Home > Article > Bid to Win A Guide to Pursuit Capture and Management of Unprecedented or High Technology Projects

Bid to Win A Guide to Pursuit Capture and Management of Unprecedented or High Technology Projects

Page ii of 199About the authoEvin Stump has had a varied career of over 60 years in the aerospace andconstruction industries In the aerospace industry, he has been a laboratory testengineer, flight test engineer, flight test instrumentation design engineer, cost engineeaerospace companies As a consultant to three major aerospace companies, he hasled or played a key role in proposal writing or pricing In the construction industry, fortwo years he consulted as a trainer for a major international oil company in constructionproject risk management

For five yorices to the government of a Middle-Eastern country For two years he managed achanical contracting company, specializing in commercial buildings For the pasttwelve years he has divided his time between assisting companies with proposals andbuilding mathematical models for project cost and risk analysisMr Stump holds the Bs in Engineering(mechanical) from Loyola University of LosAngeles, and the Ms in Operations Research and Industrial Engineering from theat Are also holds thtion ilGovernment Contract Management from UCLA/NCMA He is a member of AlphaSigma Nu Jesuit National Honor Society Prior to his recent retirement, he was aregistered professional engineer(Texas) and was certified as a Cost Estimator / Analysby the society of Cost Estimating and aHe is a pastident of the southeCalifornia chapter of the International Society of Parametric AnalystsDistributed by Galorath, Inc

Page 6 of 199e also provide five appendices They contain supplemental information that can bAppendix A-Be All that You Can Be This appendix discusses ways the project teamcan be as efficient as it can possibly beAppendix B- Maintaining Cost Discipline Cost discipline is increasingly important to awell managed project This appendix contains a thorough treatment of the subjectAppendix C-Miscellaneous Tools

This appendix discusses several very practicaltools that can help make the pursuit more effectiveAppendix D- Cost Estimating Checklist All of your hard proposal work may be foraught if your cost estimate for performing the workcontains a checklist that you can(and should)use to guard against both under and overestimates of costMost chapters of this book contain review questions They are designed to stimulatehinking about issues surrounding the piprocess Most ofver The best answer may depend on your partici

Page 7 of 199Acknowledgementspossible or who helped improtEvin Stump gratefully ackIMy wife of 49 years, Evelyn Helen Stump without whose forbearance and loyalty thisbook would not have been possibleOur sons John, michael, and Mark John provided comments on the book from hisperspective as a CPa and financial consultant michael reviewed the book from hisperspective as a manager of plant maintenance working in a highly regulatedndustry

Mark is an attorney in private practice who studied the manuscript for lacAnde grandchildren Rachel, sarah twiel and claire, and getty, alwhom(still children as this is written! )helped just by being their sweet selvesDr Wsso and Dr Gerald Wagner, both of the Department of Operations Research andndustrial Engineering, School of Engineering(Dr Wagner headed the departmentMy nephew Mr Alan Garrett, professional artist, writer, inventor, and entreprenewhose encyclopedic knowledge prevented many an error of fact, belief, or nuanceMs Karen McRitchie, VP of Development, Galorath IncorporMs McRitchieped me better understand the views of professionaions, and how the book could be more helpful to th

Page 8 of 199I Get Off to the right startChapter 1-Use early start business development practicess enormously helpful to be in on the ground floor of a new project These twoscenarios illustrate whycenario 1 You have some new ideas that you believe will be of interest to apotential customer Your technical people create a"dog and pony show and visitsOe potential customer to demonstrate what you can do You bring with you not onpt sketchup or perhaps even aunctional model Your potential customer sees value in what you have done andhe way, you get an excellent understanding of his goals and how you can best ngiters into a dialog about how your ideas can best be adapted to his needs Alongsatisfy them You give your potential customer information about likely costs andschedules so a realistic project plan can be structured and sold internallyforosal(RFP) Because ofpolicy, often others must also be invited to bid

All bidders have the same, limitedumber of days to submit their proposals Your pursuit team has been working withle customer for several months You give your proposal a final few tweaks andsubmit your bidScenario 2 You are one of the bidders receiving the RFP mentioned aboveScenarioThe technologys within your capabilitybeen aware of this opportunity You send a few people to the bidder's conferenceYou form a proposal team and submit your bid after 45 days of crash effort, withome members of therking all night in the last few days dailympty pizza and chinese food takeout boxes fill the wastebaskets in the pursuiwork areaWho is most likely to win this contract? perhaps a better question is: should the teamScenario 2 even bother to bid?he Scenario 2 team probably has little chance of winning Even though they can reade same rEPs to the Scenario 1 team, they haven't nearly the detailednderstanding of what the customer wants and what his priorities are They may have aThe words"technical"and"technology "have been much overworked in recent years Our use of those wordany specialized body of knowledge which may be the subject of a bidding situation, where expertise ineering studn for the right toorganization, quality, variety, nutrition, and presentation of the food could all be factors whichinfluence the award

Page 9 of 199poor understanding of the competitive bidding range They may have an even poorerderstanding of what their efficient competitors can offeretween Scenario 1 and Scenario 2 lies a continuum of other possibilities Forexample, there might be a Scenario 3customers or potential customers is getting interested in a particular idea An urcenario 3 your buernal champion may have proposed it, or a competitor may have But theredefinitely interest As it happens, the interest is closely related to an area whererise and has been doing internally funded reseallevelopment

Your management believes this to be a growth area, and that a majorproject will develop and be funded in a year or so You form a small pursuit team togo after it The team visits the customer, learns about (and helps define)what thestomer wants, and has the proposal half written when the RFP becoableas studied the competition, and has a good understanding of what it haso offer It also has a good handle on the competitive bidding range, and isconvinced it corresponds to realityWhile the Scenario 1 team has the advantage of being first, and will probablyoverwhelm the Scenario 2 team, it will not necessarily overwhelm the Scenario 3 teamany examples exist of come from behind wins by aggressive and powerftcompetitors But always to start from far behind is a sign of poor business developmenn the kind of advancedcontracting this bookdiscusses businessntegrated Projecteam for Businesshan simply going downhe lobby every day to see ifhave dropped byContractsBus Devn the mail It is a cohcustomersmix of activities ano erentWe offeome thoughts on hothose should be structuresome contracting firmspeople mostly approach existing customers to squeeze out more projects based on angbusiness development focuses on selling existing strengths In this paradigm, the salessentially static base of knowledge The business development and key technical

Page 10 of 199people are only loosely coupled An organizational wall divides them There is little orno internal research and developmentapproach will surely lead to a declining business base Today, ten years is a longife for many products; two yelong for many others The ones that manage to livefrequently upgradedAn excellent remedy for such a stagnant state of affairs is to extend the concetegrated project teams to business developmenthis approach, historical skillsts are merely the foundation for leveraging new ideas that may attractcustomers

They are not the entire businessExhibit 1-1 suggests a business development team and process that stresses a"fulfrontal attack" emphasizing new ideas and giving customers maximum exposure to youcompanyhe team comprises four major skills: top management, business developmets, and key technical innovators the circle and arrowdicatehat team members are in frequent communication and work closely together, everhough they may "belong" to separate organizationsn of the bidevelopment team(BDT) is torsuit and project teams in maintaining good customer relations and closeies with key customer decision makersWork with pursuit teams to obtain from customers(and other sources )informationabout what customers want and what they can afford to payAnalyze competitors ethically to obtain as much information as possible about whathey are likely to offer, and provide that information to pursuit and project teamsContinuously analyze the market for current or similar products and identifyContinuously innovate, leveraging from existing products into new and sustainableechnologies that Will interest current and new customersd poteto help theIn this book we use the expression "integrated project teams"in preference to the expresegrated productteams" which is often heard thehat we expect the team to address the entire project(productprogrammeThe role of the Bdt is to identify for the customer a need which should be pursued Theteam is the teamformed to respond to a specific customer request for proposal The project team is the team formed to workawarded project Some high value persons may be members of all three team

Pl of 199Assist in the formation of new pursuit teamsHere are typical roles within that missionTop management A single senior executive should be appointed to the BDT Hishe team cachet andof the compalis network of contacts will frequently lead to opportunities to be explored He orshe can expedite the flow of information and the mustering of resourcesContracts The traditional role of contracts people is to negotiate and administerojects contractudo this withorfrom others as members of the bdt contracts people will havebetter insights into what drives costs and schedule, and what is important and whats not They will be better prepared to develop a negotiating floor position and torade offBusiness Development As members of the BDt, the sales peopleaware of current and develochnologies, and the status of current work

Theybe better able to identify the right customer people to approach with new ideasAnd they will have a better understanding of where and how to look for clues as toburgeoning customer interests that have barely beKey technical people these are sometimes called"technology superheroesSometimes, but not always, they are also"gray beards They are senior technicapeople who have a demonstrated capability to imagine and follow through withviable product ideas, especially those that"push theirs is a centraole in the BDT They maintain awareness of the current technological capabilitiesof their company, their competitors, and their customers andThey acquire information about competitor products and use it to analyze productley go to trade shes of professional societiesand otherwise stay abreast of developments in the world at large They are eithedirectly involved in their company's internal research and development, or theymonitor it closely When new pursuit teams are forming they advise on who shouldbe involved and may participate themselves at least for a timeAmong the key technical people should be one or more personscosts of the company's products Such a person is sometimes referred to as a cosengineer or a cost analyst What makes this role necessary and even critical is theevitable need to assign costs or at least cost ranges to new product ideas and tocompetitors products Such abeyond the typical"pricer who works in theinance department assembling cost estimates into a format suitable for bidding Theole requires a strong technical background, and training in statistics and cost

PChapter 1 Review Questionsgeneral, are your efforts to acquire new contracts more like Scenario 1, s2, or Scenario 3, as described in this chapter2 Does your organization tend to focus too long on existing strengthss forced3 Does your organization routinely present new ideas to potential customers?4

Considering your competitive situation, do you feel your organization does enoughnternal research and development? Is what you do truly innovative, or does it focusimprovements to eXistDoes your business development effort more closely resemble an integrated projecteam, or a bunch of separate companies? How could you improve its effectiveness?6 Do your business development people attempt to convey information about likelysts and schedupotential customers as well as technical an

d otherformation? Either way, why?siness developmeg engineers or othealong on customer visits? (This used to be quite common, but fortunately has bechanging It can have huge advantages

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to Distribute and Publicly Perform Adaptationse For the avoidof doubpulsory License schehose jurisdictions ircensing scheme cannot be waived, the Licensor reserves the exclusiveight to collect such royalties for any exercise by you oights grantednder this licenseWaivable cSory License Schwhithe right to collect royalties through any statutory or compulsory licensescheme can be waived, the Licensor waives the exclusive right to collectsuch royalties for any exercise by You of the rights granted under thisdVoluntary License Schemes The Licensor waives the right to collectroyalties, whether individually or, in the event that the Licensor is amember of a collecting society that administers voluntary licensingschemes, via that society, from any exercise by You of the rights gbove rights may be exercised in all media and formats whehereafter devisedbohts includetechnically necessary to exercise the rights in other media and formats All rights notlessly granted by the authors are hereby reserved

Page iv of 19About case historiesave worked at several companies that are now or have been engaged in the kinds ofproposal activities described herein These activities are typically shrouded in secrecyeither for competitive reasons or because of customer requirements, or both For thieason, I do not present specific case histories in the book I also do not name anyemployers anywhere in the book

I feel that to doId be a betrayal ofconfidencesu of case historiesve written a novat addresses many of the topicsdiscussed in this book in a realistic but purely fictional context The novella is titledSaving SEIC: An Industrial Love Story It concerns a small high tech company calleSEIC that is struggling to survive and grow Thea is a useful and entertainincompanion to“ Bid to WinStump

PPrefaceI Get Off to the right StartChapter I-Use early start business development practicesChapter 2-Understand who the customerChapter 3-Understand who we areKnow what your customer wantsChapter 4- Learn about and influence customer goChapter 6--Create customer satisfactiIll Know What Your Customer Is Willing to SpendChapter &--Find the upper and lower bid limitsn YourChapter 9--Use modern programmatic design techniques944Chapter 10--Find minimal balanced and efficient product design solutionsChapter 11--Apply cost containment disciplinev Bulletproof Your ProposaChapter 12-Analyze your competitorWork the toughest issue: how much to bidChapter 14-Anal yze and abate project risksChapter 15--Get all of the right things into your proposalChapter 16--Keep the proposal going113vi For the future115Appendix A--Be all that you can bppendix b--maintaining cost discipline2247Appendix C-- Miscellaneous toolsAppendix D--Cost estimating checklist

PPrefacehis book is aimedWho are they? They certainly include all of the teams involved in bidding defenses in north and south americand elsewhere, as well as those who bidcontracts involved in launch and operation of systems in space Also included are manywho bid a variety of contracts with federal or local governments, other than routineExhibit p-1 Biddiprocurements and smaller or traditional constructioncontracts Larger service contracts of various kinds mayMay Be Usefualso come under this umbrella Excluded are all contractsere the low bidder automatically wins

Some biddingations where this book may be useful are shCommunicationsAs a member of an advanced contracting project team, toConcessionsurvive you must win projects in open competitionConstructiork is high tech" or unique in that what your customersant isbiddingEnvironmentcompetitions that you enter, the low bidder generally winshe contract but not if the bid is so low that the customebelieves it to be reckless andLegal Servicesbid is based on a concept the customer views as nomeeting perceived needsMaintenanOutfittingou cant win every job you bid, but you must win youshare, or risk having to go out of the contracting businessA long dry spell with no wins could be fatalTimportant in many ways Project design comprises bothhe design of the deliverable product and the means youchoose to develop and implement it It drives cost andhe customer must also perceive it as meeting his or oherefore the amount you must bid in order to be profitabe the awardeds moreover costs must have a reasonablcorrespondence to benefits as perceived by the customer not only at the level of thetotal project, but also at the level of major features of the projectOn a given bid typicallyly not hber of strong competitorsking the same work, but at least some of the competitors you do have will be smartentrepreneurial, and resourcethe margin by which you beat themgenerally will not be large This means that to beat them you must fully understand thestomer's needs, and fully provide for them, and you must do it in a way that is highlyvisible and cost effective

Page 2 of 199Your customers generally are astute and knowledgeable, and are able independently tothe quality of your offand the priceStill, they are not immune from mistake, and you must be adept at guiding them awayrom mistakes that might damage them and perhaps you as wecompetitors get harder to beof the time and you areconcerned that your win /loss ratio is suffering or will suffer You are looking foo prove your chances of winning, without having to bid so low that you are likely to loseall or most of the above is true of you, this book was writtehe bookox broblem of designing and bidding to win in a market where design and cost bon ondistills in one place expertise and wisdom from several fields of knowledge that bear onpoints a wayed in the direction of increased win probabind a better chance of long-term survivalhis book does not pretend to be a silver bullet that will slayyour dragons andxtct andworld, there is no such thing as a silver bullet; there is only continual striving to dos book certaatitude Onlyfailure, or a new broom sweeping clean, can do thatFinally,this book cannot make you a successful bidder in an area of expertise whereyour team has little experience or is outclassed by one or more serious competitorshopefully you are able to recognize those situations and avoid them

Or, you aref we offer no silver bullet, just how do we help? What we offer is useful ideasntegrated into a consistent strategy, which if followed rigorously should result in youat least yolusBut it is coherent and logical As you progress through this book, we hopehat you will agree that it makes sensk: What iff they are already following such a strategy and you areley are probablyre than their share of the work(Althe pain?)If you want to win your share of the work, you must maintain your competitive edgehis book can help whatever your competitors are doing

Page 3 of 199Regardless of your strategy you can't expect to win it all, all of the time The worldloesn't work that way

In the world of biddable projects monopolies tend to have aWhat are our prescriptions for successful biddingshell, you must understandd act upohe minimal project design that satisfies your customer at the lowest possible priceconsidering the risks (you cant afford to lose money on very many projects)at your customer is able and willing to pay for your project desiglow your customer values various aspects of your design baseline(the issue ofequent contact withe cuustomer you must have the abit to: sourd have early anelp the customer define needsersuade the customer away from mistakesExhibit P-2-Pursuit CvcleKnowWhatPossibleProjectWantsbulletproofProposalProposaKnownot approach a customer as a mentor or an instructonding Also, don't approach as a guru, inducing in thealpha dog S

Page 4 of 199Reject traditionalgold-plated "design solutions in favor of balanced, minimalsolutionss may be a cultural change for your creative peoplearefully estimate and manage project risk and consistently bid near the bottom ofle competitive range -this may be a cultural change for your business peoplee book discusses all of these subjects in detail It is organized into six major sectionschaptersfive appendicesMost businesses are cyclic in some sense Retailers regularly have a big push ativity at other times The demand for gasoline slowswinter months, but the demand for fuel oil picks up Machine tool manufacturetypically follows a larger business cycle related to economic booms and recessionsSome types of projects are affected by these various cycles, but companies that havesubstantial"propose/ bid" activity have a unique tyle mgit the "projectto the calendar at all but it isnevertheless a cycle of repeated activities It begof a projectopportunity

If the project is ultimately lost in competition it ends with thereiection of the contractor s biproject is won, it ends with completiacceptance of the work by the customer Small contractors may have only one projectcycle ongoing at a time Some very large contractors may have hundreds of projectsongoing at the same time, typically a few large, and many smahis book we have some inteproject cycle, andwill be discussedut our main focus is a subse call it the pursuit cycleWhile excellent execution of an awarded project is certainly something contractorsshould be concerned about, excellent execution in the pursuit cycle is something theymust be concerned about; else they will not long survive What is the pursuit cycleAs its name implies, the pursuit cycle is the part of the project that extends from first hintof a project opportunity to acquisition of the project by the contractor(the win scenarioor rejection of the contractor,'s proposal (the loss scenario) The ratio of winstypically is strongly correlated with the finanalth of a contractoand a contractor could be forced out of businesss book, rather than just the pursuit"phase, becausethat the activitiat lead tobability must be cyclicalnature a cyclical activity can leadIch desired continuous improvemete winprobability, while a one-time linear activity by definition cannot

Page 5 of 199Exhibit P-1 illustrates the pursuit cycle In this preface we will convey onlyelementary notion of what each sub-activity is about Later chapters will discuss themn much more detailpursuit cycle activitiesthe order shown inypically, the order is adapted to the flow of information and thenecessities of the proposal situation Frequently, more than one of the activities will beongoing at a particular point in timelere are brief descriptions of the activities shown in Exhibifocus of this book each in its own section1 Get Off to the Right Start this section discusses "early start"busand promotes better understanding of who the customer really is Customers do notalways speak with one voicelI Know What Your Customer Wants-customers have particular goals and valuesYou need to understand them You may be ableence them and help youcustomer avoid mistakes to youal benefitll Know What Your Customer /s Willing to Spendthe bettestand youare to be a successful bidder

This section focuses on helping you identify the y youcustomer,s spending habits and perceptions of appropriate costs the more likelycompetitive bidding rangelV Design Your Project-in a project, you do both programmatic design and productomer is certainly interested in what kind of producttend todesign and eventually build for him Will it meet his needs? Is it affordable? But youcustomer may also be highly concerned about your programmatic design How whe project be managed? Where and by whom will the work be done? What kind ofanagement toolbe used? Howct risks? theseimportant issues are thoroughly discussedV Bulletproof Your Proposakyour proposal will be"shot at"in your competitorsand may be criticized by memberarefully analyze what your critics are likely to say and do and counter it to the extentyou can One of the toughest things to do is to choose the best bid amount Thissection discusses the Best Bid model which can help you make that decision, keepingbalance between bidding too high and bidding dangerouslyroposal content and critiquing the proposalVI For the Future-Thoughts on planning between proposals More thoughtsbalancing profitability and stability