Bidding tactics

“Strategy without tactics is the slowest route to victory. Tactics without strategy are the noise before defeat.”

--Sun Tzu (544 BC – 496 BC)

[edit] Introduction

When a contractor or other supplier wishes to secure work for its business, it will usually submit a proposal (a ‘tender’, 'quote' or ‘bid’) to a prospective client and in so doing becomes a ‘bidder’. The bid is a detailed description of how the supplier will manage and complete the works required if chosen by the client.

This will involve bidding tactics - specific, small steps (or micro actions) the company takes in order to secure the work. These small steps combine to form a broader bid strategy (or macro action).

In the most basic sense, tactics can help companies define HOW to accomplish a goal while strategies define WHAT the goal will be. Generally, that goal will be to win the bid.

In a practical sense, the bid strategy will inform the definition of the bidding tactics. For more information see: Bid strategies.

[edit] Components of bidding tactics

Tactical decisions may come in the form of estimates or approximations of what materials, tools, personnel and other resources could be required for the project. For example, when working on a demolition project, a tactical question may be, ‘is there a need to include an estimate for a skip?’ The answer to this tactical question will be reflected in bid.

One tactic is to submit the most accurate bid possible. However, it's important not to reveal specific information, especially related to price or execution plans, to other potential bidders. Tactics may also include money saving factors that can be incorporated into the bid.

Having the ability to recognise important bidding tactics may require managerial skills and experience in the field. An effective project manager who can manage the process and make decisions on priorities, will ideally arrive at solutions that are advantageous for the project as a whole.

Bidding tactics will vary from project to project. Some of the factors that could influence how to bid (or tactical approaches) may include:

• The type of work.
• Project size and duration.
• The complexity of the project.
• The clarity and detail of the information provided.
• The type of employer: Public employers can be more process-driven and require more complex submittal procedures.
• The location of the project.
• Equipment availability: estimators should be mindful of the availability of expensive equipment across bids and projects.
• The availability of team and management: Projects may be bid with particular project team members in mind who may have specific expertise or experience.
• The number of bidders: Some projects will receive more bids than others. The odds of winning are greater on those with fewer bidders.
• Competition: only a few contractors will be likely to offer serious competition on any one bid. Being aware of their workload gives a better indication of which projects to bid for.
• The time of year.
• Whether the contractor has prior experience with a project that is similar.
• Confidence in the prices provided by subcontractors for the project.
• The state of the market - whether busy or slow.
• Whether there is an existing relationship with the employer.
• The opportunity for follow-on work from the same employer.
• Confidence in external events such as interest rates, inflation, and so on.
• How busy they are on other projects. Being busy may mean they enter higher bids, whereas if they are less busy they may enter lower bids that offer less profit.
• The amount and value of subcontracted work.
• Variations in productivity. As a trend, workers tend to be more productive when labour is readily available, whereas they are less so when labour is more scarce.

[edit] Related articles on Designing Buildings Wiki

• Auction theory.
• Bid strategies.
• Game theory and construction.
• Negotiation techniques.
• Procurement route.
• Typical tender process for construction projects.
• Winning work in the construction industry.