The University of Reading recently estimated that the cost of tendering for new business is equivalent to 3% of the fees that a successful engineering consultancy will charge. Obviously this investment will be worthwhile if enough bids are successful but, if not, pitching will waste resources and be de-motivating for all involved.
Research by business consultant The PACE Partnership – Creating New Clients Healthcheck 2003 – showed that engineering consultancies fared better than other professional advisers (such as lawyers) in deciding which bids to tender for and which to decline. The research showed they fell down in tailoring their proposal to each client’s specific situation.
“From our experience, firms are much more likely to win a bid if they have some prior knowledge of the client or their business,” says PACE consultant Paul Matthews. “Successful bidders understand the client’s decision-making process and have developed a relationship with as many of the decision-makers and influencers as possible. They also know the client’s other advisers and understand those firm’s strengths and weaknesses compared to their own.”
If tender responses are “cut and pasted” from other documents, and not focused on the client’s particular situation, it is far less likely that they will be successful. When responding to an opportunity engineers need to know as much as possible about the client to prevent their offer being ill-informed and “generic”. The quality of their knowledge will depend on the information they gather. Information gathering should focus on understanding the project certainty, but should also focus on the client’s overall situation. More consistently successful bidders will be aware of the current business issues affecting the client and of key industry developments.
The tender invitation provides bidders with some of this information. But successful companies draw on wider sources such as published information, sources within their own firm, other suppliers to the client and, most importantly, people within the client firm.
An objective of information gathering would be to identify which key client personnel bidders need to convince and what they will be looking for. Again, firms that are successful at winning business “map out” both the decision-making process and the individuals involved. In doing so, they identify who will become involved and at what stage. This does not just include final decision-makers – it also covers “influencers” such as people with specialist knowledge who will have an input.
Understanding the client should also influence who is selected for the “pitch team”. From our research, while engineering companies put together multi-disciplinary teams to deliver major projects, they do not approach major new business opportunities in the same way. Those firms that understand the technical skills, commercial knowledge, industry expertise and personalities being sought by the client and then draw up a team which reflects them, are more often successful.
PACE’s research also found that engineers were not confident of their fee rates in winning new business. Many said that they were pressurised to reduce fees by clients. Tailoring proposals to the client’s unique situation will help to communicate real value: engineers also need to have a strong belief in the value they bring and remain strong in the face of fee pressure. The lack of fee confidence, and the pressure on fees, are perhaps related to the fact that engineers are often seen as technical experts rather than “business advisers”. If engineering consultancies are unable to articulate the business benefits of their expertise, clients are unlikely to pay premium rates and may find the cheapest resource for the technical skills they need.
In many tender situations the technical expertise of those on a short list is seen as a given. More consistent success goes to the firms who use the best teams to present uniquely tailored solutions based on a real knowledge of the client and with a real confidence in, and focus on, the value being delivered to everyone in the client’s decision-making process.
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