How to Deal With Costs When Writing a Bid Response to a Tender

When it comes to writing bids for a contract tender, many organisations are extremely confident in relation to selling their company, their service or their product, but often companies struggle to quote their costs accurately or charge appropriately, and any prudent supplier will of course consider cost as an important element in the tender decision making process.

So how should you work out your own costs and your final fee? The first step is to map out every process involved in completing the contract; suppliers often miss out the finer detail and therefore miss out important costs which, if the tender is successful could mean you end up working at a loss. Starting at the beginning therefore you must think, how will you liaise with the contractor to determine their exact requirements? Will you need to have face to face meetings? Will there be administration costs involved in arranging these meetings? Will you need to pay for transport to the meetings? Or, can it all be done via the telephone, email or Skype?

From this one step of the process you can see that the costs could vary greatly from simply the time it takes to make a Skype call, to flights, accommodation and PA time. You should look at every step of the process and consider each step in this way. Ask questions about the most efficient and cost effective ways to achieve the intended goal. Then consider who would be responsible for leading on or delivering each step. Once you have ascertained that information you should then allocate a cost for each step, dependent upon the actions required and the staff resource involved.

You should record all of this information in a spreadsheet to allow you to clearly view your costs and to allow you to easily total the sum. Once you have established your total costs you should then factor in an element of profit. It would be foolish to quote at cost price, although this would clearly make you seem like a very cost effective option!

Whether you choose to add in a percentage of the total cost or a fixed sum, always ensure that your final quote is within the original budget quoted. Suppliers are more likely to offer contracts to those quoting within the mid-range of their budget, where a lower and upper limit is specified. If you are asked to demonstrate a cost breakdown within your bid then you should factor in this profit margin to your costs so that your mark up is hidden from the purchaser. Sound costing may just win you the tender, so always consider this step of your bid response very carefully.