NAVIGATING A SUCCESSFUL PROPOSAL PROCESS: PART 1 OF 3

NAVIGATING A SUCCESSFUL PROPOSAL PROCESS: PART 1 OF 3

To Bid or Not to Bid

You’ve just received a Request for Proposal (RFP). You’re elated. It’s a sizable contract; capturing the contract and the customer’s repeat business would be an enormous leap forward for your company.

Then you begin to look at the RFP. It’s a 100-page document full of jargon, legalese, and pages upon pages of requirements you may never have fulfilled — at least on this scale — and the elation fades to doubt. When you see the proposal deadline, a mild panic sets in.

Where do I begin? Should we even try to tackle this? How should I put the best team together? How can we pull this off with the least stress and the most efficiency?

These are the questions we’ll address during this three-part blog series. Take a deep breath, and follow these first steps toward a thorough, well-managed proposal process.

 First Things First

Remember, a Request for Proposal is just that: a request. You are not obligated to respond, and, depending on the requirements outlined in the RFP, you may not want to respond.

The first question to ask is whether this contract will truly benefit your company.

Daniel Hewitt, a Process Safety Specialist with a Houston-area engineering firm, emphasizes, “This is a question you should take very seriously. Not all contracts are worth pursuing. No matter how big the contract, no project is worth pursuing when it is doomed from the start or is likely to damage your reputation.”

Answering this question requires a thorough analysis of the RFP and some legwork on your part.

 Analyzing the RFP

Before making a decision about submitting a proposal, you must begin gathering information. Calmly read the RFP from cover to cover. Use a highlighter, write questions in the margins, take notes, and study it. Be thoroughly familiar with it before taking it to other people in your organization to avoid misinforming anyone involved.

Watch for buried requirements. Requirements may be lurking in a footnote, a table, or in very small print beneath a drawing; missing them can cost money or hold up the project.

Paul Munger, 30-year employee and project estimator for Dallas-based T W Design, illustrates this point. “For example, your company may ordinarily paint the machinery for its contracts. An asterisked note in 6-point type says something is to be powder coated. If you were to paint it and then be told by the client it was to have been powder coated, it could be very costly. And your company would have to absorb the costs.”

Look for information that is not there. “Often there is information missing from the RFP that may be critical to project delivery,” Hewitt said.

“Make a list of any questions you have concerning what seems to have been left out. Bring up any concerns you have about missing information with those who may be affected: the estimator, the procurement manager, the person who will head up the project if the contract is won, and the person in charge of company or contract finances.”

Note the deadline for asking questions. The company issuing the RFP will typically answer questions and clarify items in the RFP — up to the designated cutoff point.

Companies handle these requests for clarification differently. Some answer an individual company’s question(s) independently. Some route the response via email to everyone on the bid list. Others hold a meeting to which all bidders are invited, and questions are answered at the meeting.

“Just be sure to submit your questions prior to the deadline,” Munger said. “Only rarely will you be able to ask anything afterward.”

Scrutinize contract terms and up-front costs. For example, Marion Winsett, a career sales manager in oilfield equipment, said, “Does the contract require that you or any subcontractor post a performance bond?” Winsett recalls a contract his company bid on and lost. The RFP stipulated that a particular subcontractor be included on the project. It further required that the subcontractor post a $1 million performance bond. The subcontractor refused to agree to the performance bond, and the workaround Winsett’s company offered in its proposal was rejected.

“Our failure to come to an agreement on that single issue cost us a huge contract.”

Munger recommends paying attention to any other type of mandated insurance and specifications requiring a longer warranty period than is normally offered.

“Check with the procurement manager regarding the cost of additional warranty coverage,” he advised. “When you find a company willing to offer an extended warranty, it is likely to cost more or require extra lead time.”

Addressing contract terms up front is extremely important, Hewitt said.

“A lump sum or turnkey contract must be examined with a fine-toothed comb. If the RFP is not well thought out, and your questions related to missing information are not resolved early on, that is a huge red flag.”

Perhaps you shouldn’t respond, as committing to a poorly defined project could seriously affect project success.

Assess the resources required and the contract schedule. Make note of the number of resources and the sequence in which resources will be required. You may want to involve subcontractors rather than increase your workforce or try to expand your services.

How many employees and/or subcontractors will be needed at project startup? When will the resource curve be at its height, and how many resources will be needed? What about closeout?

“Ask the contract manager to estimate resource requirements and immediately apprise you of potential roadblocks,” Munger advised.

 If subcontractors are required, a team must be assembled to source and select the subcontractors immediately after the determination to bid the contract has been made.

This team is often independent of the team writing the proposal team. The subcontractor selection team may be members of your sales force, as they likely have existing relationships with subcontractors.

Winsett stresses the importance of working closely with the subcontractor(s).

“The selection team and the subcontractor must agree to the terms in the RFP. Terms stipulated in the RFP that the subcontractor sees as roadblocks must be addressed immediately.”

 Understand what it will take to do the job. If the RFP calls for designing, building, repairing, or otherwise providing something that is not an item you normally provide, make sure that your estimate accounts for those things.

“Consult a representative of the labor force to determine how the task might be accomplished,” Munger suggested.

Make a list of the materials required and the associated specifications. If your company has an estimator and a purchasing agent, now is the time to seek their input.

Give the RFP, the list of standard materials, and the projected labor requirements to the estimator. Ask the estimator to read the RFP and let you know if he or she thinks you’ve underestimated your ballpark resource hours or failed to note some critical materials or equipment.

If the RFP calls for any nonstandard items, take your list of nonstandard items to the purchasing agent. Ask the purchasing agent to read the RFP to double-check your list and to let you know immediately if there are issues related to product availability, backorders, and long lead times.

If your company doesn’t have a designated estimator or purchasing agent, enlist whatever help you can get so that issues regarding the cost of materials and any nonstandard items can be addressed immediately.

It’s Time to Decide

As soon as you have read the RFP and received some key players’ assistance, head straight to the person with the purse strings. Discuss the terms of the RFP regarding up-front costs, terms of payment, and additional staffing.

After your discussions with the financial officer, the estimator, and the project manager, Hewitt emphasizes that you should have a “Go/No-Go meeting.”

This meeting should include the persons just mentioned and any others you’ve involved who may have foreseen a red flag on the RFP, as well as the top decision-maker for your company or division. Brainstorm how issues in financing, staffing, and materials acquisition might be resolved.

“Set aside your belief in how important this client’s business might be,” Hewitt said. “Consider whether the roadblocks you’ve identified could actually result in project failure, a damaged reputation, or financial loss.”

You must resolve the issues or agree to pass on this one.

Next in this series: We’re Going Forward. What Next?

 If you’ve struggled with previous proposals — possibly in the form of all-nighters, frustrated teams, and a mess of email miscommunication — then you know just how wrong proposal preparation can go.

 Setting up the right team from the start can mean the difference between smooth writing and proposal hell. From sales reps to SMEs, learn who should be on your proposal team to keep the writing on track and help secure a winning bid.