15.11.2011 0 Comments

Making the Bid/No Bid Decision

Faced with a particular funding opportunity, you need to make a decision about whether to bid it or not.  All too often, in my experience, too many firms I come across end up evaluating specific opportunities on the basis of a general ‘gut feel’ or ‘intuition’ about how the opportunity fits with their core strategic priorities.

However, adopting such an unsystematic approach to evaluating an opportunity can result in you chasing a myriad of lost causes, and reduce your overall success rates.

In order to avoid these pitfalls, we generally recommend our clients use a ten point checklist to evaluate a particular opportunity and make the ‘Bid/No Bid’ decision. This process generally involves an analysis of;

1. Synergy/Strategic Fit – how well does the opportunity fit with your core business? How likely are Senior Management to Support it?

2. Funder Issues – why is the funder letting the opportunity? Are there any hidden objectives? How well do you know them?

3. Cultural/Political Issues – what is the prevailing political/cultural/social environment doing? Is this bid deliverable in that context?

4. Value to the Company – what is its worth, financially, strategically and/or from a market positioning perspective?

5. Competitive Threats – who are your likely competitors. Are you capable of beating them, either alone or by joining forces with others?

6. Partner support – how willing are partners to work with you? Have you been able to construct a winning team?

7. Type of Contract/Payment – What type of contract is it? Cost Recovery or Payment by Results?

8. Potential Return on Investment (ROI) – what is the likely ROI for your company? What, if any, surplus do you think you can make on the project?

9. Risks – What are the risks of bidding? Sometimes these can be political, strategic or operational

10. Cost to Bid – What is it going to cost you to put in place a team to bid for this opportunity? What will you forgo , to put this team in place?

Whilst this list is by no means definitive (you may even want to suggest some other considerations!), it does provide a useful starting point. It focuses a potential bidders mind on a broader set of issues than whether the particular fund actually fits your strategic objectives (which I find many businesses actually limit their analysis to).

However, as this type of list doesn’t, in itself, provide you with a robust method of quantifying your likely success in any given opportunity, we’ve also used a simple scoring matrix to help us quantify whether the bid is deliverable, winnable or profitable. An example of this matrix is shown below;

By simply scoring the opportunity according to these types of criteria, you should be able to assess whether a particular opportunity is worth pursuing, and what your likely chances of success are. In an ideal world, you should probably ask others to also complete a copy of this matrix – so as to triangulate your responses and avoid bias creeping into the process.

In order for an opportunity to be worthy of moving to the next stage in the process it needs to score positive numbers in all three columns.

Simply scoring positive in two and negative in one may cause you to be a little circumspect (for example a negative in profitable may still make you go for it, if the organisation recognises its primary reason to bid an opportunity is to prevent your competitors from securing it). Scoring negative in two or more is probably enough to get you to reject the opportunity.

Whilst ‘gut feel’ is still a useful tool in a bid managers toolkbox, these types of Opportunity Evaluation Tools can also be very useful – even if only to explain and justify to others why you think you should/shouldn’t bid a particular opportunity.

Jim Sims is Head of Strategy & Development at Ngage, to discuss bidding strategy or bid writing support email jim.sims@ngagesolutions.co.uk or call 01865 568 954.

Photo courtesy of eye of einstein