Original Post Date: June 29, 2015

I read an article this week, called “7 Questions to Answer when making bid/no bid decisions” by Bob Lohfeld on WashingtonTechnology.com, and it really hit home with my past experiences estimating on the contractor side of things.  He talks about why some companies have higher win rates than others, and how it’s really all related to the decision making process.  Why do organizations choose to bid on projects, and why would they choose not to bid?  In some cases, choosing not to bid on a risky project will save tons of time and energy that would be better focused on project that is really a better fit for the organization. It’s not beneficial to just bid on as many proposals as possible (which would spread the bidding organization as well as the performing organizations very thin), but it’s better to focus on a few programs that are most likely to be successful. 

The key, of course, is making informed bid decision, and to do this, you must collect information that proves that pursuing the bid is worth your while.  Bob suggests a list of 7 questions to answer as follows: 

  1. Do we understand the customer’s mission and the work to be performed?
  2. Do we have a solution that will help the customer achieve its mission and contract objectives?
  3. Do we have a relationship with this customer through meetings or prior contract performance?
  4. Do we know who we are competing against and can we beat them?
  5. Do we have a teaming strategy and can we get the right subcontractors?
  6. Do we know what price we need to bid to win and can we achieve it profitably?
  7. Do we have a compelling win strategy?

  The first few questions are obvious when detailed:  Do you understand the customer and the mission?  If you don’t, this may be a futile exercise.  Do you know your competition (and their expected price-point)?  And do you know how to get to the winnable price profitably?  All of the questions are important, but understanding these cost issues is absolutely critical, and generally the lifeblood of a Price to Win Practitioner.  The PTW expert will study the competition through looking at customer budgets, details of design and cost in the news and media, and comparing the competitor designs to their home organization design looking for cost-discriminators.  So what are the tools in their toolkit?  Obviously something that can generate quick estimates early in the decision making process.  Many PTW practitioners use TruePlanning to generate parametric estimates to ghost the competition, and to compare expected costs by design.  The competition may have a more complex design, but if they have performed more technology development, they will have less development engineering costs at this point in time.  With a basic knowledge of the competing designs, technology levels, and experiences of each organization, one can use TruePlanning to model each scenario, and determine who has the cost advantage, or if some investment may be required to attain an advantage.  

Here is a short list of TruePlanning inputs that may be used to address certain discriminators in a hardware project:

  • Differences in technology – Manufacturing Complexities for Structure & Electronics
  • Design Maturity - % New Design for Structure & Electronics (a more mature design will require less Development Engineering)
  • Experience of the team – Engineering Complexities (more experience = more efficiency)
  • Production Experience – Total number of Units Produced (If one organization has previously built a product, they may be further down the learning curve)

If the bidder cannot defend their position after contemplating this set of 7 questions, it probably doesn’t make sense to expend the resources required to follow through with the pursuit.  So take the time to look at the competition and really assess:  Is it worth our effort?  What questions do you ask yourself to be sure?

Lohfeld, Bob, June 19, 2015.  7 questions to answer when making bid, no bid decisions.  Retrieved from: http://washingtontechnology.com/Articles/2015/06/18/Insights-Lofeld-bid-no-bid-pipeline.aspx?Page=1