Most orders are now won through competitive tenders. Most of my customers have teams that are constantly working to produce tenders to win jobs. Some are very successful, some work very hard, some are very lucky.
What are the key factors that make a tender successful and what you can do to improve your win rate and get more orders?
I was talking to the Managing Director at a very successful engineering company the other day and he didn’t know the most important rule of tendering.
“An inferior solution in a superior proposal will often beat a superior solution in an inferior proposal.”
He had an excellent product and was complaining about losing to a particular competitor. Knowing the competitor I knew that they put a lot more time into the proposal. That’s why they were winning.
This is a long article – 20 minutes to read. If you are in the sales, contract or tender department read today. If you aren’t, forward it to colleagues who are.
So let’s start at the beginning:
What is a tender for?
The purpose of writing and submitting a tender is:
- To tell your customer how you will meet their requirements and offer them value for money
- To get them to pick your company to do the work.
A tender has to communicate the total offer you are making to the customer on paper. It should be an accurate representation of your company, which you can be legally held to if you are successful in winning the contract.
A tender should clarify what you will do and how much for. In other words, what will the customer get in terms of value from you? Customers want suppliers who are good to work with and who deliver. The tender proposal is your opportunity to give them the information they need to make the decision to work with you!
Why does it matter?
Contracts are won, and lost, on the quality of the bids submitted. Although it is just one step in a competitive bidding process, your proposal is critical. It is your main, and sometimes only, opportunity to:
- Introduce your business
- Explain your approach and solutions to the customer’s needs
- Stand out from the competition.
Being able to write a good tender proposal is essential, and though there is no one right way to prepare and write a tender, there are many wrong ones.
Now I know that in Asia some jobs are won on the basis of relationships. A great tender doesn’t help you in the short term – but in the long term relationships change, and you will be more competitive in the global market.
A tender is sometimes referred to as a ‘Silent Salesperson’. This is because a tender is selling your business to a potential customer. This is an important point about tendering that many people, especially those who do not consider themselves to be ‘sales people’, do not always realise. Your tender will either sell, or fail to sell, your solutions and proposals.
In order to sell successfully, it is helpful to:
- Know who your competition is — their strong and weak points
- Know what the unique selling points of your organisation are and what sets you apart from the competition.
If you have employees who worked for a competitor previously, think about how they did their tenders and then change the way you do yours to exploit that. For example when I wrote tenders for railway projects one of my competitors always used to include their subcontractors in the proposal. We then did the same AND included their quality certificates and testimonials. That increased our win rate till someone left and joined them.
Understanding the requirements
A good tender will demonstrate an understanding of what is required and will propose solutions to meet those requirements. To maximize [company’s] chances of success, you must make sure that you understand what is being asked for and why, so that you can respond appropriately.
The customer’s requirements will be set out in a ‘Specification’ (sometimes called a ‘Brief’), which you must read, along with any additional information that may be sent to you before you submit your response.
As well as the specification, the evaluation criteria – the way in which bids will be scored – is a vital piece of information that can help you to understand how to meet the customer’s requirements. The evaluation criteria will tell you the areas that are most important your customer, and how overall ‘value for money’ will be assessed. In other words, it will tell you the balance between quality and cost.
This is key. When you do your initial design, design first to the evaluation criteria and then to the specification. The specification is what they want, the evaluation criteria is what they’ll pay for.
When I first started tendering my company was very new to the private sector as it had been a nationalised company before then with no need to earn profits. Our first bid was £22 million and I think the winning bid was about £5 million. As my Managing Director said when he found out “They didn’t ask for a gold plated design so why did you make the whole thing out of solid gold!”
What is expected?
When you submit your bid, customers will expect that certain minimum standards will be met. They read hundreds of tenders a year, so making sure that you comply with these minimum standards are critical. If you fail to do any of the following in your tender, you may risk it not even being read or properly considered:
- You understand and respond to all of the requirements
- You can offer value for money
- You explain how you will carry out the work and help the customer to achieve their objectives
- You have a positive and professional approach
- You follow the instructions, including meeting the deadlines for submission
- Your bid is well written and easy to read
One approach that I’ve used from design is to go through the specification and as I cover something off, procedural, technical or commercial, I tick it. Then when I’m doing the checking I do a reverse tick. That way I have clear evidence that I have considered everything or not. Having an independent checker taking the same approach is also helpful.
Why tenders often fail
Tenders often fail for reasons that are avoidable. The reasons they don’t get through are:
- Simple administration failures such as not signing the tender or getting it in on time to the right place and person
- Additional or supporting information is not provided, or bits are missed out entirely
- The tender does not answer the questions, or meet the requirements
- The tender is unclear and inconsistent
- The tender is not competitive
Being competitive means being able to stand out amongst your competition and putting forward the best offer that gives the customer good value for money and meets all the requirements. This means being able to compete in terms of price and quality of your proposals.
Recently when I was at the print shop in KL collecting some new business cards I saw someone collecting their proposal. They were selling a Learjet 60 ($15 million) to someone in Malaysia. It was leather bound with embossed gold leaf.
That stood out! It’s not appropriate for the engineering industry but your proposal should look this best of all the ones on the table.
Preparation and Planning
Before you start, familiarise yourself with the tender documentation, and make sure that:
- You want to bid for this contract (you can deliver it, it is not too risky or costly)
- You can meet the deadlines for submission of information
- You have the resources you need – including staff – to be able to write the tender
Only the best tenders win, and it is important to recognise that putting together a winning tender will take dedicated time and resources. To help you get an idea of how much time and what resources will be needed, it is good practice to draw up a work plan before you begin to prepare your tender. This will detail:
- How long you have to submit the information
- What information is being asked for and how long it will take to gather this
- How long you will need to draft, edit and check your tender response
- Who else in your team you might need to help you pull the tender together
- When you might need to available for clarification or interviews
When you are in a cycle of continuously producing tenders, having a wall chart showing the status of all tenders in preparation or in progress can really help.
What makes a quality bid?
A range of factors determine whether your bid will stand a good chance of winning you a tender. These can be summarised as:
- Quality of writing
- A thorough response to the requirements
- Good presentation
Quality of writing
Writing skills are absolutely critical in tender writing: contracts are often lost on the basis of poor writing that is unclear, illogical and fails to get across the key messages of the offer being made. Both the structure and writing style of your bid are important to get right.
Asian companies competing for work from European or US companies can be weak here. Hiring a freelance proof reader who has English as a native language on a site such as Elance.com is a cost effective way ($10-15/hour) of increasing the writing quality.
The structure and order of your bid should be logical, coherent and should follow the order of the specification or invitation to tender documents which you have been sent. Use the structure of your bid to get your proposals across clearly. Link points and sections together and try not to jump about between sections and pieces of information, as customers will have to work a lot harder to understand your proposals. In very poorly laid out bids, important bits of information can be missed by customers, meaning you run the risk of losing marks.
Tenders can be effectively ‘broken up’ into sections and points with the use of diagrams, pictures and charts. However, be wary of over using these — images can be very useful in helping to get a point across but too many that appear to ‘litter’ a bid may put customers off and not provide enough detail.
Try to include an Executive Summary – this should be written last – which summarises the offer you are making and the key messages you want the customer to take on board when reading your tender. Ideally, an Executive Summary should be no longer than one side of paper and customers should be able to refer to it to recall details of who you are and what you are proposing to do.
This sells. Tell them what, when, why, how much and above all why they should give your company the job
For one tender I wrote, I included the following in the executive summary “Delivering this to legal requirements will cost you x and expose you to substantial legal and compliance costs at a later date. We will change the law, reduce your liability and construction risk and deliver a substantial cost saving”. We did as well, but the point is that it stood out massively from what our competitors said. It won us the bid – and lots of follow on work.
The way you write your tender must be:
1. Clear and concise
You must write in a way that is clear and unambiguous and gets to the point. This means:
- Do not waffle – always use 2 words instead of 5.
- Try to avoid weak qualifiers (rather, very, really, quite, somewhat)
- Use plain English
- Keep sentences short and punchy
- Be consistent in your use of terminology and language
It is important that your bid gets the customer’s attention and they will remember it. You can make your tender interesting to read by:
- Good opening sentences that get to the point
- Telling the customer something they don’t know (as long as it is relevant!)
- Proposing interesting and innovative solutions
An example of this is a customer requiring some weathering plate for use in Southeast Asia. Weathering plate has reduced effectiveness in high humidity tropical climates and the ROI is significantly reduced. So we provided scientific research supporting this, offered an alternative and ended up in a non-competitive bid situation.
3. Grammatically correct, with proper use of punctuation and good spelling
Do not run the risk of losing a contract because of bad grammar and poor spelling. It looks unprofessional and will make your tender seem hurried and poorly thought through. Poor grammar and spelling can also lead to misunderstandings about what is being said.
- Check for spelling mistakes
- Check use of apostrophes, commas and so on.
- Try to avoid the use of abbreviations and acronyms, in particular: etc., et al, e.g., i.e.
4. Personable and professional
It is important to get the tone of your tender right. You should not:
- Attempt to be funny
- Condescend or patronise
- Be over familiar or gush with warmth and praise
Above all, tenders should be written in a way that is straight forward, professional and positive, and proposes to work with the customer to meet shared aims and objectives. Remember, your tender is a formal, legal offer and should be written as such.
A thorough response to the requirements
Along with good writing skills, a basic requirement of a good tender is that it responds to all the requirements and it answers all the questions. Your tender is your opportunity to communicate your total offer to the customer and to show the customer that you can supply them with exactly what they want.
A thorough, comprehensive response
Many bids fail to address all the requirements or answer all the questions and as a result are unsuccessful in winning contracts. You must address all of the requirements set out in the specification; if you do not know what to put down do not miss it out and hope for the best. It is better to write something than nothing at all; think ‘how can I answer that question?’, rather than ‘can I answer that question?’
- Address each and every requirement with a concise, comprehensive response
- Attach any supporting information as an appendix to your tender rather than in the middle of it, as this can make the tender difficult to read.
- Show that you understand the requirements and the context of the customer by submitting information and proposals that demonstrate your knowledge of the industry, your experience and the skills that you would bring to the work
- Try to work with the customer. You both want to achieve the same things, so tell them what you will to do help them meet their requirements, including how flexible you can be, what added benefits you can bring and how you will offer value for money.
- Be honest about what you can and can’t do; you may be held to your proposals in a binding contract and you must be able to meet your commitments
- If you unclear about any of the requirements do not be afraid to ask for clarification
Evidence and examples
Do not leave anything to the customer’s imagination, or let the customer make assumptions about what you are proposing. It is essential to provide evidence and examples to back up statements and commitments that you make in your tender. Customers can only make a decision about whether a bid meets their requirements or not based on the information in front of them.
- Do not make ’empty’ statements without backing them up
- Provide relevant examples that illustrate your point
- Do not just repeat the requirements: explain how you will meet them and what you will do
One example I saw recently was an assumption that Daewoo made in building the new Triple-E ships for Maersk. The assumed that certain windows didn’t need to have heaters and wipers and Maersk argued that the standards required them. That cost $100,000.
Another approach is to attach a supplier’s technical documentation as part of the bid – for example the Dillinger HIC specification if you are bidding for a sour service pressure vessel job. This can provide evidence of the high quality supply chain that supports you.
Follow the instructions
Instructions on how to submit your tender are given for a reason and you must follow them. Customers may specify how tenders should be laid out, the points that should be addressed and when and where they should be submitted. If you do not follow the instructions, you can very quickly and easily fall out of favour with customer, and may even lose marks.
- Read the instructions
- Raise any queries you may have early on
- If there are any instructions you cannot comply with speak to the customer immediately and see if a derogation is possible.
You have you own format for proposals, just as we do. It can be extremely painful and time consuming to do things differently. We did an analysis of our win rate in just this situation – and we were 72% less successful when we ignored the format that the customer asked for! We changed.
Financial information and costings
You will be asked to provide costs against the proposals you put forward in your tender. You will normally be required to complete a ‘Pricing Schedule’ as part of your bid, which will specify what kind of financial information is required. This may be a fixed price, cost per ton, cost per unit or some other approach depending on what is required. You must make sure that:
- You fully cost your services, taking into account overheads and on-costs
- You provide enough information for the customer to make a decision on whether or not your tender offers value for money
- You provide the information that is asked for in the format requested
Given the variations that can occur during a long bidding process it’s vital that you have regular reality checks to ensure that the words match the numbers. Bidding to supply 5 structures but only costing for 4 is a really expensive typo!
A well presented tender
Last, but not least, a well presented tender will nearly always do better than a poorly presented bid. This does not mean that you should sacrifice quality in favour of glossy but unsubstantial material. However, the following recommendations will help you to make the most of your opportunity to win business:
- When typing, use the same typeface all the way through; do not write too small or too large (Arial point 12 is about right)
- An index is helpful, with pages clearly numbered and supporting information clearly labelled
- Submit your tender in a file or have it professionally bound
- Keep sentences and paragraphs to a reasonable length; bullet points are useful to clearly set out information
- If you are copying and pasting, be careful that the information is consistent all the way through
Summary and top tips
In order to win a contract it is essential that you produce a good quality tender, which:
- Addresses all of the customer’s requirements
- Is clear about the value that you are offering and is competitive
- Is well written and well presented
And make sure that you follow these top tips
- Answer the questions and address the requirements
- A clear, logical structure is essential.
- Back up statements with evidence.
- Illustrate points with relevant examples.
- Do not waffle
- Present your tender well, clearly referenced and labelled.
- Make sure you understand what the buyer wants.
- Read the instructions. Twice.
- Buyers like original, fresh approaches, but stick to the point.
- Plan and prepare properly.
- Write clearly; do not make any assumptions!
- Make sure you have included all the necessary information.
Above all, remember that bidding takes time and resources. How can you improve your bidding process? Bidding for a tender can cost $2-50,000 (or more). By focusing on the process you can reduce the amount of time to bid and increase the bid quality which has a direct impact on the bottom line.
Oakley Steel can help you by giving you the confidence of high availability and reliability of Dillinger steel plates ex-stock. With 40,000 MT of heavy, thick and high specification plates available immediately on project award your customer has increased confidence in your quality and ability to deliver.