These can be effective business growth strategies:
- Both are core business competencies and functions
- Both require and deserve thorough planning
- Always start with the project or prototype
- Keep your eye on the detail, not just on the process
What is a tender?
- A detailed proposal which will be assessed against specified criteria – it can be referred to as a bid, estimate, quote, proposal, submission or ‘request for quote’
- A successful tender must comply or conform with the mandatory requirements set out in the brief – as well present a positive, powerful and persuasive business case
- An effective tender document will include validated and sufficient detail on cost, quality, delivery and timeliness to convince the outsourcer of your organisation’s credibility, capability and commitment to a consistent and superior quality of product or service
What is a successful tender?
One that not only wins the contract, but also ensures that the work offered in the tender document is followed through to a successful conclusion – within budget, according to schedule, and meeting the terms and conditions of the negotiated tender contract. This means ensuring that the work can be carried out effectively, efficiently and humanely in the interests and to the benefit of both the outsourcer and the tenderer.
What is outsourcing?
- a calculated decision by an entity (eg business, organisation, government department) to invite tenders to provide or create specific goods or services (often referred to as ‘contracting-out’)
- successful outsourcing begins with a careful analysis of one or more non-core competencies, functions or activities to be considered, and preparation of appropriate and detailed briefs
- an effective tender brief, guidelines or ‘invitation to tender’ will provide sufficient and accurate detail on eligibility, specifications, quality, timelines, assessment/evaluation criteria, selection procedure, probity, confidentiality, negotiation procedures and contractual obligations.
What is successful outsourcing?
When an entity effectively manages the negotiation stage and contract relationship through each outsourcing agreement. This means that the entity is then able and confident to focus internal resources on sustaining and advancing their core knowledge base and uniqueness.
These are important questions to consider
- Is your business or organisation treating the preparation for tendering and/or outsourcing as core business competencies, and core business functions?
- Are adequate and appropriate internal resources allocated to the critical stages of planning, preparation, negotiation and contract/project management?
- Do you consider tendering and/or outsourcing as growth strategies?
- Do you know how many hours are currently spent in preparing, writing and negotiating tenders or outsourcing contracts that are successful – and those that are not successful?
- Is this cost acceptable to you?
- Are your contracts/projects managed and completed according to specifications and negotiations, or are variations and amendments to schedules, budgets and other details causing time and budget over-runs?
- As a tenderer – how much repeat work are you getting?
- As an outsourcer – how often do you review the cost-effectiveness of your contracts?
Sample traps to avoid in tendering
1. Don’t ignore deadlines:
a) Read the tender brief and highlight all references to timelines – including through the contract period
b) Compare the scheduling requirements and compare with your current workload and longer-term availability – and decide whether you will be able to prepare a positive, powerful and persuasive tender by the deadline for possible lodging, and complete the contract on time
2. Don’t compromise the quality of your current commitments:
a) Don’t put the quality of your current commitments at risk
b) If you don’t have time to prepare a tender document that is well-researched, fully costed, and well presented – you will do yourself and your business no favours!
3. Don’t just browse through the tender brief/specifications:
a) Read the brief through aloud – this slows up your reading, and allows you to hear as well as read the content
b) Have four different coloured highlighters – and in different colours, highly all directions as to (i) time/deadlines, (ii) specifications and mandatory requirements, (iii) eligibility criteria, and (iv) instructions as to completing the tender application.
4. Make sure to prepare a clear, concise and responsible tender document
a) Read each question in the application form carefully, and circle the key word in each question: don’t have a set of prepared responses and look for questions to suit your responses
b) The key word will give you the clue for your response: if in doubt, contact the outsourcer to check that you understand each question
c) Draft your response to each question – print these out and read them through to check for accuracy, relevance, compliance, and cost and time implications
d) After editing and refining, make sure each response meets requirements as to number of words of characters – and then complete your application form
5. Prepare a fully costed and validated tender budget
a) Start by designing the detail of your tender project or prototype – this enables you to create a solid basis for your costings and calculations, statement and claims
b) The budget in your tender documents speaks volumes about how you do business!
c) Check – and re-check – that you can fulfil the requirements and meet specifications, etc., without compromising either the quality of your work or the viability of your business
Sample traps to avoid in outsourcing
1. Make sure your anticipated cost savings are achievable
a) Do your preparation thoroughly – particularly the financial case for outsourcing each non-core competency, function or activity
b) Be careful in the contract negotiation stage – know your fallback position before you commence negotiation
2. The contracted party proved to have the technology but not the knowledge or experience
a) In your planning and preparation – before completing the tender brief – make sure you know precisely what your minimum requirements are, including knowledge, skill, experience, technology, and business case details
b) Carefully consider a range of risk scenarios that include performance, process, outputs and outcome/impact – and prepare an appropriate risk register and risk management plan
c) Have your draft tender brief checked by your financial and legal departments or advisors before finalising and release
3. The contracted party couldn’t complete the contract
a) Your contract manager should be at a level of authority to enable him/her to maintain close contact with the project manager in the contracted business throughout the contract period and beyond
b) This situation may evolve slowly, and there are a large number of contributing factors to be monitored and managed before the situation becomes a crisis
c) Make sure your contract manager is equal to the task
How does risk management align with tendering and outsourcing?
Sound and detailed project planning and development results in accurate costings, viable budgets, realistic schedules, confident risk analysis and identified monitoring points to keep the project/contract on task and on target toward the required or desired specifications, outputs or outcomes.
Confident risk analysis allows and ensures that the tenderer can offer an added value – which means something over and above what is being asked for in the tender brief that will be valued by the outsourcer: and that the outsourcer is able to calculate the actual value of such an offer.
Planning by both the tenderer and outsourcer begins with the ‘what, why, how, when, where, who, who for, at what cost and with what return’ factors, and should continue into a detailed analysis of where risk to any party can occur, where grievance or conflict is possible and how such risk, grievance or conflict can be at best avoided or at least managed.
How does risk management align with quality?
The basis of quality is having an accredited quality system, quality control mechanism, and procedure to ensure continuous quality improvement.
Quality is the flip-side of risk – if you are ensuring continuous quality improvement, you will have an equal focus on risk assessment, management and monitoring.
A risk factor is present where there is a likelihood that a product or component will have to be:
- re-worked – requiring further attention and therefore involving further cost and inconvenience, or
- replaced – resulting in loss, wastage or inconvenience.
A risk factor is present where there is a likelihood that a service or program will be:
- ineffective – ie unable to achieve the purpose for which it has been designed,
- inefficient – ie result in or contribute to an unwise use of resources, or
- sub-standard – ie failing to meet or comply with advertised or required quality or standard of delivery, process or outcome.
The outsourcer should know their minimum requirements or standard relating to quality and risk, and the tenderer should have a one-page flowchart showing how their quality/risk systems operate, are resourced and managed, and continuously improved.
Tools for this Core Business Strategy No. 6 are provided in:
- One Man Show – the smallest of small business
- Competitive Tendering – how to write a competitive tender
- Successful Submission Writing – for business and nonprofit organisations