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Last updateFri, 24 Mar 2017 12pm

 

Why should FDs adopt a ‘Bid/No bid’ process when tendering for contracts?

Contracts

When it comes to tendering for contracts, it’s important that a company knows its capabilities and limitations, and this is an area in which FDs must take an increasingly influential role.

By their very nature, entrepreneurs are ambitious. There’s nothing wrong with this, after all, some of the world’s largest and most successful corporations were started by clever people with a big vision.

While some say that if you aim for the stars, then maybe you’ll reach the sky, others suggest that you should never run before you can walk. Which of these clichés should you consider when running your business?

The economy is growing and opportunities abound

The UK economy is growing, of that there is no doubt. In fact, the Organisation for Economic Co-operation and Development recently predicted that the country’s economy will expand by 3.1 per cent in 2014 and a further 2.8 per cent in 2015. This has inevitably given important sectors such as manufacturing and construction a real boost in confidence, and the number of major new projects being launched is already increasing.

There are some monstrous infrastructure developments in the pipeline, most notably the controversial multi-billion pound High Speed 2 rail line, which will slash journey times between London, Birmingham, Manchester and Leeds. With more high-profile opportunities becoming available - and with the government committing to work more closely with SMEs - smaller businesses have a great chance of landing some lucrative work.

Don’t overstretch yourself - Bid/No bid

Many business owners have come unstuck because they’ve attempted to take on too much, too soon. When it comes to tendering for contracts, it’s important that a company knows its capabilities and limitations, and this is an area in which FDs must take an increasingly influential role.  

The head of the financial department will be in the best position to assess whether the company has the necessary resources to bid for a contract. Bid writing is a time consuming and costly process, and firms that adopt a scattergun approach towards applying for contracts are in real danger of falling into financial difficulties.

That’s why it makes sense to adopt a "Bid/No bid" process. Quite often, public sector organisations and large private corporations will use a Pre-Qualification Questionnaire in order to create a shortlist of preferred bidders for particular contracts. FDs need to assess whether it is worth applying for the work even before they make a PQQ submission.

In essence, the thought process should go something like this:

• Can we realistically win this bid? Is there too much competition for us to stand a chance?
• Can we match what our rivals are likely to offer?
• More important, do we have the resources to carry out the job if we are successful?
• Do we have a relationship with the client? If so, how can we use this to our advantage?
• Have we got the capability to submit a strong bid?

If FDs have any doubts, perhaps it’s best that they don’t submit a bid and instead focus on obtaining more suitable and realistic contracts. For example, a small construction company with a 25-person workforce is highly unlikely to win a contract to deliver a brand new multi-million pound motorway.

Is it worth outsourcing or can you manage your own bids?  

Once an FD has decided that it is worth submitting a bid, they must think about how they can gain an edge on their rivals.
With so much competition for private and public sector contracts, it’s never been more important for businesses to put together a concise, accurate and interesting bid. The FD needs to weigh up the pros and cons of writing and managing bids in-house or outsourcing the whole process. As always, it’s vital to consider ROI.
 
Have you got enough money, space and time to set up your own bid management team? Chances are that smaller businesses will be focusing their resources on other areas, so in order to remain competitive, their best option might be to outsource their bid management tasks.

Many business owners are wary about outsourcing, as they feel that their control over the bid management process is diluted. That said, a third party tendering specialist will have extensive experience of writing successful bids, so you know that your bid will be strong.

These are exciting times for UK businesses, but the pressure is mounting on FDs to ensure that money is being spent wisely. Introducing a Bid/No bid strategy will help them with this in the long term.

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