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We recently ran an online survey to find out how much organisations are spending bidding – the results are posted here, but what’s the story behind the data?

Across all organisations, most commonly 3% – 5% of the contract value is spent trying to win that contract. For services-only companies, this is higher at 6% – 13%. Both indirect and direct costs are included. So here is the answer to the question at the start of this blog. For some of the bigger deals, this is a serious amount of company resources, so as well are reviewing strategy at colour reviews, we need to be using gate reviews to establish progress and costs – to ensure that the opportunity remains viable and on-track.

The survey found that typically 11% to 20% of staff are at some time or another involved in business winning. Whilst sales & bidding typically form the core business winning team, they cannot be successful without help from contributors in solutions, programmes, legal, commercial, HR and other specialist areas when required.

Indeed, for some proposals, the majority of the content may actually be written by people outside the core team – typically, solutions and programme delivery.

It’s worth considering then, that solutions and programme delivery are likely to have more day to day customer contact than sales and bidding ever will, so it’s vital that everyone can engage effectively with customers and can help to put a winning proposal together as part of a team when necessary.

62% of respondents were providing services only, with the remainder providing products, systems and services. Not a surprising result as the service sector is estimated to be more than 70% of UK GDP. More surprising perhaps, is that there are many organisations who have asked product specialists to sell services and wonder why they have not been successful. The competencies required to sell services vs.’ products are known to be different and support to staff making this transition is essential is you want to get results in the service sector.

The survey found a wide range of proposal values. This highlights that we must ensure our business winning approach is suitably tailored and scaled to match the value and risk of the opportunity. Do we need a full suite of colour team reviews and full capture and bid plans, or can we take a more efficient route for other types of opportunities?

Most costs are charged to overheads but Technical Experts and Consultants are directly charged to the bid. No great surprises here – but one issue highlighted perhaps is how difficult it is to get access to Technical Experts when (i) they are busy delivering to customers and (ii) you have to pay from their time to work on bids. When budgets are tight this may mean that the involvement of Technical Experts is delayed beyond the point where they can add the most value, which is in the capture (or pre-RFP) phase.

56% establish a bid budget, of those 70% keep to it. Or put another way, just 39% keep to a planned bid budget. To be kept to, budgets need to be realistic and based on past experience, but as only 51% of companies are confident or very confident that they know how much they are spending trying to win contracts, then establishing this past experience is an issue by itself. A pragmatic solution is to estimate the amount of effort spent on a bid at the lessons learnt review and make sure this is recorded and discussed at the next kick-off meeting for that type of opportunity.

For your own copy of the report, please download Cost_of_Bidding_Report.pdf