#Tendering for contracts When a business

#Tendering for contracts

When a business bids for a job, usually you will draw up a quotation or an estimate and the contract will be negotiated on that basis. But for large jobs, extended periods of supply, and most public sector contracts a more formal process of tendering may be required.

This can be a complex and time-consuming process that can use up a lot of precious resources and it is advisable to carefully way up the pros and cons before launching into preparing a tender.

Potential benefits
Besides affording a degree of security and confidence to a business, winning major contracts can raise your profile both in the marketplace and among other potential customers or clients. It can also help with retaining and recruiting quality staff.

And there can be benefits from engaging in the tendering process even when you are not successful in your bid because it can help you assess your strengths and weaknesses, fine tune your business plans, and gain a greater understanding of the needs of specific customers or clients. All of this can help with identifying and bidding for future contracts.

Potential disadvantages
Depending on the size and nature of the contract, the process of preparing and submitting a tender can incur considerable costs, most or all of which will be lost if the bid is unsuccessful. You will need to be confident you can withstand the potential loss before proceeding.
Thought should also be given to other resources such as human resources that will be tied up in the tendering process and how they might otherwise be deployed, perhaps to greater effect.

Preliminary considerations
Before committing resources to preparing a tender, obtain sight of the necessary documentation and check the following carefully:

• Does the work fit in with your strategic plans and overall business objectives?
• Do you have all the necessary skills and resources required by the customer and if not what would be the additional cost of acquiring them?
• How would the work impact on other aspects of your business?
• Are there requirements to comply with specific standards relating to environmental, diversity, sustainability or health and safety matters, and if so can you meet them?
• How important is it for your business to win/retain this particular customer/contract?
• Will the contract be sufficiently profitable?
• What do you estimate the cost of preparing the tender to be and is it realistic to commit those funds at this stage?

If necessary, contact the customer directly to clarify any outstanding questions. Above all, satisfy yourself that the customer is serious and not just inviting a tender to make up numbers or simply test the market.

Beware also that the information you include in a tender could be potentially useful to competitors, so where appropriate protect your interests by requiring the customer to sign a non-disclosure agreement.

Preparing a tender
Having considered the above points and decided to proceed, the next stage is to assign a team to gather all the necessary information, analyse the costs, prepare a pricing schedule, and finally write and submit the tender. These are all areas in which we will be able to assist.
The costing and pricing in particular are critical to the viability of the tender and it is essential these are both accurate and thorough. While you want the tender to be competitive, it also needs to deliver a worthwhile profit.

One key consideration in formulating your offer is to understand whether the customer is looking for value for money or is primarily focused on the lowest bid. Where value for money and not just cost is an important consideration, be sure to emphasise unique features and benefits that your competitors are unlikely to provide. Quality, reliability, support, maintenance, and guarantees should all be emphasised in this context, as should testimonials from other customers where appropriate.

Remember, procurers will…

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