All tendering is a risk. Whether you’re bidding to clean a bungalow or to build a nuclear power station, it is an act of faith when handing over your proposal that you got it right.
So what are the risks? While we can’t list them all, this article looks at some of the most common ones and more importantly, how to avoid them.
The Risky Buyer
If you have no previous experience of the buyer there is an inherent risk in submitting a tender to provide the services in that the buyer may be:
- Demanding and unreasonable to work with
- Vague and unable to make decisions
- Dilatory with invoices
- Always asking for free extras
The only way to get around any of this is to simply do your homework. Does your buyer have a good reputation in the industry? What do their employees say about them on websites such as Glassdoor? A little bit of research could be enough to tell you all you need to hear.
The Incumbent Risk
Unless your contract is for a brand new service, there will already be somebody working on it. They will probably be your main competitor. Risks of going up against the incumbent include:
- They may be well established in their position and relationship with the buyer.
- They will have insider knowledge on the day-to-day reality of working for the buyer and what is actually involved in the service provision.
- The buyer is going through the tendering exercise because they are compelled to but may have no real intention of appointing a new provider.
- No matter how fair the buyer may try to be, if the relationship is good, there will always be bias in the evaluation.
The only real thing you can do to mitigate against these risks is to write the very best bid you can. Explain not just why you are good, but why you are better than the incumbent. What can you offer that they can’t/don’t/won’t. Offer some tangible additional value and the buyer might just give you another look.
Risky Procurement Processes
No procurement team is perfect. Some typical risks in the process include:
- Centralised procurement teams or an external bodies with little-to-no understanding of the services being procured.
- Overly complicated and difficult processes resulting in confusion and submission errors.
- Documents which contain errors or requirements that are not relevant to the services, (e.g. the steel questions in the standard selection questionnaire).
- Clarification responses being missed or delayed due to inattentive administrators. This can cause severe delays or even discourage participation.
- Severe delays in the evaluation period which result in changes to the mobilisation period and contract start date. This creates issues with planning, recruitment, purchase of equipment, setting up suppliers and so on.
The best way to avoid many of these risks is simply to be conscientious. Read all the documents through thoroughly and early. Flag up any issues as soon as they appear and don’t make assumptions based on past experiences.
Our experience tells us that one of the biggest risks in terms of pricing is the fairly common habit of not opening the document until the last minute. It is vital that you look at the pricing document as soon as you can.
Typical issues that arise with pricing documents are:
- Spreadsheet formulae that don’t work.
- Unclear instructions.
- Fee structures which don’t reflect typical industry/sector practices.
- The wrong pricing schedule entirely.
If you don’t look at this document as soon as you get it, you risk not leaving the buyer enough time to make any corrections.
Document and schedule revisions are another huge risk, especially if you aren’t paying attention. It is crucial you monitor and read clarifications for updates on any bid documents. Make sure that only the latest versions are being used. Your tender will almost certainly be rejected if you use the wrong pricing schedule.
Pricing documents can also be highly complex and difficult to navigate. You may be forced simply into making your “best guess” and hoping you are right.
The Specification Risk
Obviously, the specification document should tell you about the required services and the standards you will need to adhere to. There are risks here however. Some typical examples include:
- From your experience of the services, the client, or a site visit, you may note that the specification doesn’t really reflect day to day expectations.
- Duplications or contradictions between sections.
- Insufficient detail and vagueness.
Again read this document carefully and ask questions if there are issues to try and achieve clarity from the buyer. If you don’t receive absolute clarity, proceed with caution. You may find yourself bidding for the wrong service, or even being contracted to provide it.
Risky Terms and Conditions
The T&Cs are vitally important. You should read them thoroughly at the tendering stage or risk missing clauses that you cannot comply with. There may also be unlimited liability clauses or penalty clauses which could seriously harm your company if invoked.
The biggest risk of all, of course, can be in accepting the terms and conditions negotiated and amended or not. You should make sure the T&Cs suit your company and your capabilities. If not, you may find yourself in a difficult position, unable to provide the service adequately.
Get yourself into the habit of reading the terms and conditions as soon as possible (or asking your legal dept. to), so that you may discover any issues early on and ask questions or negotiate.
A Risky Conclusion
As with anything in life, risk is unavoidable. It is important therefore to be aware of the potential risks around you and make a concerted effort to not allow them to manifest. Many of the points made above are completely avoidable through due diligence and preparation. Don’t allow silly mistakes to lose you bids.
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