Strategic Thought

Disciplines of RM >

 Bid Management

With increasing competition, especially in the contractor market, potential suppliers are having to take greater risks in order to win bids. This has led to a far greater need to understand the cost of managing risk to enable more transparent proposals and bids to be made to customers.

Benefits that Risk Management can bring to Bid Management:

• Increase the ability to win bids because a choice of commercial options based on various risk levels can be offered to the prospective client i.e. you can better match the client’s needs.
• Give your clients the opportunity to select the level of risk that they are willing to take and adjust the price of the contrract accordingly. This further allows a client to select risks that they would prefer to manage themselves, therefore offering suppliers the opportunity to further reduce the cost of the bid and make it more competitive.
• Gives suppliers the opportunity to demonstrate their understanding of the business requirements through identifying the risks and planning the management at different levels.
• Have the ability to better target contingency as risk management provision once the risks have been identified, assessed and provided for. This targeted analysis of risk provisioning helps justify the need for contingency in the proposal.
• Offer the customer the ability to communicate more openly with you, the supplier, about project risks and therefore enhance the customer/supplier relationship.
• Better understand what risks you need to deal with within the project in the pre-contract commercial stage of the project. This helps protect margins and ensures sales staff communicate clearly the commercial strategy in the opportunity and prevents underselling.
• Ensure delivery occurs on time and therefore protects financial margins, referenceability and reputation.
• Quantitative analysis techniques can allow you to assess the likelihood of hitting specific delivery dates, schedules or costs.
• Using the same tool that your potential customer uses can go a long way in giving them peace of mind.