Project Management Institute

Proposal management

generating winning proposals, part 2

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EXECUTIVE NOTEBOOK

Joan Knutson

This article, the second in our three-part series on proposal management, continues our discussion of how to generate a winning proposal. It presents a model of specific questions to ask, steps to take, and documents needed to produce a proposal or cost-benefit analysis so that management or the customer can make decisions on which projects to approve, their priority, and in some cases, which bidder gets the job. The content of the series pertains to all project/program managers, whether they are consultants, defense contractors or internal data processing experts.

Prepare the Proposal

Three Sections: Management, Technological, Cost. Decide what sections will comprise the proposal. Traditionally, three sections should be addressed, although not necessarily in this order: “Management” describes the history of the company, what is unique about the company that justifies awarding the contract, and who will manage the project if you get the job. “Technological” addresses the specific response to the requirements of the product or service requested by the customer. “Cost” covers the financial conditions, including one-time developmental costs, and may be presented as a fixed priced bid, time and materials, cost-plus, etc.

Pricing to Win/Pricing to Lose. The financial part of the proposal should be realistic but persuasive. It might include a risk/reward analysis, a cost/benefit evaluation or a cost comparison of different approaches. Remember the word realistic. No bid is worth winning if you lose money in the end or if you do not professionally meet your commitments to your customer. Although this may sound blasphemous, there may be situations in which you price the bid to lose. One reason might be that you feel that your company/division should bid on the job but the job is truly out of your area of expertise. Bid it high enough so that if you get the job there are sufficient funds for the expertise, technology and time to do the job right.

Proposal Themes. Pick a theme for the proposal: such as “We are the best in the business and will supply you with the strongest talent available on this job” or “We have a better financial bid” or “Look at how strong technologically we are and the variety of options we are presenting” or “Isn't our proposal the most professional document you have ever seen?” Keep coming back to the theme throughout all sections of the proposal. Trying to juggle multiple themes at one time only confuses the customer. Pick the theme that you think will sell.

Past Performance. Emphasize your past performance with this client or with similar clients; with this type of project or with similar projects. Only give references who are going to say only wonderful things about you. Remember to have the courtesy to tell your references that they will be receiving a phone call from your prospective client. Include any samples or examples of similar work you have done. The customer is trying to find some tangible reason that you should be picked above all the others.

Working with Subcontractors. If you don't have the talent to cover all facets of the assignment, don't try to fake it. Find within your network other people or firms who can team up on this contract with you or to whom you would be willing to subcontract. When you subcontract, you are not totally in control, so be careful with whom you choose to subcontract. The subcontractor also needs to have a say in the proposal. Be sure you leave enough time in the preparation of the proposal for your subcontractor to do a good job.

Review Approval Levels. There are different levels of approval that need to be obtained at various stages during the proposal preparation. In the initial stages, be sure the areas of the company that are going to contribute to the job review the accuracy of their prices. Once the proposal is near completion, have the financial department review the financial data, the legal department review for legal issues, and so forth. Lastly, have the highest level of management review the proposal from a strictly business perspective: Is the organization willing to commit to these promises? Have we used every technique we can to win this bid?

Types of Contracts: Pros and Cons. This is a subject in and of itself, which we will address in another article later this year. Fixed price bids are the most binding but they make the customer the most comfortable. Cost-plus bids are best when there are many unknowns, but for the customer's sake establish some limits. Incentives and/or penalties for positive or negative performance are worth considering. Incentives can be based on schedule and/or cost and/or quality. Take some time to consider the correct contract for this particular assignment and with this particular customer.

Parametric Pricing. Take advantage of all the history that is available relative to pricing the job. Use past job logs, personnel/payroll reports, change control logs.

Conduct Detailed Risk Assessment. Risk assessment can be mathematical as well as subjective. There are contingencies that can be expected. Think of all the things that caused extra expenditures of dollars or hours. Take those into account when estimating the job. Look at those areas of unknowns where innovation, technology or just good luck are involved. Be sure all of these risks are factored into the equation.

Critique (Verify/Certify) Proposal

Is the Statement of Work Totally Responsive to the RFP? For the hundredth time, go back to the RFP and be sure the proposal addresses the requests and requirements. For example, is there a need for proof of insurance or for minority status? Read each sentence. There may be an important issue that the customer wants addressed and has buried just to see if you can find it.

Focus on the Right Criteria. Did the customer tell you verbally or in the RFP on what criteria the proposal will be evaluated? If it is financial, then don't include 20 pages describing the fantastic qualifications of every consultant/technician on your staff.

Numbers Crossfoot and Pass Reasonability Check. Nothing destroys all the work you have done faster than for the customer to find a mathematical error. Have several people check the data: someone old, someone new, someone borrowed, someone blue—in other words, someone who has worked on the team, someone who knows nothing about the proposal, someone from the finance or estimating group, and your neighborhood cynic, that nitpicker who will find the slightest error. Go through the proposal looking for statements that are illogical, not substantiated, or do not jive with other statements. Find someone with good analytical skills to perform this check.

Use of Compliance Matrix. Prepare a compliance matrix that graphically shows what the customer will be responsible for and what your organization will be responsible for. Indicate what tests or products will assure compliance, how they will be measured, who will measure them, and who will sign off that compliance has been attained.

Red Team. Now that you, the team and your advisory group have reviewed the document until you are sick of it, go offsite and review it again. Maybe bring some other people who have not been involved before now. Maybe invite some high-level management. If you do, leave your ego at home. The document will probably be substantially changed by the time the “Red Team” is done with it, but it will also be a better proposal.

Submit Proposal

Written Proposals. Print it, bind it, be sure the pages are in the right order and not upside down; give whatever ritualistic blessing you use, and send it off. Later call to be sure that your proposal has been received. The phone call serves two purposes: (1) the proposal can get lost and you want to be sure it gets into the customer's hands prior to the deadline, and (2) it shows your interest in getting the job.

Oral Proposals. Show up on time. Be prepared. Do not just talk from the proposal document—have a stand-alone presentation prepared; the proposal is just a leave-with document. Don't do all the talking—it is just as important to listen!

Bidders' Conference. This is the most difficult of them all. Having watched the presidential elections we have all seen the lose-lose situations candidates can find themselves in when pitted against a competitor. Being too aggressive and bad-mouthing your competitor leads to failure. Being too soft and non-assertive is also unsuccessful. Just keep saying to yourself, “Be professional, be professional.” That is the demeanor that will win the contract.

Contract Award!

Bravo! All that hard work paid off. You and your organization have been awarded the contract. However, your job has just begun. Before racing headlong into the assignment itself, stop and do two things:

Perform Post-Mortem (Debriefing). What did we do right? What did we do wrong? What will we do better the next time? Give yourself time to work this process through. It will be invaluable in how you relate to your now “current” client and it will be invaluable for the next proposal that needs to be developed.

Transition to Program Management. One does not automatically walk from the award of the job into the doing of the job without some project planning. Keep using PM Network as a tool for planning, monitoring and managing your projects and programs. ■

Joan Knutson is president and founder of Project Management Mentors, a San Francisco-based project management consulting and training firm.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • March 1996

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