Chapter 3 Developing Project Proposals

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.】