Contractors whose processes for bidding for work have stayed in the past are wasting time and resources on work that they stand no chance of winning. This is the view of training and consultancy specialist Marketing Works and the University of Reading. The team’s report concludes that efficient and effective bid management is the single most important critical success factor needed to win in the bidding process.

The survey focused on the cost of bidding and bids won in the construction industry. Results revealed:

  • the average cost of tendering is 3% of the project value, with the average pre-qualification costs running to 1·5%;
  • contractors are currently spending on average 3-4% of turnover on win-work activity, a large proportion of which is spent on bidding;
  • smes’ average win rates in tendering are 1:8 at an internal cost of £80 000, while medium to large firms’ is 1:5 (£115 000);
  • the average time spent by smes on each bid is 100 hours at a cost of £10 000, for medium to large firms this is 547 hours (£23 000).

Marketing Works is committed to helping contractors achieve improved bid-win rates and reducing the costs of each bid. It has helped Arup’s European division to achieve 2:3 winning bids, while a new bidding process for Shepherd Construction saw its win-rate improve from 1:8 to 1:2.

Dr Will Hughes of Reading University, said: “All too often, the huge cost and effort of bidding is wasted due to non-existent or ineffectual bid management. But the answer is simple common sense: stop bidding for work that you know you won’t win, try and distil why you win certain types of work and exploit it in the bid by clearly explaining why you should be paid more.”

Source

Electrical and Mechanical Contractor