Are you from a large firm in a project-centric industry like consulting, professional services, infrastructure, construction, hi-tech, aerospace, or defense, and are you responsible for helping your company win more projects and proposals? If so, you will find this blog useful to leverage nine steps to help your team bid on and propose complex projects at a price that wins you the deal without sacrificing your margin. For the complete guide, download it here.
1. Identify Your Strengths
Before you get excited about that RFP you just received, or the hot lead you found at a client needing your help to deliver a complex program, identify your strengths and weaknesses. While it's often good to pivot and explore new opportunities, your company needs to build on what it is already good at. Knowing your existing strengths not only help you decide what to bid on, but how to best position yourself to win.
2. Fully Understand Your Client Needs and Wants
You need to understand fully what your client wants and needs, and what critical people at the client individually want and need. What key individuals needs may differ from what the account asks for? One requirement can be broken down into multiple conditions, some of which could make your solution stand out, and some might raise a red flag because they are your weaknesses, not strengths.
Each client's need has more underlying conditions; it is your job to find out what they are. Try to map out the stakeholders at theclient – procurement contacts, IT contacts, who is signing off on the solution, and who will make the final internal recommendation, who will make the final selection, and who will you negotiate the contract? Time spent mapping your client's organization and knowing each of the stakeholders will only improve your chances of positioning your company and your bid in the best place to win.
3. Define Your Win Themes
It would help if you crafted why the client will select your company over everyone else before you start the proposal. Sometimes the win themes change the flavor of your response, as you throw out all those pre-canned descriptions of your company and service offerings in favor of crafting something tailored to this client's needs. Importantly, you need 3-4 reasons (minimum 3, maximum 7) why the client should select your company. Try not to fall into the trap of simply repeating what everyone else will say. Win themes should focus on things that differentiate you from your competitors. Put yourself in your client's shoes when crafting your win themes. Win themes are usually things that will positively influence the cost, risk, or project schedule, so ask yourself the following questions about each of your win themes: will this reduce the project cost to my client? Or increase the client's confidence that my company can deliver this on a budget?
4. Plan Your Project in Detail
If the project you are bidding on is complex; it will take time and resources to plan it out properly. Sometimes you may need to prototype critical or risky aspects of the project to determine how easy it will be to deliver. So now is the time to bring together your team, focus them on the task at hand, and have them work out how to provide this project and, more importantly, how much it will cost. The critical thing here is not to reinvent the wheel.
5. Don't Forget to Plan for Indirect and Support Costs
Having come up with what you believe is a great project plan and cost estimate, you can calculate the cost by multiplying the hours for each task by the blended cost rate of the group of people who will deliver that task. Wrong! There are lots of over looked costs. For example, fringe benefits like healthcare, vacation days, and non-recoverable employee expenses (which, to be fair, are sometimes baked into the blended cost rate by your finance dept.) Or overhead such as marketing, sales (that pre-sales budget again), supervisors, or line management, finance, purchasing, HR, facilities and maintenance, and even IT General and administrative expenses such as buildings/offices, taxes, professional or legal fees, general management of your company.
Mature organizations use a financial systems like SAP ERP, Oracle, Sage, etc., to keep track of all their costs and record them to a range of GL accounts and overhead' pools' or cost groupings. They then use this data in turn to compute overhead rates or factors which can be applied as a % on top of direct costs, as a % of revenue or based on some objective measure like the number of employees, or square footage of office space.
6. Calculate All Risks, Issues & Opportunities
Once you've calculated the burdened or actual cost, you can add your margin and price to the proposal and submit it to the client. But since most projects are delivered overtime and over budget, you've got to think about what might go wrong. You need to consider the risks, issues, and opportunities involved. Be sure to build a risk register before the contract is signed, and the project manager is doing detailed planning and preparation before you make a risk register. The time to build a risk register is now, during the bid stage.
There are two ways to build a risk register or calculate the risk-adjusted cost. The first is the more complex (and more accurate) way which is to create a list or record of specific and unique risks that your team (and some help from ChatGPT) thinks could impact your project.
7. Find the Best Pricing Strategy
Once you know your cost, all you need to do is add your target margin (as a percentage of revenue), and you have your price. Not exactly! Your pricing strategy can be a combination of the above or several of the above all at once to give a set of price points to help your VP do a 'gut-check' of the price. Eight percent of the project margin is determined in the pricing step of the proposal, after all so it is essential to get it right. Too high, and you lose the bid; too low, and you lose money on the bid. You can also bundle multiple service offerings, give drastic discounts to drive desired customer behavior, such as closing a deal this quarter, and investing in strategic markets or service offerings by offering lower pricing.
8. Confidence is Key
Believe in your skills and communicate your value with conviction. Show that you understand the client's business and are committed to delivering high-quality work that meets their needs. Consultants often talk about the 'trusted advisor status, which is a target of most professional services firms, if not during the sales cycle, then during the delivery cycle, as it will generally lead to repeat business. The way to achieve a trusted advisor is simple, tell the truth. Don't trick the client; assume they will Google what you told them to compare; even better, assume they have a buddy working in your same industry, perhaps even in your company. If you are the expert you think you are, it will show. And the few occasions when you say, "I don't know, let me get back to you on that" (provided you do, of course, get back to them) will only impress them more.
9. Have a Follow-up Plan After Proposal Submission
After submitting your proposal, follow up with the client to show your continued interest and answer any questions they may have. This can help build rapport and increase your chances of winning the project. Professional buyers or large or complex programs will have a defined procurement process, which they will write down and publish to all bidders. They will never be on time, but at least you can know what to expect and when to prepare and chase the client for updates and information. Use the follow-up time to reinforce your win themes. For example, if your bid is all about how great your people are, ensure your delivery team is in front of the client and not just the sales team. If you have a unique approach or tool, expose the client to the tool, perhaps by offering training or a hands-on trial.
Good luck! And remember, once you have won and successfully negotiated the contract, the real journey, and the challenge start; how do you deliver a project successfully and profitably?
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