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Seven Key Formula for Winning Cost Proposals

In a highly-competitive environment with tight budget constraints, your cost proposal solution mustn’t only be compliant but additionally responsive, competitive and convincing.

From the price side, it’s extremely hard with an impact on the technical proposal. But you can follow seven key basics that should go a long way to making the next proposal a successful cost proposal as well.

1. Have available and utilize current customer information – know the market factors driving price.
Knowing what your customer is all about is the initial step. You are merely guessing about the consumer without knowledge of the prior buying history, their budget pressures, authorized program funding, deductions for program support, customer staff, and reserves in addition to their independent cost estimate and whether they are price oriented or performance oriented. You have to obtain your intelligence ethically.

2. Know what it costs your company to complete business.
We’ve often heard from many companies they can’t find out what it costs to complete the job until the ultimate RFP comes out. That’s hogwash. With a draft RFP you are able to do an earlier estimate of what it costs you to complete the work. Without a draft RFP you ought to have enough intelligence in regards to the procurement to estimate what it’ll set you back – even if it’s a broad ranging estimate. Remember this is simply not a defined science and you are certain to get more accurate as you receive closer to the true RFP. Knowing the expense early will allow you to get creative within the last few step. In the event that you wait until the ultimate RFP comes out, you are too late to make a creative difference in your pricing (different from cost) because you are too busy guessing in what the true costs are. With understanding of your costs early, you can make many creative choices to win.

3. Know what your competitors’costs are to complete exactly the same business.
Without competitive information, you are just guessing in what it will take to win. These records is easily available through GSA Advantage, Internet searches, FOIA requests, and subscribed search services such as for instance EZGovOpps and GovWin. Discover who your competitor teammates are and how they’ll bid by considering past wins by your competition and their teammates. Gather intelligence in what corporate investments they will likely make in the project and what their probable approaches are to bidding. Discover the small tricks your competitors use to get lower pricing such as for instance changing work locations to get to lower base, infusing productivity enhanced tools, staff greening. Companies tend to complete exactly the same things over time. You also need to consider whether your competitors are incumbents. Incumbents often take fewer risks and think less’away from box ‘.

4. Give a well-designed work breakdown structure (WBS) that ties to the performance work statement and is supported by basis of estimates.
We genuinely believe that without a WBS for estimating the job outlined in the performance work statement or the statement of work, you can’t adequately think through every one of the elements related to performing. You will likely leave out some elements or potentially double up on your estimates. We often find a three level WBS is adequate to estimate the work. Further, we see that contractors frequently estimate at all quantities of the WBS rather than only at the third level, causing confusion and estimating incorrectly. When you develop this amount of detail, it now is easier to detect where you can make corrections, cuts or additions to your costing.

5. Actively determine your company investments in the project you are bidding.
Company investments are those items your corporation makes to boost the performance or efficiencies of the project (training, recruiting, transitions), investments in property, plant and equipment, and project-specific reductions taken by the corporation in indirect rates. Most of these types of investments are those which are shouldered by the corporation and are not reimbursement items by the Government.

6. Be the business that’s easy to complete business with.
Let them have what they ask for and more. The business that wins is the business that makes the evaluation easy, presents the info (technical and cost) in an organized trackable fashion, and presents the info in both written and electronic formats. Even though the RFP doesn’t ask for electronic format, give it to the Government that way anyway. Retain all formulas so your evaluator can very quickly follow your thought processes. Remember, the firm that offers them the written and electronic version they can trail through, will probably make unscored points with the evaluators.

7. Be cost competitive and get creative about it.
This is the easiest (really) if you have satisfied all the remaining steps before this one. This implies you sharpen your pencil and your mind about labor rates, staff greening, de-escalation, competitive fee structures, competitive and new indirect rates, bidding direct whenever possible, and company investments.

All those details aside, there needs to exist a visible unity of purpose and thought among every one of the elements of the proposal. In other words, you can’t describe something in the technical or management proposal that isn’t identified in cost. Many (maybe most) proposals are very hard to trace in one volume to another. Brash as it can certainly sound, there should always be an identifiable link between the elements, even although you have to produce it for yourself.

About Muhammad Mubeen

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