How to qualify tenders is a topic that gives many business owners a headache! Here is a guide on qualifying tenders. It also applies to when you invited to quote for work. Bid or No Bid.
Qualifying Tenders & Sales Opportunities
It’s all about Quality Not Quantity. This refers equally to formal tenders and when you get approached for a quotation.
I love winning bids! But absolutely hate wasting time on something that was never going to be a success. I try and take a realistic view on the likely return on investment (time and money). I can then make a more rational decision whether to pitch or not.
Too many times I hear about organisations going for lots of tenders and not winning any. This is often due to not qualifying tenders properly. If you are looking for new business and you find a tender, it can be very exciting when you go for it – the anticipation of a big win. But when you get rejected (once again) it is very depressing!
Over the years I’ve had some difficult and lengthy discussions with MDs about whether to bid or not. Deciding between ditching an opportunity to win new business and potentially your wasting time is tricky.
Making the decision not to bid on tenders can be hard. You may feel you are limiting your opportunities. But if you do it well, you are just freeing up valuable resources to do something more profitable. Like creating one excellent winning bid, rather than three mediocre losing bids. Or simply going home on time tonight?
What is a Qualified Tender?
It is a tender (or sales) opportunity that you have thoroughly checked. Leaving you certain that you have a good chance of competing to win.
Anything else is a punt!
To avoid confusion, this article is not about any instructions or rules within an invitation to tender (ITT) that bans ‘any qualification of a tender’. When an ITT says that a tender must not be qualified, that means that your bid must not be caveated, subject to conditions, assumptions or equivocal. They are asking for an unequivocal bid. Not a tender that you have selected because it is right for you.
Tender Qualification Checklist
Assuming that you are Fit to Tender, the simple solution is properly qualify tenders every time. Here are some items for your Tender Qualification Checklist:
- Go for quality not quantity
This will improve your hit rates.
- Ask yourself ‘can we win it?
Is it really your business?
- Consider the contract value
Contracts are often not given to organisations if the contract value represents more than 50% of their turnover (are you big enough to service the contract?).
- Do you have provide good references
Can you demonstrate working for similar types of customers doing similar work?
Are they happy to be contacted to provide a reference?
- Look at the tender evaluation criteria
Can you meet their requirements and score well in the high-value questions?
See evaluation criteria explained.
- Location – are you close enough to service the work?
Unless you have a specialised offering, it’s often no good going for contracts out of your area.
- Too many other bidders?
Are you just making up the numbers?
- Any PQQ/SQ requirements that you cannot meet e.g. ISO 9001?
If so, ask the buyer if it’s mandatory.
- Existing relationship?
Do you have a good / bad / no relationship?
What about your competitors?
Who are you up against?
Can you beat them?
- Is the customer going to change?
Is it just a bench marking exercise?
Or a tool to beat the current supplier’s price down?
- Do the buyers allow meaningful communication?
Do they give useful answers to clarification questions?
If not, how can you know what you are bidding for?
What will they be like to work for?
- Consider resources / time / cost
Can you provide / support them?
If you find that you have too many negatives, maybe it’s time for you to give a polite ‘no thanks’ and do something else more profitable…
Time is too short to waste on tenders that you are probably not going to win!
Can We Win It?
Talking to clients a while ago, a phrase came to mind that sums up one of the most important elements of selecting which tenders to bid for:
“Can we win it?” NOT “Can we do it?”
The Tender Qualification Checklist above shows the key steps to take – you really must be realistic. You may well be able to carry out the work required in the tender BUT really, what are your chances of winning it?
Too Many Opportunities
Another difficult issue is when too many opportunities come up at the same time. If you do not have enough resources to bid for everything properly, then you need to decide which tender(s) to reject. It is far better to submit 1-2 first class bids than 3-4 poor tenders. So, consider which are most important and then politely decline the rest. Typical considerations are:
- Existing business vs. new
- Great customers vs. poor
- Ideal work vs. imperfect
Are You Ready to Compete?
I frequently get asked by start-up companies how they can win large public sector contracts. I try and gently explain that it’s hard for new companies to compete against more established businesses. You don’t need to be a big business to win big contracts. But you do need to be able to beat the competition. Our Tender Check-list has advice on making the decision whether to tender or not. It also explains how to get ready to win tenders.
Remember that tendering and bidding for contracts is part of the sales process. You are still selling, although in a more formal way than face-to-face sales. You should always carefully assess all sales opportunities – is it right for you or is it a waste of time. The same approach to qualification applies to tenders.
Procurement Regulations Changes Help You to Qualify Tenders
I posted an article on the 2015 Procurement Regulations and How Will They Effect Tenders & PQQs. There are two procedural changes that help with qualifying public sector tenders:
- ‘Below Threshold Contracts’ will not require PQQs
- Electronic versions of the procurement documentation will be available via the internet when the contract notice is published
These mean that you should have more information from the very start. That supports making a more informed qualifying decision. Not having to complete a PQQ just to see that the tender is not suitable saves wasted time. Having all documents available beforehand allows you to assess what is involved in bidding. You can see the questions, the contract and the specification. This knowledge definitely helps with the bid / no bid decision.
If you want to improve your hit rates, contact us for help with tendering.
Tender Qualification – Summary
It’s always exciting when you have a chance to pitch for work. But remember it’s all about Quality Not Quantity. You cannot expect to win everything you go for – even after careful qualification. But you can at least avoid bidding on low quality opportunities.
It is vital to have a sensible approach to qualifying tenders and sales opportunities. Be careful, logical and impartial. Only go for those that are really viable. That way you reduce wasted effort and increase your win rate. It’s better to submit 1 good tender and win it than do 5 poor bids and lose them all!
Here are a couple of questions to ask yourself when attempting to qualify tenders or deciding what sales leads to chase:
- “Can we do it?” Are we able do all the work as specified? Do we have the resources to do a good job?
- “Can we win it?” Do we have a chance of winning this? Anything preventing us from scoring top marks?
Question (1) seems obvious. But unless you can also say ‘yes’ to question (2) – do not bid.
Anyone got any more thoughts on how to qualify tenders and sales opportunities?