To Tender or not to Tender, That is the Question

As a small company, this can be a key question, as tendering can be a gamble, and when up against the big 3 or 4, you are tendering against a “brand impression” that is created by the bigger company as a whole, not necessarily the local team they may be using, which can drastically reduce your chances of being successful.

We used to respond to a lot of tenders (At significant cost) and get no-where, before we started asking ourselves the following question before responding:

“Would I take out a personal loan of €xxx,xxx to respond to this tender, or would that be a waste of money?”.

The things that qualify when it is worthwhile to go forward can be:

  • Inside connections in company – will tell you what is influencing any decision, or if there is already a preferred company – there nearly always is.
    • Connections to people who have tendered to company before and won. (they can give you the how/why)
    • Ability of company to support the solution you would propose – ie. Their in house skills.
    • Track record of company type/size that previous contracts have been awarded to.

This does not mean that you can never tender – when the big boys come in way too expensive, you may be approached and requested to tender. When this happens you have to find out why you are being asked:

  1. Is it because other tenders were too expensive? (Most promising scenario – get in, discuss, and build up a trust relationship – smaller companies do not have the same overheads as larger ones, so lots of opportunity here)
  2. Is it because they didn’t get 3 quotes, and all public bodies need to have 3 quotes before they can award (if this is the case, run away)
  3. Is it because of the track record of those that tendered?
  4. Is it due to past project problems with companies that did tender?(important to identify what went wrong in the past – the company or individual might be un-workable with, or they may just be tired of being ripped off, or something else)
  5. Is it because no-one tendered (be cautious here – they still need 3 quotes)
  6. Where the tender was awarded and the project failed – they now need to turn it into a success, or become answerable for the failure. This is never a proper tender, as they already had the 3, and a massive budget will already have been wasted. (Discover why the project failed, or don’t proceed)

Note: With any tender, too little information is nearly always provided at the RFP stage, and scope/costs will creep if you turn a blind eye to even one ambiguous line in the RFP.

If giving a fixed price quote (which big companies don’t do), make sure you pin down every aspect of what you are proposing and clearly flag what is OUT of scope, ensuring there is no ambiguity. Scope creep is not an option.

Where information is not provided, quote for a full analysis/design stage, and say that a fixed price quote for delivery will be given at the end of design stage. There is no point winning a tender process which results in a contract that would LOSE you money.

Find out what SDLC processes are in place, and itemise the SDLC documents you will be responsible for producing. This is a very expensive process, as they go through many versions till approved for signoff.

Never forget the testing overhead in an enterprise project. Between assembly, unit, peer-to-peer, integration, system, performance, stress, soak testing etc, you are talking between 30% and 50% of the overall costs.

Find out how many people/teams you will need to interact with within the company to carry out the project – eg.  Architecture, Hardware, networking, security, integration, support, Requisitions (for software and hardware), Test teams, Project Management, Business areas etc.

The number of people involved push the costs higher – you will put a LOT of time into conference calls / meetings / politics / getting agreement between teams with interesting histories of working together etc.

Support – Don’t forget this – even if its not asked for in tender – you don’t have to cost it – just say you offer it – it sets expectations, and is something customers often don’t consider when putting a tender out, as they may intend to fully support in-house, but the reality is that even in-house support will have questions from time to time – Never consider your end-product as static – the reality is that it’d be dead of it couldn’t accommodate a world of changing data.

And always remember, there is no point going in to something if you have an unhappy customer at the end of it – ensure you understand clearly what will make the customer happy. A project is for a period of time – the customer relationship is for life.

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