the company might have. For instance, a contract that earns your company less money may actually be worth more because the RFP was put out by a very well-known business. Completing the service well can boost your reputation greatly and add significant non-monetary value to your organisation.
Making the decision before the RFP was even released
Many companies use past tender data to make the decision before the release of a tender.
The issue here is that they only take into account what has been done without seeing the full scope of the project. This approach doesn’t review the current tender’s requirements, which could sometimes have changed from previous years, so companies may be missing out on a good opportunity.
Factors to consider in your bid or no-bid decision-making process
Presence of an incumbent
An incumbent here refers to the seller that is providing the service to the buyer. The presence of an incumbent does not necessarily mean that all hope is lost.
Tenderers are constantly looking for options that can maximise the outcome with a decent cost. Ultimately, as a bidder, you need to ensure that your proposal provides great value for a reasonable price. You need not resort to starting a price war as the price can only take you so far. Providing the most value is essential.
Presence of a well established competitor
If a big player in the industry is competing with you for the tender, don’t panic. Just because a reputable competitor is present, it does not mean that you should pull out. Instead, think of other ways that can provide you with a competitive advantage before making that decision to bid or not.
Basic requirements of the project
As we’ve said, it’s not a good idea to not proceed with the bid before you even view the RFP. When reviewing tender documents, ask yourself some of these questions:
- Can you provide the manpower necessary to complete the service?
- Can you complete the project on time?
- Is the project related to your business’s core competency?
- Are you able to obtain the materials needed to complete the service?
External requirements aside, you also need to look inward at your business to consider several things before making the decision to bid or not to bid.
One of which is whether or not the nature of the project is aligned with your business’s core mission and vision. Ask yourself, should you submit a proposal for an RFP put out by a business of a different industry? What do you stand to gain from this?
Use a checklist to simplify the process
There is a long list of factors to consider before you make the bid or no-bid decision.
Instead of rummaging through many articles online on the things you need to pay attention to, use a bid or no-bid checklist to simplify the process for you.
Here’s a snippet of the one we provide our users at Tenderboard:
When it comes to the bid or no-bid decision-making process, never make a quick decision without first giving yourself ample time to consider the many factors. You don’t want to end up giving up on a good opportunity or taking up a project you are not able to complete.
Download our bid or no-bid checklist to simplify the process. This checklist provides you with a list of factors to consider and score before making that decision.
To learn more about the tendering process and other best practices, check out our blog today!