Keeping Bids and Proposals up-to-date to combat Global Supply-Chain issues
Rapid change is the new norm. Most of us have never dealt with global currency inflation or supply-chain interruption.
CS Global Group, is a multi-national communications consulting firm specializing in bid and RFP preparation. The founding partners Chris Runowski and Sander Trestain, have written, and won, over half a billion dollars of commercial bids in energy, infrastructure, and manufacturing, across EMEA, and share their thoughts on the technical and commercial aspects of proposal writing in today’s economic environment:
Trestain said: “It’s an unusual time. Contractors bid on $100 million-plus projects with razor-thin margins. Project execution risk is as high as I’ve seen it within recent memory.”
Runowski said: “We’re advising our clients to take a de-risking strategy. A successful bid in the extremely competitive international infrastructure market must demonstrate value and a ‘wow’ factor.”
Trestain said: “We have four de-risking points to consider. Link your pricing to an inflation index. Your finance department will have some input on this, but it’s a balance of the currency your corporation holds and the currency you expect to procure with. Project award is often delayed, and a year of inflation could eliminate your margin.
“Consider linking components in your bid to commodity pricing. For example, if you’re doing an electrical project, global copper pricing is important. Establish these commodity pricing mechanisms by noting a specific index value and date in the bid, and define certain pricing line items as variable, based on the actual index value at award date.
“Double-check your force majeure wording and don’t accept anything one-sided. Force majeure is intended to protect all parties. In case of a supply-chain disruption, it should protect the owner from unwarranted price increases but allow the contractor to extend the schedule without liquidated damages. This is often not the case in typical contracts.
“If you cannot index currency or commodity pricing due to bid compliance issues, consider buying an option-to-purchase from key suppliers when you price out the project. For a fee, a supplier will guarantee you a price at a later date, and it’s your option to proceed or not. Talk to your supplier, you may find it’s surprisingly cheap to secure a price for a few years.”
Runowski pointed out the challenges to these strategies.
Runowski said: “These de-risking strategies may be non-compliant with the RFP or negatively affect your competitiveness.
“Our advice is simple. Get your bid documents polished and corrected. You’re investing a lot of time and money, and it often goes overlooked just how many language, technical, and bid compliance errors are submitted. Countless bids are disqualified for these reasons.
“In our experience reviewing bid documents, 30-40% of the text is revised, and significant changes are made to comply with RFP requirements. Putting together bid documents is a complicated and involved process. Regionalization to cultural norms, language, aesthetic inconsistencies, and errors in reused boilerplate material are prime examples.”
Trestain said: “Effective bid regionalization means knowing your audience. Is it a lift or an elevator? kPa, bar, or psi?
“We correct an alarming number of definition, compliance, and technical inconsistencies. It makes you wonder how many companies shoot themselves in the foot by submitting non-compliant bids without a third-party review.”
CS Global Group
CS Global Group is a strategic communications consulting firm specializing in bid writing and review. The company consults EPC bidders on infrastructure, energy, and renewables mega-projects.
CS Global’s team has experience in mechanical engineering, construction, project management, and automotive manufacturing. They take a technically-oriented approach to preparing compliant and competitive bids.
The company’s staff have over 40 years’ experience writing commercial documents.
