Love Me Tender – An Industry Perspective
Elvis Presley summed it up beautifully:
Love me tender,
Love me true
Tell me you are mine
It is what every contractor wants to hear when bidding for work. After the long hours, the innovative approach and thinking, competitive pricing, construction methodology and the potential team have been developed and are at the ready; the critical element for a contractor is securing a project at a price that enables profitability and delivers the asset required by the client.
But is the way that we currently tender and procure projects sustainable or fair? Is it time to evolve our thinking around the process to ensure the best possible outcomes for all parties? I pose the questions because after taking part in several competitive tenders recently, it seems that while projects, requirements, technologies, and more have changed, the fundamental process of competitive tendering has remained the same.
An RFP is created by clients. Contractors and designers price the job. Lots of cost, effort and presentations follow before negotiations and final agreement. Work then commences, an asset is delivered, and a contractor makes a small margin, or sometimes if the risks were misjudged, takes a loss.
But, like any process, there is always room for potential improvement, increased simplicity and removal of much of the burden that comes with tendering. The outcome? A smoother process, improved submissions and a clearer pathway for all involved.
And for Lidiar Group’s Niall Callan, there are areas where gains can be made, but only if the hard yards are done upfront.
The Documentation Challenge
Having taken part in several competitive tenders after some years away from this area, I find myself asking the question, is anyone reading the myriad of documents clients request that contractors complete as part of the tender process?
I have a sneaking suspicion that they are not always read and that clients go straight to the rate card all too often, and that’s where it ends. This comes to light in tender review meetings, which are often filled with questions already answered in the documentation provided in the submission. You know the drill, standard questions about management plans requested in the schedule or basic questions relating to construction methodology, which are clearly detailed in the submission.
So the first step in the improvement process is to ensure the RFP documentation is thorough, detailed, and focussed so that contractors and subcontractors can ensure that exactly what is required is scoped and priced thoroughly, consistently and accurately.
At Lidiar Group, we look to always make the best tender submission that we can with the information and time on hand. We follow a standardised process of creating an overall delivery methodology, developing a schedule, consider all risks and defining all costs, from the ground up, to deliver a solution for the client that provides the highest degree of outcome for the project.
I take it back to the words of Jim Collins in Good to Great when he speaks of the six times iron man winner David Scott who rinses his cottage cheese to get rid of excess fat. His training schedule would see him burn more than 5,000 calories a day; he didn’t need to do this as he was already burning enough energy to manage the fat intake many times over. But in his quest to be the best he could be, he took every step and left no stone unturned. This is what separates the best from the rest and is a philosophy that should be applied to every step of developing a response to a Request for Tender.
The Communication Conundrum
The second improvement we can suggest is to get people talking.
Perhaps we are often overburdened at tender time due to the scale and size of clients and the challenges associated with processes in large entities? Is client capacity, the time-poor nature of many roles and the challenges of changing a process the reason for the challenge?
As a result, are large organisations not always communicating internally on what they want from their tender and, consequently, using documents and processes from the past? Because we often see the same tender RFP that would have been issued ten years ago while separate verbal communications are taking place with the contractors and emphasing different ‘real’ deliverables.
The challenge and the risk here is that contractors with fantastic relationships gain an advantage; new contractors, small firms, and independents may not be so fortunate.
The solution, get people talking. Have a more collaborative process between clients and potential contractors to ensure that every possible element of information is shared appropriately and that everyone is on the same page. This will help to extend the options for clients and may encourage more innovative responses.
Time To Plan, Time to Succeed
The timeframes to turn around a tender are often tight, and a considerable amount of work must go into each submission. Contractors can often spend hundreds of thousands, if not millions of dollars each year, bidding for work, and in most Australian jurisdictions, bid costs are not covered as part of the tender.
Therefore, it is appropriate to ask that if we are developing construction, safety, environmental, sustainability, or regional engagement plans specific to the scope and these are not being reviewed, are we wasting our time? Perhaps have a tighter pre-qualification process and extend the mobilisation timeframes to allow for the development of these documents from shortlisted or winning contractors only.
In a time of lean construction, with a focus on efficiency and cost-effective delivery, maybe it is time to review the demands made at tender time and only provide RFPs that contain the information that is actually required?
It would also be beneficial to have tenders scheduled at regular intervals rather than all arriving in a glut. For example, how Coomera Connector is being procured will allow for regular packages to come to market and for contractors to respond in a timely fashion.
We would also encourage organisations to look at the approach taken by the Department of Transport and Main Roads, which has implemented the TMR Tender Moratorium Policy. The policy restricts procurement activities over the Christmas and New Year period, with no tenders to be released between 11 December 2019 and 10 January 2020. A simple initiative, but one that takes enormous pressure off bid teams and enables the occasional uninterrupted and much-needed break time for stressed teams.
What Can be Achieved?
We all want projects to succeed, to be delivered on time and to schedule. Therefore, it is in the best interest of everyone to improve the tender process.
- Clients receive a response that provides the best possible chance of project success with accurate costs
- Contractors respond to precisely what is required ensuring the best possible price and program
With tighter RFP documentation, contractors will be able to see the process as an opportunity to demonstrate knowledge of the scope and our ability to deliver. Competition will be on a more level playing field, and when it’s neck and neck across the sector, it’s the quality of the submission that will separate the winning bid from the rest.
By treating every step as a critical one, we must put our best foot forward, stay steadfast in our resolve, trust the process and, if all things are equal, reap the rewards.