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So what is tender management? In todays competitive business world, many potential projects and services are put out to tender. That is numerous potential companies are provided with the opportunity to bid for the work. In their bids, they will describe how their company will solve a business problem, provide the service required or supply the goods requested. They will also need to provide a competitive price for this work. The process of designing and writing these proposals or tenders, complete with the competitive pricing, is called tender management, proposal management or bid management.
Tenders Are Not that Standardised There are standard bid management processes available to manage these activities and one published bid methodology. There are also some computerized systems that will manage the workflow of a tender management process but bid management is nowhere as formalized as project management. This makes experience proposal writers with a history of winning highly sought after.
A tender or bid writer manages risk very well and is always organized and able to manage staff within a very highly charged environment. Framework Tender Agreements Such is the popularity of tendering that framework agreement tenders are now being offered. This is where a company tenders to receive a framework agreement that then provides them with the opportunity to tender for future work with the organization. These framework agreements are particularly popular with government tenders and large companies and are often found in information technology and staffing. Tenders can be low level such as a cleaning service or they can be highly prized, such as a bid for a multi-million dollar new computer system but they all have the same structure and processes. They start with the ITT request for bids and end up with a negotiated contract. A good bid manager knows how to manage the process, whilst juggling staff, information overload, searching for missing information and managing time frames.
All relevant laws are followed. This usually includes employment, health & safety, discrimination laws. These are some of the standard documents that you can write before you bid. These types of organizations love quality certificates so the more you hold the better.
All bidders also have to produce the same information in the same format, which makes evaluation much fairer and quicker. Lengthy evaluations can take time and money and these tender regulations keep evaluation costs down. Most evaluating agencies also have a set method of evaluating and scoring new bids. This also makes bidding much fairer as well as quicker to undertake. Savvy bidders know this and soon learn how to design their bids to take the best advantage of this knowledge. Whilst you may think that tender regulations are irksome, they actually make writing a bid much fairer, quicker and yes, easier.
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Government tenders are very competitive and many companies exist only on them. That is because they are steady work and there is a guarantee of payment. Many projects provided by central or local governments have a great deal of prestige attached to them. The contracts can be any size from large to $multi contracts and be for anything from ditch digging to massive computer systems. In some highly specialized areas such as some defence contracts there may only be a few bidders. In other government areas such as cleaning, road repair or staffing there may be hundreds of businesses all competing for the same work.
organization, your capacity to service the client in the timeframe and your technical ability are all decisions that need to be made so your time is not wasted.
Pricing
Pricing may not be the main criteria in the selection of a supplier. Quality and experience can count to a far greater level especially in cases where emergency supplies are required and where the buyer is looking for a long term relationship and continuity of supply.
Risk management
There are risks involved in global tenders but they can be mitigated provided you are fully informed of the implications and you have done the necessary market research. Some of these are: 1. Qualify the buying organization. Find out as much as possible about them, their financial status, reputation in the market, trading and business history, any published achievements. Watch out for the red flags. 2. Good quality tenders will provide clear specifications, due date for submission, due dates for delivery of the goods or services. Contact details of the people handling the bid including telephone number and email addresses should be given. If any of these are not clear or missing, beware. 3. Legal and contract requirements may vary widely geographically and tenderers should take both their own advice and engage local legal support within the particular country or region. 4. Potential fraud is a risk, especially in emerging markets. This can be deliberate and designed but can also be through inadequate internal controls and lack of separation of duties in the buying organization. 5. Currency and finance risk. There are fluctuations in foreign currency exchange rates on a daily basis and forward cover or other defensive strategies should be used to protect the overall cost of the product or service and transportation. Tenders are issued by country, by area, by region rather than for the whole world. Investigate the region you are interested in expanding into and select the global tenders that you are truly able to fulfil.
If you get a copy of the tender documents through a third party, make sure that you register your interest with the contracting agency. This will ensure that you are notified of any amendments and that you are provided with any additional information issued.
5. Check the closing date, time and place for the tender
Failure to submit on time is a regular occurrence. As a rule, late tenders are not accepted. Dont waste all the effort that has been put into the tender application. Be quite sure that you have enough time to prepare and submit an offer before the due date. It is up to you to deliver or post your tender documents to the correct address by the due date, and indeed at the correct time.
In the Government sector it is normal practice to provide both the criteria and the weightings, i.e. the exact basis on which their offer will be judged. In the private sector, most organizations provide the general criteria but often do not disclose the weightings. Cost is usually one of the main criteria. Tip: Best practice is to provide a costing template for the bidders to complete so that you can compare the bids easily without a lengthy calculation and analysis process Cost vs price Cost is more than the base price. It will include delivery, installation and transportation if they are not specified separately. It is important to ask for any on-going operational costs, warehousing, maintenance, spares, consumables, licenses and various other costs that may be incurred. Tip: Your costing template in the tender should allow for and encourage bidders to include all the costs associated with the commodity over its whole life. Quality requirements All non-cost criteria should be defined in the bid document. The criteria to be used in the tender evaluation process will vary depending on the goods or services being sourced. Here are some of the main ones: Technical issues and functional ability to fulfill the requirements Continued technical support and after sales services Ability to deliver on time and complete in the required time frame Compliance with legal and statutory requirements Acceptance of the proposed terms and conditions Training and on-site installation Tender is complete and signed by an authorized person Criteria weightings Each separate criterion should have a percentage or a number of marks allocated to it highlighting the relative importance of each area, disclosed in the RFP if appropriate. Bids should only be assessed against the criteria issued in the invitation and no new assumptions made when performing a tender evaluation. Assessing the Tender responses An important first step in the process is to ensure that the bidders meet the overall basic requirements and that the bidders fully understand the implications and the risks of implementing the service or delivering the goods. Provided that the template layout you supplied is clear, scoring the responses is easy and the process to evaluate tenders should be straightforward.
Pitfall #2 - Failure to Comply with how to tender rules Take time to understand and then adhere to the tenders legal requirements and stipulations. This is particularly important in public sector tenders where the regulations are defined by law and these may differ for different government departments and local authorities. Failure to comply will disqualify you. Pitfall #3 - Be totally honest. If the tender asks whether your organisation has suffered deductions for liquidated damages, or whether a previous contract has been terminated, or not renewed, be truthful. Follow the 5 rules on how to tender and they will work in your favour.
Tender leads for private sector contracts that are not publicly advertised will require more research by:
Building contacts with potential customers so that you are aware of business opportunities before they are tendered Advertising your services in trade and professional magazines Researching activities and trends in your area of business Following up on news reports on developments in your industry sector Networking in your business environment There are commercial services available which scan the business world for as many tenders as possible. They gather the information and sort them into categories. When you subscribe to their services, they send you the information on tenders available for
your industry. It is a very handy way to find tender leads if you don't have time to phone around and scan all the newspapers and bulletins. Leads for the not-for-profit sector are not always advertised, so either Use local voluntary and community sector networks and publications, or Make direct contact with the purchaser such as the United Nations, World Bank and Oxfam through their websites which carry their tenders Tender leads can also be found in commercial business support organisations and tender alert services that are equipped to help small businesses get access to tender information. They will also help you complete the tender documentation. Be proactive. Stay in contact with the buying offices that put out the most appropriate tenders for your business. Tender information is made available as widely as possible but it doesn't mean that it will come to you automatically. Apart from keeping a keen eye on newspapers and the Tender Bulletins, apply the age-old business principle of networking.
Specific points to consider before bidding on public sector tenders: #1. Where Are Government Buying Decisions Made?
It is important to know where government buying decisions are made when you are initiating business with government for the first time. You will need to do some research to work out who is the right person to talk to. As all government agencies structure their buying activities differently, this task is a necessary step. Know who you are dealing with.
Procurement practitioners managing public sector tenders are demanding more of bidders. To succeed, tender responses need to be shorter, sharper, and to the point. The responses to questions need to be clear and easy to find. Evaluation teams do not spend time hunting for the information they need so size and word count limits need to be adhered to.
#4. Use the template provided for Price & Cost Breakdowns.
Price and cost breakdown information and financial analyses must be provided in the template provided or in the order stated. It is not advisable to use other formats or programs as this may lead to disqualification. Evaluation cannot be done fairly or easily if submissions are not comparable.
To bid government contracts is made easy by many governments who have their own web sites. So if you wished to bid on UK government contracts, they have their own web site that has all of the available government (Invitation To Tenders) ITTs in one place. The USA also have their own site, as does the European Community. If you wish to bid government contracts you must remember several major factors: Governments are very price sensitive.
Governments need to be fair and legal, so their bidding procedures are highly controlled and formulative. Many governments have key areas that they are particularly keen to see within a bid. These would be such activities as: o Equal opportunities. o Green initiatives. o Legal requirements. o Quality. o Health & Safety. o Staff transfers.
This does mean that once you have written this information you are able to use it on several occasions. This does make tender writing much easier and quicker. So ensure that you know and understand your governments bidding processes and what they generally look for in a winning bid. If you wish to bid government contracts you will need to complete a PQQ (Pre Qualification Questionnaire) before you are allowed to complete a full tender. This will ask you questions about the stability and financial robustness as well as a few other questions intending to choose a few most appropriate bidders. Read the PQQ in great detail because you can often find out the government agencies key requirements. To conclude if you wish to bid government contracts, learn the bidding processes, write up the standard questions and pay attention to the PQQs.
Many of the consortiums that bid for these projects come from several countries and all of them must, as part of the bidding regulations, contain companies from the host country. To solve language and currency misunderstandings, most of the bids are completed in UK or USA English and priced in US dollars. This means that when companies bid for these projects they need to hedge their own currencies against the US dollar, and often for many years. This provides an extra layer of risk in what are often extremely risky projects. Countries, as expected, require their bids to be in their native language and currency. This means that international companies need to employ local bid writers or those that can speak a foreign language. Some countries, luckily stick to USA or UK English, but most still want paying in their own language and funds. So where do you find these projects so that you can make your own international competitive bids? Well, luckily they are grouped together on just a few different web sites. The major funding agencies have their own web sites and there are a few large web sites that have international projects as well as project feeds from the funding agencies. If there is a large project being set up such as the Olympic Games Venue then a web site is also set up offering companies all over the world the opportunity to place their own international competitive bids. As already stated, these projects are extremely risky to complete, particularly those within any third world country. The usual risks found are: Finding the skilled staff who are prepared to live away from home for some months or even years. Transporting goods, materials, tools etc to another country or sourcing them from within that country. Purchasing goods and services to work on the project in one or more currencies and being paid in a completely different currency. Any political unrest that may make completely the project or being paid difficult. Working in several different languages and training staff in yet another language. The volume and sheer size of the projects as well as the sometimes long wait to be paid.
When writing any international competitive bids, a company must be very skilled in managing large scale risk in order to both win the project and more importantly, make a profit from the project. So why do companies place international competitive bids on projects? The simple answer is that winning one of these bids can be several years work and profits for a company. Of course that can also be a major risk factor! The fact is that international competitive bids are a growing trend and this kind of work will continue to be available.
This usually happens when there is only one company that is available or able to undertake the work. Large government contracts for ships, submarines, army tanks etc. are commonly no bid contracts. No bid contracts are sometimes controversial and should be used sparingly. They are common when: There are legal or security reasons why negotiations with only one company should be undertaken. There is a need for great speed. Sole or single source contracts are much faster to negotiate and award than a conventional bidding environment which may take many months to complete. It is in the public interest. An example of this would be if a national asset such as a car manufacturer or bank needed to be sold, bailed out or remodeled and only one possible purchaser had been identified.
The USA has a law colloquially called Cronyism which makes no bid contracts particularly difficult in that country and there are several investigations currently under way on some these awarded contracts. They seem to be particularly popular in defense and building and many large companies have won this type of contract, simply on their reputation and contacts in high places. Sometimes the particularly unappealing contracts are awarded on the basis of the receiving company having little option but to accept the contract. In this case, the government usually offers other deals, loans and rewards for undertaking the project. This may be the case where a company is asked to merge with or bail out another company in the same industry that is having financial and operational problems. In this case loans and financial assistance may be offered. This option can often save a country's key assets. This was quite common at the height of the worldwide financial and banking crisis in 2008. Great care must be taken to ensure that these no bid contracts are fair and seen to be fair and that no inducements are received or offered.
Once you have found your ideal ITT, you must remember that hundreds of other companies have found this ITT just as easily so your competition has massively grown from a few years ago. Needless to say, you have found your ITT and because you are one of many that has also found it and will bid for this project, your tender writing skills need to be very good. Companies have found that when they issue an ITT on one of these web sites, they receive a considerable number of inappropriate and poorly written tenders. Evaluating tenders is a time consuming and expensive process, so ITT issuing companies are now issuing Pre Qualifying Questions (PPQs) that are very long and complex. These PQQs are designed to remove any companies that are bidding because they found the ITT, but are clearly inappropriate for the project. As web sites that allow bidding companies to easily find online tenders flourish, complex and difficult PQQs will continue to become the business norm. There are also a group of web sites that offer online tenders called reverse auctions. On these web sites companies place their work to be completed and sellers bid directly on the web site for any work. Currently these web sites only manage smaller size projects, but there is definitely room for growth in this area. It may be that in a few years time, a company will find online tenders and then be asked to produce their PQQ directly on the site. This can then be quickly reviewed and the winning companies offered the right to complete a full tender for the work.