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Tendering is often viewed as a complex process with a lot of uncertainty present. In fact, the chances of success in tendering is low due to the high volume of competition that suppliers often must compete with. This is due to the tendering process being a mandatory process used in many government organizations in Singapore for projects and purchases. It is also pertinent to the United States, where the law explicitly states that approximately 23% of the US government organisations award their contracts to small businesses yearly. Hence, it is important for those who engage in sales through a tender process to understand why tenders fail and learn how to avoid incurring any large overhead costs from pursuing tender opportunities that don’t come to fruition. In this post, we will list 6 key reasons why tenders fail and how to avoid these failures.
These are the 6 reasons why tenders fail-
- Poor opportunity
- Poor Documentation
- Not addressing the client’s needs
- Focusing too much on price
- Poor compelling ability
Poor Tender Opportunity
When companies or agencies call for tenders, there often more then one supplier providing tenders for certain services. As such, the competitive landscape in the tender process is extremely rough. Therefore, it is important to your competitors and your company’s own competitive advantage to see which tendering opportunities can be better exploited to the best of your ability and which tendering opportunity should be forgone. This would save the company any costs by avoiding any costs which it would have incurred by embarking on a losing tender.
When companies call for tender documents, they would often require the tendering company to submit various policies or supporting documentation. Therefore, when companies forget to submit certain essential attachments, the clients would often disregard the entire tender. With many other strong companies competing for the operating rights for a certain service, a company that can’t even meet the basic documentation requirements is an easy dismissal for many clients. Therefore, it is essential that companies check their documentation before submission of the tender.
Not Addressing the Client’s needs
The content of the tender is especially important. When companies call for tenders, they would also provide a few Request for Proposal (RFP) questions. These companies are looking for specific answers to specific questions. Therefore, failure to understand these questions, would result in a failure to address the client’s needs. These questions should also be answered clearly and succinctly since clients would not ask for clarifications and questions that might arise from reading the tenders. If there is anything that is not understood in the tender document, clarification should be sought from the client.
Focusing too much on price
For tenders, while it is important that companies price their services competitively, the lowest price does not always win the tender. This common misconception leads businesses to ignore other factors that matter to the client. In fact, most companies would judge the tender based on whether it addresses each criterion the client has set for judgement, how the bid will best meet each requirement the client has to fulfil and see if there are areas where the company can exceed requirements. Therefore, by focusing too much on price these tenders might be investing their resources in a less important area of focus.
Poor Compelling Ability
Tenders need to be compelling enough to convince the client that the tendering company can meet the requirements and exceed expectations. An honest tender would more than likely tend towards being consistent and smooth. It is difficult to say one thing in one part but another in another section when you are telling the truth. However, when overselling certain competencies, clients will easily notice the inconsistencies and the lies in the tender. Therefore, if your tender raises doubt to what you offer, a competitor who has clearly and consistently laid out their proposal.
Formal tenders usually specify what you need to provide and in which format they require it to be submitted in. Yet many businesses misunderstand or fail to look at the detail. For example, failure to sign documents, spelling mistakes or late submissions can all exclude your tender from the process. Clients usually look for competence in all areas and wants a supplying company that has a robust back-office system in place. Therefore, many contracts have cumbersome paperwork and sometimes regulatory requirements. Non-compliance to the requirement in the documentation casts doubt on your company’s ability to fulfil those requirements. Therefore, this non-compliance in format of submission would also usually cost the company their tenders.
Bid Management and Tender Evaluation is a 4-day online training course. Designed to provide delegates with the necessary understanding, skills, tools and templates to swiftly and effectively implement world-class tendered procurement strategies and processes, this course considers the effects of the process on the supplier base and gives insights into the immediate and long-term implications to the ongoing supplier relationship management.
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