Tips For Winning (And Losing) Tender Bids
Over my career, I have participated in countless tender evaluation committees. In doing so, I have seen a number of bids that could have possibly won the work if they had simply presented their bid differently. So, here are a few tips.
The most common mistakes I've seen in tender bids include:
1. Offering a very low price without explanation.
I've seen bids rejected simply because the price being offered was far too low. The client may see this as being likely to be lower than the cost of providing the works and as such, presents a risk of the project not being completed. In these cases, the client will form the opinion that the bidder has a low understanding of what is required in the works. If the low price is however deliberate so that the project can be won for strategic reasons, then an acknowledgement and explanation of the low price being offered will put you back in the running.
2. Not answering all the questions that have been asked.
In a recent tender evaluation, one of the questions asked the bidders to outline their quality assurance measures that would be applied to the works. One bidder simply responded by stating that their past projects are testament to their quality. This did not answer the question and the bidder received a score of zero for this answer.
3. Providing too much information.
Many tender bidders provide a massive amount of literature that is not directly responding to the questions asked in the tender documents. This has included complete OH&S documentation, QA documentation, Safety Management documents etc. Before sending all this literature, consider the poor tender evaluation committee that receives it and think about if you really expect them to read all of it. Most likely, the extra information will not be looked at which is a risk to the bidder if it contains information that they consider to be important.
4. Not proof reading the bid.
A tender evaluation that we assisted with recently had three bids submitted. Each contained a table of their prices for elements of the project with a total price at the bottom. Not one of the bidders pricing correctly added up! In another bid I reviewed, the bidders price was listed as 'heaps' - they obviously left an early draft of the pricing schedule in their submission.
5. Not demonstrating a complete understanding of the required works.
When bidders do not have a large number of similar projects in their listed experience, it is essential to demonstrate that they fully understand the works. This is best done by providing a detailed schedule for the works showing that all issues are understood. For example, instead of having a single line of installation of external cameras, break it up into sub-tasks that may include items such as check for heritage issues, develop safety management plan for working at heights, develop traffic management plan, obtain approvals for connecting to power etc.
6. Not complying with the technical or contractual requirements.
Many tender bids loose because they do not offer what has been asked for. If you want to offer a product that differs from what has been specified, then add this as an alternative offer, otherwise there is a risk it will be rejected. The same applies to compliance with the contract terms. Unless these absolutely cannot be complied with, then it's best to accept them or put in a note that you comply but would like to discuss them further if you are awarded the works. We directly experienced an example of this ourselves on a project we once bid on. The client received two lower priced bids, one that was half our price, but because neither fully accepted the contract terms, we were awarded the works as we were the lowest price fully complying tender.
7. Being late to submit the bid.
This sounds obvious but it happens. As recent as last month, one bidder on a project where I was on the evaluation committee was late because they had internet trouble while logging onto the government tender website. Under the government rules their bid wasn't accepted. It's generally a good rule to submit tender bids a day early as internet connections cannot be completely relied upon.
So, when responding to a tender, you will also need to pay attention to the following points.
Provide a complete submission and answer each question in full. This may require some duplication of answers which is better than leaving parts out.
The unit rates do matter. Sometimes the client may want significantly more works than are identified in the tender documentation. You may have the lowest lump sum price, but high unit rates could count you out.
Give alternative non-complying bids if you can see a more cost-effective way of providing your services or better product solutions. But, make sure that you also provide a complying bid as this is the one that will be scored in government procurement.
Look at the weighting given to the evaluation of responses if they are provided. Evaluate your own bid and harshly score it using the weightings. You will then see the areas where you need to provide more information.
The price can be evaluated in a number of ways.
A common method is to evaluate the value for money. This may even take into account the whole of life cost. A number of different approaches are taken and the formulas used by some government departments can be found by searching online.
Other methods include giving a simple % weighting score to the price or even awarding the works to the lowest priced fully complying bid. In one government evaluation panel we participated in, a score was given that was dependant upon if they were within a certain % of budget with the highest score being given if they were more than 20% or more under budget. In this case all bidders were more than 20% under budget so they all received the same score for their price. In this multi-million dollar project, the price turned out to be irrelevant even though there were significant differences!
Even after all of that, there are other factors that may cause you to win or lose the works. One important one is the relationship that bidders may have with the client. Although this shouldn't affect the outcome of a tender evaluation, it may, especially in the tender evaluation scores given in any subjective areas.