Chapter 3 Developing Project Proposals
Building
relationship with customers and partners（important）
Customer gives you RFP
Why we need a good relationship with
customer.
They ask to you to do another one, because
they have trust on you.
Foundation for successful funding and
opportunities
Requires good listening and constant
learning
Frequent and regular contact, express
appreciation for the client’s time
Trust is key and ethics are imperative
First impression is important
Problem solving and credibility grows with
good performance
Partner with several key individuals in an
organization
【
Generally
speaking, customers (clients) and partner organizations prefer to work with
people they know and trust.
•Relationships
establish the foundation for successful funding and contract opportunities.
•Relationship
building requires being proactive and engaged.
•It
requires face-to-face contacts; it cannot be done as effectively through e-mail
or phone conversations.
•Relationship
building requires being a good listener and a good learner. When you are with
clients, ask questions and listen. Make the client feel good. Empathize with
their issues, whether they are business or personal.
•Contacts
with potential clients should be frequent and regular– not just when there is a
current opportunity for funding or just before they will be issuing a RFP.
During contacts, do not focus on discussing potential contract opportunities.
•After meeting with a client, always express your
appreciation and thank them for making the time to meet with you.
•Establishing
and building trust is key to developing effective and successful relationships
with clients and partners. One way to foster this is to be reliable and
responsive.
•Ethical
behavior in dealing with clients and partners is also imperative for building
trust.
•The
first impression you make on a client is pivotal to developing a continuing and
fruitful relationship.
•Clients
want to work with people who can solve problems, not with those who merely
identify them.
•Build
credibility based on good performance.
•Always
put the client first. Clients want to be confident that any projects they
undertake with the contractor will be successful, will involve a good working
relationship with the contractor, and will help the clients achieve their
business goals.
•It
is advisable not to rely on a good relationship with just one individual in a
client or partner organization, but rather to build relationships with several
key people in a client or partner organization, since key individuals may leave
the organization while others become more influential.】
Pre-RFP/Proposal
Marketing
Begin developing the relationship before RFP is
prepared
§ Can help
client identify needs
§ Better
position to win the contract
§ Develop a
more clearly focused response to RFP
Pre-RFP and pre-proposal efforts are business
development
§ No cost to
the customer
§ Help build
the relationship
Unsolicited proposals and uncompetitive contracts
§ Result of
identified needs and problem solving
§ Eliminates
preparation of an RFP and soliciting process
【
•Contractors
whose business depends on creating winning proposals in response to business or
government RFPs should not wait until formal RFP solicitations are announced by
customers before starting to develop proposals.
•Contractors need to develop relationships with potential
customers long before the customers prepare RFPs.
•Contractors
should maintain frequent contacts with past and current customers and initiate
contacts with potential new customers.
•A
contractor who is familiar with a customer’s needs and requirements can prepare
a better proposal in response to the customer’s RFP.
•These
pre-RFP or pre-proposal efforts by a contractor are considered marketing or
business development and are performed at no cost to the customer.
•In
some cases, the contractor may prepare an unsolicited proposal and present it to the
customer.
•If the customer is confident that the unsolicited
proposal will solve the problem at a reasonable cost, the customer may simply
negotiate a contract with the contractor to implement the proposal, thus
eliminating the preparation of an RFP and the subsequent competitive proposal
process.
•Whether
the goal is winning a competitive RFP or obtaining a noncompetitive contract
from a customer, a contractor’s pre-RFP/proposal efforts are crucial to
establishing the foundation for eventually winning a contract from the customer
to perform the project.】
Decision
to Develop a Proposal
Development is costly and time consuming (not
for most business, they have a template, because you have done the similar work
before)
Contractors must be realistic about their
probability of winning a contract (salesman are liar)
Evaluate bid/no-bid decision
Many non-winning proposals hurt reputation（You got a
lot of selective）
May be hard to decide to no-bid an RFP
【
•The
development and preparation of a proposal can be costly and time-consuming.
•Contractors
interested in submitting a proposal must be realistic about the probability of
being selected as the winning contractor.
•Evaluating
whether or not to go forward with the preparation of a proposal is sometimes
referred to as the bid/no-bid decision.
•Contractors
need to be realistic about their ability to prepare proposals and about the
probability of winning the contract because submitting a lot of non-winning
proposals in response to RFPs can hurt a contractor’s reputation.
Sometimes the hardest
thing for a contractor to do is to decide to no-bid an RFP.】
Creating
a winning proposal
Selling document
The best idea to solve the problem
Highlight unique factors
Emphasize benefits to the customer
Be simple and concise (really important)
Addresses requirements from RFP
Be realistic
【•The
proposal process can be highly competitive and a proposal is a selling document
- not a technical report.
•In
the proposal, the contractor must convince the customer that the contractor is
the best one to solve the problem.
•The
contractor should highlight the unique factors of its proposal that
differentiate it from competing contractors.
•The
proposal should always emphasize the benefits to the customer.
•Proposals
should be written in a simple, concise manner.
•Proposals
must be specific in addressing the customer’s requirements as laid out in the
RFP.
•Proposals
must be realistic, in terms of the proposed scope, cost, and schedule, in the
eyes of the customer.】
Proposal
contents
Three sections
Technical, management, cost
Missing one is executive summary（give this to
your boss）
Detail level
Depends on complexity of the project (certain
level of detail)
Requirements from the RFP
Bottom line is cost
【•The
amount of detail the contractor includes will depend on the complexity of the
project and the requirements stipulated by the RFP.】
Technical
Section
Understand the need
Proposed approach or solution
Benefits to the customer
【
The
objective of this section is to convince the customer that the contractor
understands the problem or need and can provide the least risky and most
beneficial solution. The technical section should contain the following
elements:
•Understanding
of the need—the contractor must show the customer that they thoroughly
understand the problem to be solved.
•Proposed
approach or solution—the proposal should describe the approach or methodology
that would be used in developing the solution.
Benefits to the
customer—the contractor should state how the proposed solution or approach
would benefit the customer and achieve the project’s success criteria or
expected outcomes, including cost savings; reduced processing time; reduced
inventory; better customer service; reduced errors; improved safety conditions;
more timely information; reduced maintenance, etc.】
Management
Section
Description of work tasks
Deliverables
Project schedule
Project organization
Related experience
Equipment and facilities
【
The
objective of the management section is to convince the customer that the
contractor can do the proposed work and achieve the intended results. The
management section should contain the following elements:
•Description
of work tasks—the contractor should define the major tasks that will be
performed in carrying out the project.
•Deliverables—the
contractor should include a list of all deliverables that will be provided
during the project (such as reports, drawings, manuals, and equipment).
•Project
schedule—the contractor should provide a schedule for performing the major
tasks required to complete the project.
•The task schedule can be given in any one of several
formats: a list of tasks with their estimated start and completion dates, a
Gantt chart, or a network diagram.
•Project
organization—the contractor should describe how the work and resources will be
organized to perform the project.
•An organization chart, resumes of the key people, and a
responsibility matrix are often helpful.
•Related
experience—the contractor should provide a list of similar projects it has
completed and the dollar value of those contracts.
Equipment and
facilities—the contractor may want to provide a list of the equipment and
special facilities it has in order to convince the customer that it possesses
the necessary resources.】
Cost Section（Bottom line）
Include estimated costs
§ Labor
§ Materials
§ Equipment
§ Facilities
§ Subcontractors
and consultants
§ Travel
§ Documentation
§ Overhead
§ Escalation
§ Contingency
§ Fee or
profit
【•The
objective of the cost section of the contractor proposal is to convince the
customer that the contractor’s costs for the proposed project are realistic and
reasonable. The cost section usually consists of tabulations of the
contractor’s estimated costs for such elements as the following:
•Labor—the estimated costs for the various
classifications of people who are expected to work on the project
•It might include the estimated hours and hourly rate for
each person or classification.
•Materials—the cost of materials the contractor needs to
purchase for the project
•Equipment— the cost of equipment that must be purchased
to complete the project
•Facilities—sometimes the contractor will have to rent
special facilities or specialty space for the project team.
•Subcontractors and consultants—when contractors do not
have the expertise or resources to do certain project tasks, they may outsource
some of the work to subcontractors or other consultants.
•Travel—such as airfare, lodging, and meals if trips are
required during the project
•Documentation—some customers want the contractor to show
separately the costs associated with the project documentation deliverables.
•This would be the cost of printing manuals, drawings,
reports, or the cost of DVDs.
•Overhead—contractors will add a percentage to costs of
the above items to cover the indirect costs of doing business (such as
insurance, depreciation, accounting, general management, marketing, and human
resources).
•Escalation—for large projects that are expected to take
several years to complete, the contractor needs to include the costs of
escalation in wage rates and materials costs over the length of the project.
•Contingency or management reserve—an amount the
contractor may want to include to cover unexpected items that have been
overlooked.
•Fee or profit— all the above items are costs. The
contractor must add an amount for its fee or profit.
•The total cost plus the contractor’s fee is the
contractor’s price for the proposed project.
•Cost
estimates should be reasonable and realistic. If possible, it is good practice
to have the person who will be responsible for the major work tasks estimate
the associated costs.】
Pricing
Considerations
Competition
Price
§ Not
overpriced or underpriced
Factors
§ Reliability
of cost estimates
§ Risk
§ Value of
project to the contractor
§ Customer’s
budget
§ Competition
level
【
When contractors prepare a proposal, they are generally
competing with other contractors. There are three main factors that contractors
should consider when setting a price for a proposal: competition, prices
compared to competitors, and other factors like risk and the customer’s budget.
•Contractors need to be careful not to overprice the
proposed project, or else the customer may select a lower-priced contractor.
•They must be equally careful not to underprice the
proposed project; otherwise, the contractor may lose money.
•The contractor must consider the following items when
determining the price for the proposed project:
•Reliability of the cost estimates—the level of
confidence that the total cost for the proposed project is complete and
accurate
•Risk - if the proposed project involves an endeavor that
has not been undertaken before, it may be necessary to include a large amount
of contingency funds.
•Value of the project to the contractor—there may be
situations in which the contractor is willing to live with a low price.
•For example, in order to get a contract so it will not
have lay off workers.
•Customer’s budget—a proposal should not exceed what the
customer has available.
•Competition—if many contractors are expected to submit,
it may be necessary to submit a price that includes only a small profit to
increase the chances of winning the contract.】
Simplified
project proposal
Complex
Large number of pages
Defined sections
Charts and figures
Tables of information
Simplified
Statement of the customer’s need
Assumptions（I need that relative
company help me, or need more information and resources）
Project scope
Deliverable
Resources
Schedule
Price
Risks
Expected benefits
【
•Sometimes
a proposal is complex for a large multi-million dollar project. These proposals
will be lengthy, with many defined sections, charts, figures and tables.
•At
other times, the proposal may not need to be complex. A simplified or basic
proposal may be appropriate and sufficient.
•All
proposals should include the following elements as a minimum:
•Statement of the customer's need— should clearly
describe the contractor's understanding of the customer's need or problem and
reference any information or data to support the need
•Assumptions– state any assumptions that may affect the
contractor’s scope, schedule, or price
•Project scope— describe the contractor’s approach to
addressing the customer’s need or solving the problem, define specifically what
work tasks the contractor proposes to do, and outline how the contractor
expects the customer to be involved throughout the project
•Deliverables— list all the tangible products or items it
will provide to the customer during the performance of the project
•Resources— types of expertise and skills that the
contractor will utilize on the project, including any key subcontractors,
consultants, or suppliers
•Schedule— list of key milestones with their target dates
or cycle time from the start of the project in sufficient detail to demonstrate
a well-thought-out plan
•Price— indicate the bottom-line price to perform the
project. Emphasize the value provided and not on how low, or “cheap,” the price
is.
•Risks—identify potential concern about any risks that
have a high likelihood of occurrence or a high degree of potential impact. Try
to demonstrate that the contractor has experience with these risks and outline
a realistic approach to dealing with them in the project.
•Expected benefits— pull together information from the
preceding sections and make a case to justify the “value” of the proposal in
terms of expected quantitative benefits, such as return on investment, payback,
cost savings, an increase in productivity, reduced processing times, faster
time-to-market, and so on.
•The
focus of the proposal should be on quality of the content—clear, concise, and
convincing—rather than quantity or number of pages.
•Many simplified project proposals range from 4 to 8
pages, and they are usually less than 20 pages.
•It is appropriate to attach appendices for items such as
resumes of key people who will be assigned to the project, back-up details for
cost estimates, or a list of past related projects and associated references.】
Proposal submission and follow-up
Submission
MUST be on time
Formatted properly easy to read
Sent in manner required （Hard copies,
email, Electronic form）
Two sets by different delivery methods
Follow-up
Be proactive
Professional manner
Follow RFP guidelines
【
Proposals
should be:
•Submitted on time
•Late or incomplete
proposals are often not accepted
•Formatted properly
•In the manner specified
•Possibly deliver two sets by different delivery methods
•Depending on the
dollar value of the proposal, some contractors have been known to hand-deliver
the proposal or send two sets of proposals by different express mail services.
•
Contractors
must continue to be proactive even after the proposal is submitted.
Any
follow-up needs to be done in a professional manner and in accordance with the
RFP guidelines.】
Contracts
Agreement
Contract must be signed before starting
work
Establishes communication
Agreement of deliverable for a certain price
Types
Fixed price
Price remains fixed
Low risk for customer
High risk for contractor
For well-defined projects with little risk
Cost-reimbursement (Flexibility,
better for contractor)
Price for actual costs
High-risk for customer
Low risk for contractor
For higher risk projects（lots more he
didn’t tell you）
【Just
because the contractor has been selected as the winner does not mean the
contractor begins the work right away. Before the project can proceed, a
contract must be signed between the customer and the contractor.
•A contract is a vehicle for
establishing good customer-contractor communications and arriving at a mutual
understanding and clear expectations to ensure project success.
•It is an agreement between the contractor, who consents
to provide a product or service (deliverables), and the customer, who agrees to
pay the contractor a certain amount in return.
•The contract must clearly spell out the deliverables the
contractor is expected to provide.
There
are basically two types of contracts: fixed price and cost reimbursement.
•In
a fixed-price
contract, the customer and
the contractor agree on a price for the proposed work.
•The price remains fixed unless the customer and
contractor agree on changes.
•This type of contract is low risk for the customer,
since the customer will not pay more than the originally agreed-upon price.
•This type of contract is high risk for the contractor
because, if the cost of completing the project is more than originally planned,
the contractor will make a lower profit than anticipated— or may even lose
money.
•Fixed-price contracts are most appropriate for projects
that are well defined and entail little risk.
•In
a cost-reimbursement
contract, the customer agrees
to pay the contractor for all actual costs (labor, materials, and so forth),
regardless of amount, plus some agreed-upon profit.
•This type of contract is high risk for the customer,
since contractor costs can overrun the proposed price.
•In cost-reimbursement contracts, the customer usually
requires that, throughout the project, the contractor regularly compare actual
expenditures with the proposed budget and reforecast cost-at-completion.
•This type of contract is low risk for the contractor
because all costs will be reimbursed by the customer. The contractor cannot
lose money on this type of contract.
•Cost-reimbursement contracts are most appropriate for
projects that involve a higher degree of risk.】
