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Procurement tender deadlines after the holiday season are on trend. That’s the word on the street after it was learned today that procurement departments across the world secretly banded together to sign a bulk purchasing agreement for luxury holidays to be redeemed during the peak Christmas and Easter holiday seasons.
Announcing the agreement at a CIPS conference, Damian Jolly* said the holiday agreement would formalize a long-standing practice, granting procurement departments their rightful annual leave at a good price, while leaving the window open for suppliers to work on their tenders “in their own time” or “on the beach” rather than in the office where they may have conflicting priorities and added pressure.
“We recognize that tenders are high pressure, fast paced and terribly expensive for companies, so we want to give suppliers the breathing space to work on them, and there’s no better time than Boxing Day or Easter Sunday when the phones aren’t ringing or the bosses aren’t breathing down your neck. And when we get back from our holidays feeling refreshed that’s the best time for our evaluators to assess the tenders that have been waiting for them for 4 weeks. Win win for everyone,” he said.
Vanessa* from the Association of Proposal Management Professionals however, said members of their global peak body, which represents suppliers, weren’t consulted about the decision.
“We’ve never been consulted, and yet our members are filling in 15 page Social Procurement questionnaires instead of breaking bread or guzzling wine with mates. Instead, they’re answering responses about their commitment to gender equity, their human rights track records and sustainable business practices. Do you see the irony here? Our members are modern slaves to procurement, with latch key kids making TV dinners while husbands or wives are frustrated as hell at having to go solo to the theme parks to entertain the kids while the pre-paid holiday apartment dining table has turned into a hot-desk mess. Don’t even get me started in trying to reach Gary from Procurement with clarification questions. His out of office email is on, and the message states that he’s not in mobile reach and only has intermittent access to emails so he won’t be able to respond to clarification questions until he returns from Fiji.”
Bidhive has since run its own survey of bidders, with 99.9% of respondents admitting that they had forgone holidays and happy family memories to prioritize a tender deadline.
The survey delved deeper into respondents’ sentiments around who is responsible for employee wellbeing during a tender competition: the employer or procurement. Responses were overwhelmingly supportive and sympathetic towards employers, with 99.9% of respondents viewing the employer as the victim.
Given a multiple choice response for how suppliers feel when forced to respond to a tender during the holidays, 99.9% chose option C: “”You can #$!% your tender process procurement people. Happy #^##*#* Christmas or Easter to you”.
Bidhive has contacted various procurement representatives for comment, but our requests have so far been unanswered.
If there’s one thing standing in the way of bid teams as they return to the office or do a 40 hour week from a spare room it’s the struggle to regain work/life balance as many transition from pyjamas to business casual.
Fear not bidding friends. We listened and we delivered!
Our Kayo integration brings the loungeroom to your desktop in an instant so you can watch the pitch action while multitasking (as you do) on your pitch.
This epic feature was Inspired by research which found that more than half of workers play video games or stream TV shows and movies instead of working so why not find a way to boost wellbeing and productivity in a single platform?
By treating your desk better, you’ll work better!!!
With in-built sensor movement our smart streaming plug in automatically detects and shuts down when your manager walks within a 10m radius of your work station.
Genius invention. Available 1 April.
As a consumer society we have experienced the positive and not so positive aspects of algorithms including nuisance advertising and social media tracking that erodes trust and breaches privacy. To advance procurement 4.0, the ethical use of algorithms in artificial intelligence is essential.
The concept of algorithms were once very much associated mathematicians. Today, algorithms have become pervasive in modern society – the way we shop and behave online can be tracked and companies can predict and influence everyday purchases and decision making.
There are a growing number of use cases of using machine learning and artificial intelligence in the procurement supply chain – from inventory ordering to category spend analysis and supplier performance and compliance. Data is crucial for procurement teams because, without the data, they cannot effectively track spend or manage supplier and vendor relationships. New technologies are now available that can learn more about the activities of stakeholders, giving procurement and suppliers with the means to anticipate and adapt to market trends, and to guide decisions to help attain sustainable competitive advantage.
Using artificial intelligence for good
When artificial intelligence is used for good, data can now help to trace fraudulent activity online, and track the journey of a parcel from A to B. The impact of data-driven innovation to shape procurement 4.0 has been researched and well documented by the Open Contracting Partnership, Transparency International, the World Health Organisation and the OECD – all of whom advocate for the release of open data to make government more transparent.
Procurement 4.0 has been discussed by industry for years now, and it will be digital procurement pioneers that hit the go button to get the ecosystem going. How can new technologies increase agility and accelerate digitization within the procurement function? And what will the new procurement 4.0 look like?
This is one of the hottest topics being discussed in procurement circles right now after the industry lagged too long in modernising their systems, and subsequently suffering the fallout of supply chain disruption and COVID-related contract mismanagement and corruption.
Trends and red flag analysis in procurement
Hindsight is a wonderful thing, but so is embracing technology and all that it has to offer with advancements in cloud security, process optimisation and deep learning.
The criminal world and law enforcement has been using data-driven approaches in their sting operations for years, yet procurement is one of the most vulnerable industries to bid rigging and collusion. Some of the applications that data can be used for in procurement include:
Identifying number of wins by companies Are the same companies winning all of the time? Which regions or sectors are we seeing these patterns, and do they have diversity and inclusion policies?
Is there bid rotation occurring? Can we see a time series view of the winners?
Few or low participants in the bidding processs. Can we see the distribution of participants? Was the timeframe unreasonable to push out open competition?
As the industry transforms, we will likely see simplified tendering, better supplier relationships, and time-saving solutions to optimise procurement programs.
Building the ecosystem foundation with connected data
We will finally see uptake and a strong appetite for efficiencies that connect buyers and sellers across the supply chain, and the adoption of best-practice models for sourcing and engagement. Open Contracting has been long ignored by governments and yet data is the very thing that can improve business decisions and deliver competitive differentiation.
In using data we can create a new procurement system to bring:
Transparency to public contracting
Openness that will lead to fair competition
Competition that will lead to potential cost savings and more innovative solutions
And more innovation will lead to better and faster impact and outcomes for communities.
So back to algorithms. When algorithms are used for good, they can be used to measure the success of past activity, and predict the likelihood of future outcomes. By predicting success or failure, it can improve decision-making, enabling companies to plan their business strategies, optimise their resources more effectively, and develop solutions based on learnings to improve quality, safety, and to reduce service gaps.
By defragmenting public procurement data and placing it into common formats we can enable supply to meet demand; and demand can be based on what’s needed, not what is budgeted for. Open data that is linked will help procurement to detect duplication vertically and horizontally; there can be better resource allocation, and suppliers can detect red flags or opportunities for collaboration.
With better data, we can have a better procurement system. And with the 30% (or a cool $5 TRILLION) savings that can be made, why don’t we put that towards the world’s to do list and advance the 17 Sustainability Development Goals?
Collaborate on your bids and proposals with others in real time – no more emailing files back and forth.
Fast-track your bid responses without ever having to leave the Bidhive interface.
Bidhive’s simple yet powerful editing tool provides an efficient way of managing multiple files as well as merging sections from different documents into one single source of truth throughout all revisions — say hello to a blissful drafting experience where you can work simultaneously in parallel!
This feature enables bid teams to track of all changes users make to their text, images, tables, styles, formatting, and more. This includes tracking for newly added and deleted text, as well as various styling and text formatting changes.
Get more done in half the time
Say goodbye email trails – because now there’s just one document in which everyone is working on at any given time
Want to work on your content outside of Bidhive? Stay organized and in control with a centralized location by cloud linking your files
Ensure accuracy, consistency and transparency with versioning, roll back and audit trail.
With an easy button on the main text editing panel within the Bid Builder, Bidhive users can easily ‘Enable or Disable Tracking’.
Get your team all on the same page with in-app comments, @messaging and section status
By using the Bidhive Bid Builder, proposal teams can dramatically cut content development and drafting time. Some of the time-saving features we’ve introduced include:
Shared content library, advanced search and content expiry date
Point and click insertion of content library assets into the Bid Builder
In-platform storyboard to get everyone on the same page – customise your template to include win themes and hot buttons, or any other criteria you wish to communicate to your team
Top to bottom section view – collaborate in real time on sections with internal team members and external partners
Centralised assets – build tables, add video, pictures and attachments
Writer’s instructions, word count, section assignments and review process
Lock down for sections once approved (pens down!!)
Kanban view of section status
Tasks and approval workflow
In-platform messaging and notifications
Export bid in PDF, Word or Zip file format.
We have so much to reflect on about adaptation and change from the first wave of the COVID-19 pandemic, and the procurement mayhem that occurred.
Whilst such a crisis has reminded those of us in business how fragile the supply chain is (and that our risk management plans were focused too much on ‘known’ risks), we have also seized new opportunities to become more interconnected, and accepting of new technologies and novel ways of finding solutions.
This phenomenon is more than just being resilient and robust; it’s what is more popularly termed as being ‘anti-fragile’ – a thing or system that not only survives at stress, but flourishes and gets better. So what emerging cross industry trends can bidding organisations expect to see, and what do they need to ‘bend’ in order to ultimately come back stronger?
“You never want a serious crisis to go to waste.” Rahm Emanuel
(former Chief of Staff to Barack Obama)
In Nassim Nicholas Taleb’s book, Antifragile, he talks about Black Swans, described as “large-scale unpredictable and irregular events of massive consequences.” When we think of other Black Swan events – the world wars, the internet and global financial crisis – they all profoundly shaped our world and disrupted companies to either thrive or demise.
Above: the opposite of fragility is not robustness or resilience, but antifragility (source: Leading Edge Forum)
COVID-19’s universal threat to humankind. which spread through 114 countries within the first three months, has profoundly impacted lives and caused financial instability and job losses worldwide.
Decisive actions to mitigate and contain the virus – and its seemingly endless mutations – has placed new challenges and added obligations on businesses and households – from mass immobilization and remote working, to distance learning and contactless deliveries.
Procurement has evolved rapidly since the COVID-19 pandemic began, forcing companies to rethink how they plan, react, connect and respond with their ecosystem of suppliers, external partners and customers.
On the flipside, bidding and tender professionals have faced their own rapid adjustments. Some bid teams were stood down from cancelled or postponed tenders. Others supported their logistics departments in the response to frantic calls for essential supplies at unprecedented levels, including via unconventional channels such as Twitter (pictured below).
Above: A single Tweet from NYC in March 2020 highlighted the scale of the COVID-19
procurement problem, but also how dire system-wide inefficiency had become. Source: Twitter
So if we take a leaf from Taleb’s Antifragile book, the world is changing. So are you changing with it?
Bidding professionals have long been fast to adapt to peaks and troughs of procurement activity, and in managing everyday chaos in pressure cooker environments. Variability is a bid team’s routine.
Here we highlight 7 changes to be prepared for, and how they will affect organisational bidding and technology adoption strategy.
Supply chain networks reimagined
As the pandemic unfolded, we saw a system evolve, where business-government cooperation and citizen involvement unveiled the potential of integrated solutions being used as a lever to build local resilience and national innovation. But without price controls or rationing, we also witnessed the downside of public-private collaborations where political interests, critical shortages and price-gouging fueled social discontent and contributed to further supply chain imbalances.
In the COVID-19 emergency context, the lack of coordination between governments, hospitals and retailers all placing orders at the same time highlighted a fragmented, broken system that needed to change. Many companies discovered that even dual sourcing didn’t cushion the blow because of multi-country supply chain failures. Lack of visibility into inventory levels – what goods were available, and where – led to panic buying and hoarding which could have been avoided had there been end-to-end visibility of stock and suppliers, and sense and respond technology across the global supply chain.
COVID-19 exposed weaknesses of single large-scale manufacturing centres, and highlighted the strength of having human assets to drive agility. As a result we’ll likely see procurement departments accelerate their research into alternative suppliers leading to:
more flexibility and multi-level sourcing;
a rapid shift from globalisation to regionalisation – and localisation – of logistics hubs; and
real-time inventory views providing upstream and downstream traceability, from manufacturer to final destination.
Blockchain, which offers the building blocks to trading partners and consumers to address challenges around fragmented supply chains is claimed to provide transparency and real-time data flow from source to shelf (‘what I see is what you see’). Blockchain was developed in 2009 by Bitcoin inventor Satoshi Nakamoto. The World Economic Forum has prepared a toolkit to guide companies through the development and deployment of blockchain, although mainstream uptake is predicted to be slower than originally hyped.
Bid strategy will become more multidisciplinary
For companies that rely on bidding for their revenue pipeline, the inability to win or renew contracts through the regulated procurement process can irrevocably harm operations and significantly reduce or eliminate profits.
Procurement cancellations and delays, followed by the onslaught of stimulus packages has placed pressures on bid teams to either ramp up and seek reprieve through technology solutions and externally hired help; while in-house bid teams in vulnerable industries look for other ways to use their time proactively, such as reviewing bid content libraries or upskilling with online training.
Bid strategy and team-orientation will therefore move higher up the value chain with:
opportunity identification and qualification, capture management, and proposal development being far more integrated;
intelligence gathering, relationship management, market analysis and pipeline development being core to transforming qualified opportunities into wins;
sales and operations teams being more involved in bid strategies; and
greater emphasis on debriefs following each bid to discuss learning points and implementation of agreed actions.
Silos will be removed and enterprise visibility will open up. Those companies that fail to plan and invest in collaborative bid tools will otherwise lose time from the start of their bid schedules which will have a compounding, negative effect on success rates.
Expect more work packages over multi-year contracts
There are many twists and turns in the procurement landscape where policy is monitored and risks and uncertainties have to be managed in line with the cyclical shifts that occur between insourcing, outsourcing and co-sourcing models. Contractors should expect to have their single contracts put out to tender early or at best, re-tendered under a multi-source arrangement to spread supplier and geographic risk. Procurement is likely to:
increase their use of ‘mega panels’ or ‘frameworks’ in which multiple contractors are qualified for a specific program or category of work;
replace large, programmatic assignments with smaller packages of shorter duration and award task orders or projects across the qualified contractors; and
encourage greater involvement from small businesses and minority owned companies.
Anticipate increased multi-partner involvement
Multi-partner collaborations don’t have to rely on existing consortia but any collaboration must demonstrate that it brings together capabilities, expertise and resources necessary to address the proposed project.
In the new bidding environment this may include clustering of partners that have the greatest potential to make an impact, and co-location of partners is now unlikely to be a deal breaker given remote is the new normal.
Inter-company initiatives will reinforce the importance of internal coordination, but with collective resources new challenges will be presented. These include:
the need for collaboration tools that support interdisciplinary input into solutions development;
adapting internal coordination structures and opening them up to external collaborators; and
implementing strategies to research, anticipate and position your company as a preferred partner for future procurement opportunities.
Key watch points for companies seeking collaborations will be the need for clear contract leadership and accountability, and strategic use of the contract funds across the partnership to deliver optimum value for money outcomes. There will also need to be agreement over intellectual property ownership, and clear mechanisms for monitoring and reporting of progress across each of the partner organizations.
Local wisdom counts
Being qualified to deliver a contract is no longer the only criterion to win bids. As governments increasingly design policies to protect small businesses and underrepresented minority contractors, there are distinctive contributions and expertise that can be brought to the table.
A major lesson from COVID-19 is that effective collaborations are driven by the people who collaborate, not the institutions. There’s a ripple and scaling effect in local communities connecting and mobilizing to take up collection action. Local businesses with grassroots knowledge and experience in community engagement are more than ever providing leadership and strategic insight into their local market.
Procurement and industry need to support the development and extend these collaborative working opportunities at the local level. Platforms that bring together multiple stakeholders that are priced for accessibility and which lower barriers to collaboration are important enablers to this process.
Accelerated digitisation and remote collaboration
Grandparents having virtual calls with their grandchildren might have been an impossible idea only a couple of years ago, yet being together while apart with screen time has connected generations of families around the world.
COVID-19 has also expedited the fourth industrial revolution and digitalization of corporate and public services. We have seen the remarkable response from children using their classroom 3D printers to deliver protective equipment to hospitals, of high street fashion labels pivoting to provide hospital gowns and masks, and rapid adoption of telehealth to deliver essential health services while protecting the vulnerable and frontline workers.
Gartner estimated that $3.7 trillion would be spent on IT spending in 2020, and while some strategic transformation projects were put on hold, actual Cloud use grew by 19% in 2020, reaching $3.4 trillion. That figure is now predicted to reach $4.5 trillion in 2022. Enterprises and small to medium businesses that had not yet migrated to the Cloud with browser-based Software as a Service (SaaS) tools accelerated their plans and, while a seemingly incremental change, the shift has provided a radical breakthrough in enabling workforces to remain productive, more agile and connected. Over 89 percent of companies now use SaaS products, according to IDG.
Previously, high expectations of interoperability between collaboration tools often led to false assumptions and over-engineered solutions which blocked agility and caused ‘change fatigue’ in some business situations. The COVID-19 situation, however, has unlocked entrenched IT restrictions and unnecessarily expensive IT system deployments. This has opened up enterprises to more agile tools and creative and collaborative partnerships. It has also enabled teams to identify new ways of working.
Knowledge management as a competitive differentiator
As people transitioned to full remote work, companies that weren’t prepared realized the importance of project management and remote communication tools for their business, with bid teams being no exception. Knowledge hoarding is one the most important collaboration barriers, creating inefficiencies and financial costs to companies. Research published in the Journal of Organizational Behavior found that the way jobs are designed can affect whether employees share or hide knowledge from their colleagues.
Cognitively complex jobs such as bid management rely on people to process large amounts of information and solve complex problems so it is little wonder that investment in collaboration and productivity software has increased for tools that:
provide a central hub for team members to learn and share information across disciplinary and organisational boundaries;
support task identification, problem solving and quality decision making;
host high performance project spaces where knowledge can be put into action before it is outdated; and
deliver data sharing and analytics to drive value.
The importance of human-centred collaboration – internally and externally – has certainly been exposed by COVID-19. We’ve learned that there is a very real need to reduce dependency on physical offices, but like all human endeavours we need to check in regularly on the physical, mental and emotional health of core and extended workforces, especially given the rise of the remote ‘gig working’ model. We must reshape ways of working to maximize investments in digital technologies that support smarter ways of working.
Lessons learned to having an antifragile mindsest
The aftermath of this pandemic will force bid teams to build strength and accept that there will be new procurement models that consider:
the creation of a portfolio of suppliers who can be called on in an emergency;
the awarding of contracts to capable but reliable suppliers; and
the development of contracts that are outcomes-driven and flexible to changing macro forces.
Innovation is iterative, not an all-out solution. The technology sector will continue to play a significant role in supporting and accelerating governments, citizens and businesses’ ability to adapt and innovate through trial and error to become learning machines so that they come back stronger and ultimately, become ‘antifragile’. Co-design with citizens and stakeholders for policy and service design has often been attempted but frequently not realized as the structure and culture of government is not suited to this approach. Policy officials have traditionally not responded well to the risks of diminished control. Yet the response to COVID-19 has highlighted the benefit of the triple helix model, where university /industry (startup)/ government relations can create real change with experimental, market-oriented and responsive solutions
Independent but interconnected networks lead to new learnings. Historically, In the context of the perceived risk of fraud and corruption in procurement and the mandate for transparency and bureaucratic conformity, governments around the world often miss out on fostering true collaboration to facilitate strategic public procurement. But the interactions between citizens and government, and the Herculean effort that agencies are undertaking to partner with the private sector to deliver critical services and support economic recovery show that there are many positives that will come from this historic time. One such positive in using procurement to achieve policy goals includes building business resilience, embracing innovation, supporting national production and celebrating diversity in suppliers.
If there was any time in history that procurement and contract bidding has been showcased as being a true engine of an economy, it is now.
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General contractors live or die by their overheads and profit margins. Within the construction and infrastructure sector in particular, competitive bidding has long been used as a method for contractor selection.
As the true cost of construction and hard/soft infrastructure delivery is not known until the completion of a project, contractor selection and the risk of selecting a winning bidder that has underestimated the cost of the contract is a major concern in procurement. This can lead to the winner’s curse, a term that refers to the difference between the lowest and second lowest bid, and the consequences of the bid price being too low to cover the costs including a reasonable return.
If contracts are potentially cursed from the start, how can estimation accuracy be improved?
Strategy #1 – Avoid pricing low to secure the project
In industries that need to scope requirements and estimate the value in advance during the bidding process, bidding too low can lead to low profitability and cash flow problems that can also have an adverse effect on the customer.
Major projects, or major programs of work, will play a key role in getting nations back to work and in repairing the economic damage from COVID-19. Bent Flyvbjerg, a professor at the University of Oxford who studied project data from across 20 nations in five continents, found that the average cost overrun of infrastructure projects was substantial, with 92% of projects reporting overruns of their scheduling estimates and original cost (ranging from 20.4% to 44.7%). Despite the evidence, no significant systemic improvements to mitigate the failures have been adopted to prevent further recurrence.
To compensate for the winner’s curse, contractors may try to remedy their losses by lowering quality of work, reducing their staffing, or making variations and change orders that risk the three ‘D’s of contract doom – dispute, delay and debt. In short, the submission of abnormally low pricing can give rise to significant legal issues, including the risk of insolvency.
Strategy #2 – Account for overheads
Public tenders are an important tool to stimulate competition between suppliers, and ideally, it is not meant to be about price alone. Unfortunately, many contractors approach bidding as a ‘guesstimate’ by pricing their work low enough to beat the competition at whatever customers will pay. However, not knowing what it takes to cover your actual project costs, overhead and profit results can leave a lot of money on the table.
The solution should – under legislative requirements – deliver the best option to fulfil the conditions of contract by demonstrating greatest value for money (eg. the right quality, fit for purpose, with the right experience and performance history, environmentally sustainable and the best whole-of-life cost option). Factoring a percentage against project costs to cover head office or administrative services, including the cost of bidding, is usually an apportionment (by way of example, it might be 2.5% to 10%) decided by management as part of a management policy.
Strategy #3 – Track your bid data
Implementing technology to digitize your efforts while keeping everyone continuously connected has the potential to improve the likelihood of a successful bid and project (and it can keep your sanity!).
Being able to use bid data from previous projects to estimate the margin and markup you’ll need to cover each subsequent project is one of the best business metrics you can track to achieve successful project outcomes.
Capturing and analysing lessons learned, price variations and final contract values of not just your own projects, but also of the projects you lost and sharing this with your bid team will improve the business case and front-end design engineering that would contribute to more successful, cost-efficient projects.
To reduce industry exposure and the risk of the winner’s curse (and inspired by our construction and infrastructure customers), Bidhive now features a margin and markup calculator to help contractors find out their real revenue, based on their known cost and target profit margin percentage.
All you need to do is enter two values into the cost / margin / markup / revenue / profit fields and the calculator will auto-update all other inputs. There are 20 possible calculations which can alter the result.
The construction and infrastructure sector is booming, so bid smarter and focus on value so that you achieve the profit margin you need to perform!
Know your numbers are right to bid and win more profitable work with our margin and markup calculator.
Above: By using Bidhive’s margin calculator you can fill in any two fields to start calculating the remaining fields.