Consulting Journal: Bid management

Bid management: Approaches

by David Blakey

There is a spectrum of bid management approaches. Here are some of them.

[Monday 29 October 2001]

There is a whole spectrum of active bid management approaches. It is worthwhile to examine active bid management by taking an example of one end of the spectrum. You should bear in mind throughout this example that you may adopt less ‘extreme’ methods.

This example assumes that your company is an application service provider or an outsourcer. It certainly depends upon having systems capacity available to satisfy the demands of existing customers while being expandable to include new customers. The most active forms of bid management are best applied where your own infrastructure and facilities can be changed by adding new customers.

The discussion in active bid management will involve your bid manager and your business development manager. They may also involve senior management in decisions, financial people in projections, and technical people in infrastructure issues. The aim will be to determine where your business should aim to go in the medium to short term.

You may have a number of options available.

You may be able to add new customers to your existing infrastructure, provided that these new customers use the services and facilities currently used by your existing customers. This must be done without degrading the performance given to your existing customers. The aim of this option will be to achieve some economies of scale.
You may be able to add new customers on an extended infrastructure, because this will enable you to improve the service offered to your existing customers. In effect, the new customer will provide justification for expansion that, although needed, cannot be justified on the existing turnover. The aim of this option is usually to ease a bottleneck.
You may be able to add a new service, required by a new customer, and then offer it to your existing customers and to future prospects. The aim of this option is to finance expansion.

It is important that some - if not all - of these options are undertaken because your company has them as part of its strategy for future growth and development.

The nature of active bid management

Active bid management requires you to make decisions about the future of your business, even though there may be more than one acceptable direction for you to take. Then, when a prospect approaches you to bid, you can determine whether this prospect's business will fit with your strategic direction.

Active bid management gives you control of your growth, rather than growing in reaction to each new contract with each new customer. It is good that you should be driven by the market, so that you are providing what the market needs, but this should not cause you to dissipate your focus in a number of different directions, none of which you will pursue with the commitment and vigour that it requires.

Whenever a bid is won, the review process should be undertaken again, to make decisions about the next piece of new business that your company wants. You should note that this review is specifically for the purposes of active bid management. There is a separate review of the bid management process following each bid, as part of the responsive bid management process. This review process discussed here follows the last successful bid and precedes the next bid. It demonstrates the cyclic nature of bid management.

It also illustrates the strong communication that must exist between your business development manager and your bid manager.

If you have an established long-term infrastructure, or if your infrastructure consists entirely of expertise rather than physical assets, then much of active bid management may be unnecessary for you. You are likely to have clear, established lines of business. It follows that your bids will be expected to fit in these lines of business.

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