New university research is starting to shed light on the murky world of tendering. Is it worth the effort? maybe, maybe not, as Will Hughes discovers
The more contractors spend on marketing, the more bids they lose. Should they just give up? Consultants who focus on presentations lose bids. Are they ineffective presenters? Consultants spend far more in proportion to turnover trying to win work than contractors do. Are they just inefficient? General contracting is four times more expensive to bid for than management-based methods or novated design-build.

Research currently under way at the University of Reading in conjunction with Be is probing the true costs of tendering in UK construction.

The research aims to find characteristics of winning bids, identify wasted costs and improve the processes of selection and pricing.

As part of this research, a recent survey carried out in collaboration with Marketing Works collected data about 78 bids and pre-qualifications from contractors and consultants. The results provide a rare insight into what works and what doesn't. How do you match up?

More than the job’s worth?

Consultants spend a much larger proportion of their turnover trying to win work than contractors do. Is this because consultants are inefficient? No. It’s just that they are bidding for consultancy fees, not for the whole project. For consultants, general contracting projects are more expensive to win than other forms of procurement. For contractors, the proportion of the contract sum spent on winning work is much smaller, almost trivial. General contracting is four times more expensive to bid for than novated design-build.

Power of presentation

Consultants succeed when they devote more energy to marketing and pre-bid discussions. The opposite is true for contractors. Are contractors poor at marketing? Or perhaps marketing is not something that can successfully be carried out for just one project. Consultants who spend more effort on presentations lose more bids. The opposite is true of contractors. This may mean that for consultants, less talk is better. This may also mean that by the time you get to the presentations, the bid may already be won - or lost.

Time is money!

The hit rate for consultants and contractors is the same. This means that with an average win rate of one in five, consultants spend approximately 20% of their fee turnover on winning work and contractors spend approximately 3% of their turnover on winning work. This money can only be recouped from successful bids and it represents a significant proportion of a construction budget. A consultant spends (on average) 136 hours on a bid. A contractor spends about four times that to win 14 times the value of work.

Source

Construction Manager

Postscript

A word of warning: these figures are from a very small survey, and one would need a lot more data to be confident in the results. If you are interested in taking part in a larger-scale survey, contact Will Hughes at the University of Reading, email w.p.hughes@rdg.ac.uk

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