When companies or organizations issue an invite to tender, they’re essentially welcoming bids from prospective suppliers. Commonly used in the construction industry, tenders are also widely used in other sectors, including tech, healthcare and local government.
If a company is looking for a new IT support provider, for example, they may issue invites to tender and permit specified businesses to bid for contracts. Similarly, if an organization wants a new custom CRM system, they will issue invites to tender, so that providers can bid on the project.
How Does the Tender Process Work?
Tenders are usually kept confidential and, once the submission deadline has passed, the issuer will analyze the bids and hire their preferred contractor. As service providers are eager to secure the contract, they often try to submit the lowest bid but, sadly, this can backfire if suppliers underestimate the amount of work involved.
If you want to ensure that you don’t make a loss on project tenders, take a look at these top tips now:
1. Create Custom Tenders
When you’re routinely bidding for projects and submitting tenders, it can be tempting to cut and paste content from one document to another. After all, if you’re applying for the same type of projects, many of your tenders will cover the same points.
However, using generic content or cutting and pasting from one tender to another can have disastrous results. It only takes one minor error to drastically change the substance of your bid and, as a result, you could end up inadvertently submitting a tender that’s much lower than you intended.
By creating an empty template that you can use for each tender, you can ensure that the process is efficient, while still writing a custom proposal for each submission.
2. Estimate Time Accurately
If you’re preparing a tender, you’ll need to consider how much time the project is likely to take. If you’re bidding to design a new website for a company, for example, you might be able to undertake this project yourself, in which case estimating the time required could be fairly easy.
However, more complex projects, such as software development or creating custom cybersecurity systems, can require input from numerous professionals. Here, you’ll need to obtain feedback from team members so that the estimated time can be accurately calculated.
Underestimating the amount of time required is one of the most common reason for suppliers to lose money when submitting tenders. To prevent this from happening, monitor your time carefully when you’re undertaking existing projects so that you can make a more accurate assessment for future work.
3. Calculate the Return on Equity
There are many ways to measure financial performance, but calculating the return on equity is one of the most useful. By dividing your company’s net income by the shareholders’ equity, you can effectively work out what the return on your net assets will be.
When you factor the value of winning a project into your return on equity calculations, you can determine what impact the project will have on your annual financial performance. If it’s going to damage your yearly results, you’ll know that your tender is too low to make the project worthwhile.
Fortunately, you don’t have to work out the return on equity manually. Instead, you can use an online ROE calculator to implement the right formula. Once you have the data you need, you’ll be able to ensure that your future tenders won’t equate to a loss for your company.
Can Any Business Submit a Tender?
Before you’re eligible to submit a tender, you typically have to go through preliminary stages to determine your eligibility before an invitation to tender is issued. In the public sector, these are known as expressions of interest (EOI) and pre-qualification questionnaires (PQQ). When you’re bidding on contracts in the private sector, these preliminary stages may be referred to as a request for information, request for quotation or request for offer.
These criterion-based eligibility requirements help to determine which suppliers are best-suited to bid for the contract and means there will be less competition when you are invited to submit a tender.
Is It Easy to Win Contracts with Tenders?
Although the process can sometimes be drawn out, it can be relatively easy to win a project via tender. However, it’s also very easy to lose money by undervaluing your time or resources. To prevent this from happening, it’s essential to ensure that you take the time to carefully consider potential projects before creating a detailed, accurate and comprehensive tender.