2014 Bid Cost Survey
It has been my mission over many
years to help construction organisations to be more effective in their
work-winning activities and enhance their win rates, which play a significant
role in improving win work efficiencies.
In 2003 MarketingWorks undertook
research assessing how the bid cost investment affects work winning within the
construction industry.
In 2014 I decided to invest
MarketingWorks’ resources in updating this research, in association with
Professor Will Hughes of the University of Reading. I wanted to see what
we could usefully learn about successful work winning behaviours and how we
could use that insight to help our clients.
The data was collected by reference
to actual projects and was analysed to discover what can be learnt, not only in
the cost of bidding for work, but also how differing behaviours and approaches
have influenced whether a company wins or loses the bid.
In addition to providing some
interesting indications on how and why a bid is successful, the survey also
highlights that many companies fail to capture bid cost information and to
fully evaluate their own specific market and processes. This has a real and
clear impact on the profitability of the company and is an issue from which the
industry could greatly profit, if addressed.
Improving the win rate
As there are many variables
influencing how effort or bid spend affect outcomes for different types of
project it is important for contractors and consultants to be analytical of
their market and rigorous in the management
of their work-winning and bidding behaviours. The resulting knowledge can be
applied to enhance work-winning effectiveness.
The research reinforces our view
that there is enormous potential for this type of data to help in decisions
which could identify:
o Where
to invest effort (in activities that will win the work)
o How
this varies by client/ sector/ procurement route
o How
to exploit selectivity to maximise profitability
o How
this would influence strategic organisation
In most cases activities focused on the specific client
(i.e. client-centric, aligned activities) win the most work, in the most cost
effective manner.
Work winning efficiencies are achieved through a combination
of improved effectiveness (resulting in fewer abortive bids) and increased
rigour in selectivity and focusing of available resources. The 2014 survey
gives pointers on where winning bidders focus their resources and the
MarketingWorks Work Winning Solutions help organisations to apply this learning
for greater work winning effectiveness.
Key Findings
- The total project value of the bids submitted with data is £11.3 billion of which £8 billion has full cost data. Significantly this includes £4.3 billion of winning bids.
- The sample represents a large proportion of the construction work carried out last year in the UK and is a good representation in the key areas of measurement.
- The approximate cost of a contractor’s average winning bid is £60k in 2014 and consultants average £24k.
- In 11% of bids won and 15% of bids lost, the reasons for winning or losing are apparently unknown.
- Price was given as the single reason on 50% of losing bids but only 30% of winning ones.
- Almost 40% of winning bids identified a combination of factors as the reason for the win, compared with 21% of losing responses citing a combination of factors for the loss.
- Winning bidders invest more in their bids.
- The investment of time or money needs to be focused on the activities identified as creating a winning bid.
- The activities identified as helping create a winning bid are importantly those that are client-focused.
- The bid cost worked out, across winning and losing bids, to be 0.57% of the total project value.
- The bid cost percentage has significant impact on a contractor’s retained operating turnover.
Conclusion
The survey data deals with headline results across a complex
industry with a lot of variables. This highlights the opportunity for an
ongoing research programme addressing bid assessment in the context of a
company’s own market situation, thus offering benefits in achieving greater
effectiveness and efficiency in work-winning tools, processes and behaviours.
MarketingWorks offers a range of solutions to help our
clients achieve these objectives including:
Creating bespoke win work flow processes and guidance that supports company-wide adoption of a work winning culture with embedded client centric behaviours and attitudes that improve win rates and work winning efficiencies.
- MarketingWorks works with you to identify desirable changes in behaviours and processes and then works with your teams to uplift their capability, achieving rapid buy-in to desired behavioural change resulting in dramatic and immediate improvement. Read More.
Bespoke easy-to-use bid selection
tools that help contractors and consultants to quickly evaluate their bidding
opportunities, enabling consistency and transparency in decision taking.
- By using MarketingWorks’ Selectivity and Reporting Tools you will be able to avoid waste by refocusing resources and effort on enhancing the quality of those bids where they have the highest chance of winning. Read More.
To discuss the outcomes from the survey further, contact philipcollard@marketingworks.co.uk
To Participate Further
MarketingWorks helps our clients to capture this data
through online tools and processes and, when analysed, the outputs deliver
invaluable information at company level.
For this reason, we are looking for more contractors and
consultants to provide us with access to their internal metrics so we can
explore this potential for them. There
is a one-off bespoking cost and an ongoing monthly fee per user, but the
resulting reports will equip participating organisations to make more
consistent bid/ no bid decisions and inform them where best to focus their
investment. To discuss this opportunity further please contact philipcollard@marketingworks.co.uk
Encouraging Ongoing Debate
As we wish to open up debates surrounding the cost of
bidding and how differing behaviours and approaches have influenced whether a
company wins or loses the bid, we will be promoting this research at industry
events where we can present and then debate these survey findings.
The survey results go some way to answering our initial
questions, but also raised new ones. These results should make the debates
around bid costs and overall work winning approaches tools and behaviours more
factual.
We will be using these results to improve client centric
alignment which is a core theme of this analysis. We welcome comments on our
blog or email us directly at: enquiries@marketingworks.co.uk
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