Recent Posts A Rational Approach to Making Bid Decisions (Part One)

A Rational Approach to Making Bid Decisions (Part One)

Most companies don’t have the resources to bid on every mildly relevant opportunity that moves. At some point we have to make a bid/no-bid decision, and if we’re doing business development right, we make informed bid decisions for every opportunity we consider.

For most of us who work in proposals, we have had a moment when we pick our heads up in the middle of proposal intensity and ask, “why are we bidding this anyway?” That unfortunate circumstance lays bare the stark reality that bid decision processes are often not followed, if they exist at all.

The ideal bid decision approach:

  • Removes emotion and produces a decision around which all can rally;
  • Advances the strategic goals of the organization;
  • Increases win rates; and
  • Drives capture activities.

Every new opportunity should be assessed for a bid decision at multiple points:

  • Initial opportunity identification
  • About mid-way through the capture process
  • After the preliminary “solution” has been devised
  • When the final solicitation has been released
  • Prior to submitting the bid

At each of these points, the capture/proposal team and company leadership should evaluate the bid by assessing a set of decision criteria. Critical to success is the willingness to pull the plug at any of these decision gates. If the team determines when the RFP is released, for example, that the opportunity should not be bid, despite perhaps many months spent doing capture, the “sunk cost” argument should not override the objective bid decision criteria. The “don’t throw good money after bad” maxim applies here.

business discussion on make a bid decision

So what is a logical set of bid decision criteria? We often kick around the idea of “PWin,” or probability of win. This factor, while important, should be only one of a logical set of bid decision criteria. Bid/No-Bid decisions should ultimately be made according to the following criteria:

  • Probability of Win (PWin) Analysis—what are our chances of winning?
  • Strength/Maturity of Win Strategy—have we made sufficient progress in positioning ourselves to win, or are we jumping in too late?
  • Implementation Risks—are there any risks to successful project implementation, such as an uncertain client budget or ill-defined technical requirements? Is there a significant chance that we could fail during contract execution?
  • Organizational Conflict of Interest—are there any actual or perceived conflicts? Will winning this contract keep us from being able to bid another, perhaps larger opportunity? Are we doing any current work that the customer would perceive as a conflict that would preclude our winning this new opportunity?
  • Profitability—are there significant concerns about our ability to make money, such as large components of revenue that cannot bear fee, a requirement to subcontract large segments of the work, or the likelihood that we would have to bid an unrealistically low fee to win?
  • Alignment with Company Strategic Plan—would winning this contract align with specific elements of the company’s strategic growth plan? Does the contract fit in with who we want to be and the kind of work we want to do?

As with most things, the devil is in the details for how you implement a bid decision methodology. But a well-defined bid decision process which is understood by all and executed with honesty will go a long way to improve win rates, support the company’s strategic growth objectives, and enhance the team’s morale.

Next month we’ll discuss PWin in some detail, including defining what PWin is—and is not—and how to use the components of PWin to guide your capture efforts. (Hint: get rid of your PWin calculator spreadsheets!)

This two-part article was written by Jeff Leitner, senior proposal consultant at Red Team Consulting. 

2018-12-05T19:43:09+00:00December 5th, 2018|Categories: Capture Management, Proposals|Tags: , , , |

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