Proposed Solutions

Chapter 3

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 Learning Objectives

 Building relationships with customers and partners

 Proposal marketing strategies and the bid/no-bid decision
 The development of winning proposals
 The proposal preparation process and the elements that
may be included in a proposal
 Pricing considerations
 The evaluation of proposals
 Types of contracts between the customer and the contractor
 Measuring success of proposal efforts

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 Proposed Solutions

 In many situations an RFP does not involve soliciting

competitive proposals from external contractors, and
the second phase of the project life cycle may be
completely bypassed.

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 Building Relationships with
Customers and Partners

 Relationships establish the foundation for successful

funding and contract opportunities.
– Requires being proactive and engaged
– Necessitates being a good listener and a good learner
– Contacts with potential clients should be frequent
– Focus should not remain on discussing potential contract
opportunities alone.
– Establishing and building trust is key
– Ethical behavior in dealing with clients and partners is
imperative for building trust

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 Building Relationships with
Customers and Partners (Cont.)

 Keep in mind:
– Control emotions and be tactful and not confrontational in
discussions with clients
– Maintain a positive and can-do attitude in dealings
– Build credibility based on performance
– Always put the client first
 It is important to build relationships with several key
people in a client or partner organization.

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 Pre-RFP/Proposal Marketing

 Contractors whose livelihood depends on creating

winning proposals:
– Should not wait until formal RFP solicitations are
announced before starting to develop proposals
– Develop relationships with potential customers
– Maintain frequent contacts with past and current customers

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 Pre-RFP/Proposal Marketing (Cont.)

 Be familiar with a customer’s needs and

requirements
 Consider this marketing or business development;
no cost to the customer
 May prepare an unsolicited proposal
 Efforts are crucial to the foundation for winning a
contract

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 Bid/No-Bid Decision

 Factors to consider:
– Competition
– Risk
– Mission
– Extension of capabilities
– Reputation
– Customer funds
– Proposal resources
– Project resources

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 Bid/No-Bid Decision (Cont.)

 Need to be realistic about probability of winning the

contract
 A lot of non-winning proposals can hurt a contractor’s
reputation

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 Developing a Winning Proposal

 A selling document – not a technical report

 Convince the customer that you are the best one to solve
the problem
 Highlight the unique factors that differentiate you from
competing contractors
 Emphasize the benefits to the customer
 Write in a simple, concise manner
 Address requirements as laid out in the RFP
 Be realistic in scope, cost, and schedule

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 Proposal Preparation

 Can be a straightforward task performed by one person or

a resource-intensive effort requiring a team
 May designate a proposal manager
 Schedule must allow time for review and approval by
management
 Can be a few pages or hundreds of pages
 Customers do not pay contractors to prepare proposals

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 Proposal Contents

Proposals are organized into three sections:

 Technical Section
– Understanding of the problem
– Proposed approach or solution
 Exception – variation from specified requirements
– Benefits to the customer

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 Proposal Contents (Cont.)

 Management Section
– Description of work tasks
– Deliverables
– Project schedule
– Project organization
– Related experience
– Equipment and facilities

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 Proposal Contents (Cont.)

 Cost Section
– Labor
– Materials
– Subcontractors and consultants
– Equipment and facilities rental
– Travel
– Documentation
– Overhead
– Escalation
– Contingency or management reserve
– Fee or profit

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 Pricing Considerations

 Be careful not to overprice or underprice the proposed

project
 Consider:
– Reliability of the cost estimates
– Risk
– Value of the project to the contractor
– Customer’s budget
– Competition

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 Proposal Submission and Follow-Up

 Submit proposals on time

 Hand deliver expensive proposals or send 2 sets by
different express mail services, if necessary
– Customers may request electronic submissions
 Continue to be proactive even after submission
– Follow-up needs to be done in a professional manner

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 Customer Evaluation of Proposals

 Some look at the prices and select only from the

three lowest-priced proposals
 Some screen out prices above budget or whose
technical section doesn’t meet all the requirements
 Some create a proposal review team that uses a
scorecard
 May submit a best and final offer (BAFO)

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 Customer Evaluation of Proposals (Cont.)

 Criteria that might be used in evaluating:

– Compliance with SOW
– Understanding of the problem or need
– Soundness of the proposed approach
– Contractor’s experience and past success
– Experience of key individuals
– Management capability
– Realism of the schedule
– Price – reasonableness, realism, and completeness

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 Types of Contracts

 A contract is:
– A vehicle for establishing customer-contractor
communications and arriving at a mutual understanding and
clear expectations
– An agreement between the contractor, who agrees to
provide a product or service, and the customer, who agrees
to pay
 It must clearly spell out the deliverables
 Two types of contracts: fixed price and cost
reimbursement

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 Types of Contracts (Cont.)

 Fixed-price contract
– Price remains fixed unless the customer and contractor
agree
– Provides low risk for the customer
– Provides high risk for the contractor
– Is most appropriate for projects that are well defined and
entail little risk

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 Types of Contracts (Cont.)

 Cost-reimbursement contract
– Provides high risk for the customer
– Provides low risk for the contractor
– Is most appropriate for projects that involve risk
– Customer usually requires that the contractor regularly
compare actual expenditures with the proposed budget and
reforecast cost-at-completion

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 Contract Provisions

 Miscellaneous provisions that may be included in

project contracts:
– Misrepresentation of costs
– Notice of cost overruns or schedule delays
– Approval of subcontractor
– Customer-furnished equipment or information
– Patents

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 Contract Provisions (Cont.)

 Disclosure of proprietary information

 International considerations
 Termination
 Terms of payment
 Bonus/penalty payments
 Changes

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 Measuring Success

 Success of proposal efforts are measured by:

– Number of times proposals are selected, and/or
– Total dollar value of proposals that are selected
 Popular methods:
– Win ratio - the percentage of the number of proposals won
out of the total number of proposals submitted over a
particular time period
– Total dollar value of proposal won as a percentage of the
total dollar value of all the proposals submitted during a
specific time period

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