Winning work in the construction industry
There is a great deal of best practice information on what to do when you have won a project, but very little written about how to win the work in the first place, or how to retain a client for the long-term. Given nearly 10% of a consultants turnover and up to 4% of a contractor’s can be spent on work winning activities, just a few improvements in effectiveness and efficiencies will significantly increase the firm’s profitability.
Research carried out by Marketing Works and the University of Reading put the average cost of construction tendering at 3% of the value of the project, with the average pre-qualification costs running to 1.5%. That means if you are winning one bid in five, then 22.5% of your win budget is spent on bidding costs. There are significant opportunities both to improve win ratios and to reduce the cost of each bid.
 Building on existing foundations
Ideally a business-winning culture starts at the beginning with feedback on whether client expectations and relationships are being properly managed. How confident are you that you will play a part in their future? Do you know what your clients think, what they want, and more importantly how they see your relationship with them developing? Procurement philosophy is becoming more enlightened, but to exploit this change we become more client-centric.
Most firms start off with excellent core competences and services, which initially fulfil niche client requirements, but as they grow and develop new services and operate in new sectors, they can start to develop bad habits. One such habit is to treat all clients in the same way. This often involves thinking about existing clients on a transactional sales level, with the client / supplier relationship based on being given yet another piece of work.
It is as important to understand why you were awarded a job, as it is to learn from the mistakes when you fail to win one. Most business leaders realise that their central goal should be to establish long-term client relationships. This recognises the cost efficiencies in repeat business, versus the relatively higher cost of converting new opportunities into actual clients. Studies have shown that it costs five times more to acquire a new client than to make a sale to an existing one.
What does this mean for firms in the construction industry? It means assiduously following the 80:20 rule (80% of fee income coming from 20% of clients). This means researching your existing clients’ actual requirements and potentially changing the way you serve them.
Clients have been getting bigger and more sophisticated. They want tailor-made solutions and are prepared to rationalise their supplier base. Cosy relationships and frameworks now face regular strategic reviews as the demands of economic reality are passed down the line to achieve cost savings. The key therefore, is to actively court a close relationship with your strategically valuable key clients, perhaps by developing new ways to work with them so they cannot easily drop you and to create exit barriers such as a growing dependence on your knowledge of their business.
No longer can incumbent service firms feel safe. They will have to proactively differentiate and to demonstrate why they continue to offer the client the best option. This will mean exploiting distinct sector strengths and marketing unique problem-solving abilities, perhaps honed whilst on the last few jobs. For example, some firms offer existing clients a lower fee structure for the following year’s term contract because they have developed streamlined processes. This shows commitment to building a long-term client relationship.
To achieve this, it must become fundamental to your tactical and strategic plans. Winning work is too important to be left solely to the marketing department. It depends upon the shared vision of the senior leadership and a willingness to engage all operational client facing staff to play a specific and aligned role in client relationship development. The critical organisational changes that are needed to deliver a client-focused service must be successfully communicated throughout the firm. Every service industry, including construction, is reporting new behavioural models. The current favourite is knowledge sharing and collaboration platforms that facilitate improved internal communications. Leadership must ensure it is easy to communicate within and across delivery teams, to ensure it is easy for the client to deal with their firm and that it is hard for them to leave.
- Having a clearly thought-through 12 month tactical plan encompassing new business development and key client management strategies and tactics.
- Offering a truly integrated, client-focused service with default feedback capture.
- Implementing IT solutions to effectively support behaviours such as collaboration platforms, hosting proposal/ PQQ content, key client management plans and business development forums and communities.
- Having the right calibre of staff, fully trained, revitalised with refreshed aligned and integrated win work processes.
- Ensuring regular communications designed to engage with client’s decision makers to encourage rapport and relationship building.
 Visibility at board level
Of crucial importance is the visibility at board level of the opportunity pipeline that will fill the order book in coming months and years. It is vital that reporting provides the board with confidence and certainty that win work activities feeding the opportunity pipeline are being effectively actioned now, not finding out in 3 months’ time that the pursuit slipped due to individuals project commitments. No amount of hard work by staff will lead to any real improvement if these basic business development elements are lacking and senior leadership’s commitment is not there.
Culture change is the key and using external consultants to facilitate this change can make the process easier and faster.
This article was created by --Philip Collard 10:54, 10 December 2013 (UTC)
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