Strategies and Tactics
Mistake #13 - Being outsmarted by competitors
Failure to notice loopholes and flaws in the customer's selection process or
documentation could work to your disadvantage. I have a sad story to tell which
I picked up when conducting a post tender critique of an unsuccessful bid prepared
by a contractor. They did everything right and submitted the best quality submission
and a very competitive price but because of the way that the customer's scoring
system worked it meant that they came second overall to what I would call a very
crafty piece of opportunism from a competitor.
The quality section was worth 60% of the total score and the pricing section
was worth 40%. The flaw was in the pricing section as the customer bizarrely only
required the bidders to price the on-site overheads (preliminaries). This created
an opportunity to gain a disproportionate advantage by submitting a very low price
for an element of the contract that would make up less than 10% of the overall
costs. Moreover, it would not really affect their profitability that much as there
would be plenty of opportunity for them to legitimately build the "missing" costs
into the labor rates or the general overheads when pricing the work after appointment!
The customer admitted afterwards that they didn't notice the flaw until it
was too late and their hands were tied. They placed the contract with the "wrong"
company and lived to regret it afterwards. If one of the bidders had noticed the
flaw and brought it to the attention of the customer at tender stage then they
could have issued an amendment or correction to all bidders to ensure a level
playing field. The alternative of course was to do what the winning bidder did
and submit a tactically low price and keep quiet hoping that none of the other
bidders notice the unfair advantage that could be gained! However, if you are
in the business of retaining customers and developing long-term relationships
then you might want to think carefully before you employ this tactic.
Part of the problem is not taking time to collect and analyze intelligence
about your competitors to forecast their likely tactics and taking action to offset
any advantage that they may gain from these tactics. Look at the project through
your competitors' eyes: what would you do in their position? How can you counter
their approach?
How can you outsmarting your competitors? The key to winning profitable contracts
is innovation and creativity. The best deal for a customer is the one that adds
the most value and produces the least risk relative to the price. The factors
that create value and reduce risk are different for each customer and each project
so your solutions need to be tailored each time.
You can only come up with innovative tailored solutions that are relevant and
attractive to customers if you really understand their needs, constraints and
objectives. If you know more than your competitors and use that "information advantage"
early enough you will have a significant advantage over your competitors. Then
it will be their turn to scratch their heads and wonder what you did to win the
contract.
Mistake #14 - Pricing tactics that backfire
Using a non-compliant low price tactic to get a foot in the door can backfire
if the bid is heavily qualified and the solution is technically unacceptable.
It depends on the customer, but some will actually penalize bidders who put in
a technically unacceptable low price hoping to talk it up at a later stage. Others
may still want to discuss your bid so you have to pick the right customer with
whom to use this tactic.
Some customers have strict procedures for dealing with this situation and you
will be faced with the choice of standing by your price and confirming total compliance
with the customer's requirements or withdrawing. Neither may be a satisfactory
conclusion to all of the efforts you put into the tender so you have to weigh
up the risks. As an ex-contractor I do accept that you need to explore all avenues
to use a tactic or approach that gives you an advantage. You want to push it to
the limit without risk of being penalized. The trick is selecting the right tactic
for the right situation.
Mistake #15 - Late surprises
I have seen bidders snatch defeat from the jaws of victory by introducing a
late surprise. For example, in the negotiation stage, after the bid has been submitted,
they:
- Switch the proposed project team.
- Try to change the price or conditions of contract.
- Introduce a JV partner or switch key partners.
- Reduce quality.
- Ask for a later start and a longer period to complete the works.
- Declare that they are now going to sub-contract out a significant part of
the work.
- Pass significant risks back to client.
Customers don't like surprises, especially when they have already evaluated
the promises and proposals made earlier and have probably eliminated other companies
who scored just slightly lower. You could easily find yourself disqualified or
reassessed and eliminated through a lower score. Is it worth the risk? When you
think about it, how can the customer trust you again? Won't they think that you
tried to mislead them or will they think that it is just part of the game that
all bidders play? It depends on the customer.
Mistake #16 - Running with the wrong partners
If one member of your team is much weaker, it dilutes your strengths and introduces
risk for the customer. If you are not a good match for your partners it shows
up clearly and creates doubt in your teams ability to perform.
Ideally you want partners who are the best at what they do, who have the capacity
to deliver, have relevant experience and competences, and are capable of creating
competitive and attractive solutions. They must also be able to work collaboratively
for mutual benefit and preferably have a successful track record of working with
you and the customer before. It doesn't go down too well with customers if you
switch partners after the tender has been submitted and evaluated.
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Introduction
