InnovationProcesses

Tender Evaluation Proposal

How does a company win new business? Sales, Marketing, Strategy and Product or Business Model Innovation can all play an important role. The business world is a competition in which competitive advantages determine the winners. A specific case of business competition is public tenders. Below I am proposing a theoretical method to evaluate the tenders a company wants to participate. As in the battlefield or sports tournaments, sometimes canalizing your efforts to important battles/competitions can represent your competitive advantage too.

First of all, I would like to touch on the topic of why companies should participate in tenders, especially public tenders. The answer seems obvious to me, making business with the state is a good insurance policy no matter the trends in the global economy. The state always pays, even if the stock market gets a historical retraction, and the moment when the state will no longer be able to pay, we’ll have bigger problems than the financial results of our companies. On top of that, tenders come with predefined demand. A company proposes a solution, and if the proposal is the winning one, the company can secure itself a good contract for a couple of years, solving a real problem and meeting actual demand from the customers. In some carefully chosen cases, the company can even further develop itself or its product at the customer expense, diminishing the risk of new investment.

On the other hand, many tenders come with specific requirements. The company might not have the skills needed to address it. Other times, the solution for the tender might not fit the strategy the company wants to follow or the vision of its offers. Yes, tenders do reflect the market demand. Still, like the old say states: “You can have anything you want, but you can’t have everything”, a company can not satisfy all the needs of all the customers.

All from above generate the need for a structured tender evaluation process. It helps sales teams to evaluate promptly what tenders to prepare BID offers for. In my view, the main topics that need to be taken into consideration are: 

  • introduce the customer;
  • perform a GAP Analysis;
  • request a Security Assessment
  • create a Risk Matrix;
  • develop a top-down P&L
  • perform a SWOT Analysis
  • get the delivery organization buy-in;
  • check the strategy and vision alignment. 

In the end, a score is allocated to each tender, helping the BID team to assess a tender and compare it with other tenders. The consolidated report on scores given to past tenders gives upper management can get valuable insights into what the market demand is. They can identify what divisions and processes within the company can improve their outcome to meet the customer needs. They can check that the company strategy and vision for the product and services align with the overall market trends.

There is a lot to say on this topic. The tender evaluation proposal positions itself in the first stage of a tender lifecycle when the tender is published, and the company needs to evaluate if it wants to BID to it or not. All stages in a tender life cycle have their characteristics. At any step, improvements can be made, increasing the chances the company has of winning the contract. As of now, I am talking only about the tender selection and the tender BID approval stage.

For sure the Tender Evaluation Proposal can be improved too. Using it in practice will allow for a weighted average to replace the score formula, improve the templates and even create new ones, per the company-specific tools and processes.

With this introduction being made, I will let the slides speak for themselves.

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