While submitting tenders is always a hit and miss process, understanding the evaluation process and the factors that act as key decision drivers helps in making a successful bid.
Preparing and submitting tenders for facilities and corporate real estate management contracts is time-consuming and expensive. The call-for-tender process, evaluation of submissions and awarding of contracts is relatively similar across the industry; however, the process details have an impact upon the final award decision. And unsuccessful tenderers usually do not understand the reason behind it.
Typically, the tender process starts with the client organisation issuing an expression of interest (EOI) to test the market capacity and capability to deliver the services. After selecting a list of qualified tenderers, the Request for Tender (RFT) will be issued. So what are the chances of winning the tender particularly when the evaluation process is not known?
Tender evaluation plans (TEP)
While the evaluation process is more or less similar, there are specific details that have an impact upon the tender outcome. Many evaluations separate certain criteria such as evaluation and scoring for non-financial and financial tenders – a wise approach, as it ensures the focus is not on the price submitted before understanding the delivery capacity and service offerings.
Usually, the non-financial criteria include service delivery aspects such as:
- proven capability and experience in delivering the services
- approach, service delivery team structure and MIS (management information system) solution
- demonstrated understanding of client and specific tender requirements
- delivery innovation, process improvement and ‘value-add’ opportunities, and
- transitioning-in the service delivery ensuring no business interruption.
The tender documentation usually sets out the evaluation criteria, but the weighting is seldom disclosed. Within the weighting evaluation frameworks, between 20 and 30 percent is allocated to the first three aspects, while the last two get around 10 percent each. Having an understanding of the client organisation’s decision drivers can assist in understanding the service requirements. Tenderers that do their market research have the advantage of the relevant focus in their tenders.
The dynamics within the evaluation panels is challenging. Not all members are experts in the subject matter. Representatives from the procurement, finance, legal and risk departments tend to take different approaches in scoring. These anomalies are usually managed by each member score individually before being aggregated with open debate around the outliers. Tenderers who write their responses in simple English and avoid industry jargon can sometimes offer a better understanding and are likely to get better scores from the non-technical panel members.
The tender pricing is always a key decision driver, particularly for client organisations on a cost-cutting journey. Ideally, the financial evaluation is undertaken separately from the non-financial side and is not a part of the overall weightings. In other cases, the financial criteria weigh about 30 to 50 percent overall and thus have a huge impact on the final decision.
Tenderers are usually required to detail and price the proposed service delivery resource structure, with staff salaries, oncost, corporate and MIS infrastructure costs, and profit margins. These factors are then reviewed, analysed and compared with the breakdown from other submissions. The panel assesses whether tenderers have adequately resourced the service requirements for both – the number of resources and the skill and experience levels. Normally, with more resources and higher salaries, it is more likely that the service requirements and client expectations will be met. Low pricing from under-resourcing will skew the tender outcome to a service delivery solution that will not meet client expectations.
At this stage, the financial and non-financial assessment results are combined. The ideal way to do this is to compare tenders on a ‘cost per value point’. This approach balances low costs with poor non-financial evaluation criteria and vice versa, so that the client can make a more informed decision, one that is not skewed by unrealistically low prices.
Reasons for outsourcing
Evaluation plans are usually directly linked to the reasons why the business is outsourcing the service provision. Understanding the key decision-making drivers for the outsourcing is key to submitting competitive bids.
Reducing cost is one of the main reasons for outsourcing. Some service providers in the industry have structured their service offering on low price models delivering low service standards and despite negative client reviews they continue to win contracts based on price.
A focus on core capabilities within the organisation is another decision driver, particularly when it is identified that there is a lack of relevant internal skills. Because the required service functions are many and varied, all of the required skills are seldom found within a small team. Outsourcing can be advantageous as an external service provider is more likely to have all the required skills shared across a number of contracts.
Poor understanding, control or conditions of the portfolio assets are common problems for organisations, particularly with larger portfolios of diverse properties. While this could be due to a lack of discipline in populating asset maintenance databases, outsourcing is often seen as the solution. The investment in and availability of bespoke systems, processes and infrastructure provides a cost-effective solution. The single ‘source of truth’ for all information and financial data related to assets and occupancy costs, across the various facilities and property functions, is a compelling business objective and key driver in the outsourcing decision.
The reasons for outsourcing are linked to a combination of objectives, often with a strong focus on cost savings; astute tenderers who have done their research can respond to these even if they are not clearly stated in the tender documents.
Not winning a bid after significant effort, time and money, can be frustrating. But understanding the reasons for failure is important for the preparation of the next tender. Reviewing an unsuccessful tender bid with the client’s feedback is useful in identifying aspects that cannot easily be bridged. Tough decisions to invest in resources, infrastructure or even a possible trade purchase may be required before entering a market.
Experience in similar service delivery roles is a key evaluation criterion for most clients. If the tenderer is unable is demonstrate service-specific experience, chances are they will lose the bid, since few companies are prepared to risk contracting a new market entrant. Clients are also cautious of manipulative tender responses because it gives the idea that either the tenderer did not understand the brief properly or they are not deemed trustworthy.
Lack of appropriate systems and processes are also viewed negatively during the evaluation process. Some tenderers take the ‘promise’ approach that new systems and processes will be implemented and the appropriate skilled resources employed once the contract is awarded. Tender evaluation panels view this approach with significant cynicism, however, and such bids are therefore seldom successful.
Although the required tender response formats are relatively prescriptive, some tenderers are still tempted to populate their response with excessive corporate brochures and marketing bumf. This tends to confuse and irritate the evaluation panel as it detracts from the main message, which may be very good. It is best to stick to the key message in the formal response referencing the corporate literature included as attachment when required.
Another challenge for evaluation panels is the submission received from consortiums with members offering complementary service capabilities. Although it looks good on paper, I wonder when do consortium members ever really work together and if there really will be seamless service delivery.
Submitting tenders is always a hit and miss process. Trying to understand and navigate the vagaries of tender evaluation processes is even more challenging. Being realistic and honest in responding to tender requirements and focusing on the key drivers in the outsourcing process is nevertheless key to realising and maintaining an acceptable winning track record.
Rodney Timm is the Director of Property Beyond