From our professional experience and understanding of costing and pricing opportunities and over ten years of bid work across industries, sectors and seniority, Enginance has identified a number of potential problems, symptoms and issues that can be experienced. Each contribute to weakening the chances of winning, delivering and making money:
- A lack of valuation and quantitative (numerical) analysis and assessment early-on in the bid cycle meaning decisions, direction and strategy are made on opinion/qualitative judgement only;
- One function reigning-by-opinion over the others, with only argument or whispered criticism to counter the ruling view (eg: Finance, Sales, Operations, or Legal for example) leading to a win-or-lose ethos between functions, instead of win-win;
- Slow, tardy and incomplete cost estimation that puts pressure on pricing teams to convert costs to a price in a hurry;
- A lack of trust and cohesion between those preparing a bid and those to review and approve. There can also be a lack of trust between those winning the work and those delivering; this results in estimates being deliberately too high as the lack-of-trust mentality expects their content to be slashed prior to award, and be handed back under a diktat;
- Business functions (eg: Operations, Sales, Purchasing, Engineering, Finance, etc.) criticising each other for not comprehending the balance between estimated costs being robust (so that the business can deliver to time, cost & quality) and enabling an offered price to be lean & competitive;
- Little or no quantitative cross-functional assessment of how viable an opportunity is, only a qualitative Business Development view that can go unchecked until late in the bid cycle and then not be feasible once costs and prices have been calculated;
- Stressful and argumentative review processes with senior management where cost and price content is not seen as robust, explainable or sufficiently competitive;
- After a lot of hard and draining work, the bid loses on price against the competition for simply being too expensive;
- A common quote is “our estimators don’t know what they’re doing and over-cost” when in fact they do know what they’re doing and what a true cost may be – they simply don’t have time to prepare and review things fully, or are trying to resist pressure to deliberately under-cost to meet overly stringent targets;
- Another common quote is “our estimators keep on adding-in hidden risk in their cost numbers so we get risk-on-risk in the price, making us uncompetitive”. This can be exacerbated when there is little or no time to test the hypothesis or correct things if it is true;
- Senior management seemingly wanting to add-on ‘too much’ margin/profit late in the process which sets prices higher than the client relationship manager knows will work. This may be due to not having been discussed, or the impact calculated, at an early enough stage or others with no jurisdiction assuming margin can be low until over-ruled;
- A complete calculation and presentation of price comes too late in the bid-cycle and is often far too high to be competitive, leading to untenable review cycles and tension between 1. client relationship managers, 2. the delivery-side of the business and 3. senior managers who must sign-off costs and the offered price;
- The operations (delivery & support) functions are constantly under pressure to do more with less people and with less money during the bid/quotation phase (potentially to the point of not being able to deliver to time, cost & quality post-award) otherwise the bid will be lost…but must be won!
- After bid submission, work is awarded but costs over-run significantly (versus the costs within the bid price) leading to poor margin realisation or, worst case, the project making a loss that can then not be recovered.
All of the above points can manifest into poor bid morale and poor levels of cohesion between matrix teams across functions leading to sub-par overall performance or even, worst case, high levels of lost bids and, ultimately, losing people.
Enginance can help and solve all of the points above by harbouring collaboration via early and quick analysis, most notably our EVOCAP approach.