The Five Latest Trends in Tendering (and how to exploit them!)
Clever clients will be watching the latest international trends in procurement – reflected in the NZ Government Rules of Sourcing and Principles of Procurement, and adjusting their bidding behaviour to keep at the front of the pack. So, what are these trends?
1. False economies
First and foremost, there’s widespread recognition that the cheapest is seldom the best. The greatest value for money is achieved by looking at the solution that offers a balanced optimum of economic, social and environmental benefits.
Where weightings are provided in RFTs, we are seeing price weights are reducing and the value of quality, innovation, environmental and community benefits are now better recognised.
2. Whole of Life Costs
Another growing trend is the increased focus on whole-of-life considerations. Responsible buyers are looking carefully at potential hidden costs that result from a short-term focus on tender box savings.
3. Healthy, balanced industries
Clever buyers are actively working to provide a range of opportunities for small, medium and large companies at the tender box. They can see that this is the only way to guarantee long-term competitive tension in supplier markets.
4. Today’s RFTs are not Cookie-Cutters
Every contract is different, with unique risks and opportunities to add value. So, it makes sense that the information sought in every tender is customised to the job in hand. It’s a simple and obvious fact that, in order to get what they want, buyers have to ask questions that enable them to find it.
Clever buyers are doing just that – putting time and effort into planning their procurement activities, so that they only ask for what’s necessary to distinguish the great bidders from the good ones.
5. Innovation commands a premium
A love of inventiveness and innate resourcefulness is in our DNA. It’s the reason why Kiwi and Aussie companies in so many industries are coming up with ground-breaking technologies, methods and solutions that accelerate, reduce costs, increase safety or prolong the lives of the assets they create and maintain. We are breaking ground in just about every industry – water, roads, telcos, electricity, vertical construction, IT, and even health, social services, and education.
The beauty is that purchasing organisations see this too, and not surprisingly, they want a piece of it. That thirst for innovation is worth paying for, especially if it reduces whole-of-life costs of assets. And government clients are finding ways to encourage it and recognise it in their tender scoring methodologies.
Advice for Suppliers and Bidders
So how can smart supplier companies position themselves to take advantage of this new era in procurement?
The secret is to recognise that the way clients procure infrastructure is inexorably changing, to a regime that’s more firmly based on what you know, rather than who you know.
Contracts that were once awarded on the basis of past performance only, plus a strong relationship between the people involved, now must be formally tendered within a competitive environment. And now that price is not the only factor under consideration, it’s essential that companies who are good at what they do learn a new type of marketing.
No longer reliant on handshakes, corporate boxes at the cricket, or golf games, tendering now requires high levels of articulate written descriptions. Describing the successful projects you’ve completed and your track record for innovation is important. As is describing how you’ll extend that to deliver step-up results for THIS particular contract, and the extraordinary depth of talent that you bring to managing the project and its stakeholders. Presenting a compelling case is now essential to winning tenders. Unless, of course, you want to buy the work.
Where clients are excited by long-term benefits and innovations, they are equally repelled by indications that their suppliers may be difficult to work with. Including page upon page of tags within your tenders is a sure-fire way to fast-track the response to the reject pile.
While minimising tags is a no-brainer, there are other more subtle ways of communicating that you’re cooperative, professional and great to work with. Endorsements from other clients, simple and direct language throughout your bid response, adherence to your clients’ instructions, and formatting that makes the document easy to navigate and understand – can you tick those off? They’re all valuable contributors to that vital message of goodwill and efficiency.
Make no mistake – tendering is changing, and the news is good for both sides of procurement. More balanced decision-making, more opportunities for innovation, and a keen appreciation for long-term value for money are all drivers that will ultimately deliver better long-term solutions.
A Wall of Work
For the rest of this year, there’s a wall of work coming our way via tenders. To suppliers – this is your chance to strut your stuff! Make your responses stand out from your competitors with clever solutions, clear language, careful compliance with what your client wants, and a polished, easily understood document.
Good luck with your tenders!