Why do Businesses Tender for Work? – How Tendering Works

“So, how does tendering work?”

“Why does it matter to my business?”

“Would an SME stand a chance?”

“Isn’t it just for the big players?”

“Would tendering benefit my business?”

These are all common questions that, as tender writing consultants, we have been asked by businesses who are unsure about a) how tendering works and b) if tendering is suitable for them. If these are questions that you have asked yourself before, then read on for a clear and comprehensive response (without going too deep into the whys and wherefores of tendering) to these queries:

How does tendering work?

In short, tendering is an opportunity for Suppliers to ‘bid’ on a contract, by submitting a combination of pricing and responses to quality questions. Ordinarily, the Buyer will construct their tender by:

Developing a specification or general requirement.
Setting out Supplier requirements (e.g. the minimum Economic and Financial threshold, mandatory accreditations or required experience).
Developing a set of quality questions to be answered by Suppliers as part of their tender response.
Establish specific rules, or instructions (e.g. where / how the tender must be submitted, how the tender should be formatted etc).
Setting down the evaluation criteria (e.g. it will be assessed through 60% quality and 40% price). This is commonly referred to as souring the MEAT (Most Economically Advantageous Tender). For a full explanation of MEAT and how it works, have a look at this short tutorial video.
Deciding the contract type (i.e. one-off, term or framework).
Agreeing the tender procurement process, which can include:
PQQ/SQ stage (Pre-Qualification Questionnaire / Selection Questionnaire)
Shortlist to ITT (Invitation to Tender).
Site Visits (where appropriate for the sector).
ITT Submission.
Presentation.
Contract Award.

Once the Buyer has finalised all the details of their tender, they will release it out into the public domain, through a tendering portal such as ProContract, Intend or Delta eSourcing (this applies to the Public Tendering domain, for information on how things work a little differently in private sector tendering, check out our video on the subject).

It’s at this point that tendering starts to matter to your business.

What happens next?

Once the contract notice has been published and you see that a contract would be perfect for your company, you have a (usually small!) window of opportunity to respond. There are a lot of things you can do to make absolutely sure your business is capable and ready to try and win a particular tender (check out our previous blog on Bid Writing Skills for Beginners which features more information on how tendering works) but for the purpose of this exercise, let us assume that you know that your company has the experience and meets the economic and financial threshold. Why wouldn’t you take this opportunity?

It’s a good question, and one we at Hudson find ourselves asking quite a lot of the time. There are thousands of SME businesses who could be tapping into the valuable market of tendering and who simply aren’t. We think that’s madness; this is an excellent way to win contracts with big companies and public bodies, meaning you have the potential to increase your company’s turnover and profit year on year.

So, why are so many SMEs doing themselves out of this golden opportunity?

Well, we have a few theories:

Misconceptions

A lot of SME businesses seem to think that tendering is just for the ‘Big Players’, i.e. companies with turnovers in excess of £5M+. Whilst it is true that these companies definitely tender (pretty successfully to, we can assume) it simply isn’t true that tendering is set up for these companies and nobody else. The UK Government is trying to encourage SME businesses to get into tendering, to help UK small business grow and to help improve the quality of businesses on offer for Buyers, with a goal of 1 in 3 business that tender being an SME.

Lack of know-how
Unsurprisingly, a lot of SME businesses just don’t know how tendering works, which isn’t in and of itself that surprising; it isn’t a topic covered very much in general media or news. Plus, once people do learn about tendering, it can look pretty dense and unwelcoming to the uninitiated, which must be off-putting to even the most ambitious of small businesses. (If this is the case for you, check out our online learning resource, Tender VLE, for some guidance).

Limited resources

This is one area in which, admittedly, the big companies have a clear and distinct advantage. Whereas a large outfit will almost definitely have their own internal bid writing resource, smaller companies don’t tend to have that luxury. Companies trying to get started in bid writing are trying to balance it with against their daily tasks and duties, which can be stressful and ultimately not very conducive to success.

All of the above applies to my business! How do I overcome these problems?

The good news is that you’re definitely not alone, and the great news is that there are some very simple things you can do to overcome those three road-blocks to success.

Fix your misconceptions

If you have a good think about it, you’ll probably find that most of what you think you know about tendering is not very substantial at all.

Do your reading and research and you’ll find that there is a whole Government Initiative with the sole purpose of improving opportunities for SMEs in the UK, and that tendering is a significant part of that. Tendering is definitely not just for enormous companies with glass-walled conference rooms and beanbags in a riot of colours (though we concede that those things are very nice, and who knows? They may even be a happy consequence of learning to tender successfully).

Work on your knowledge

Diving into tendering head-first would not be a good idea, but setting aside some time to educate yourself on how tendering works and how you can best prepare yourself is a worthy use of your time. A Google search will bring up more results than you could ever look at, but a good place to start is right here, on our Tender VLE site, where you can watch short (free!) instructional videos on the basics of tendering.

Many people see tendering as an impenetrable, expensive exercise in bureaucracy, so we’re very proud to be the first company in the UK to offer a free learning resource to help demystify procurement and show people just how tendering works (we promise it’s probably not quite as impossible as you might think it is).

Outsource if you don’t have the resource

Now, it might be that between you and your other team members, you can pull together a tender in a reasonable amount of time, without too much stress and not too much risk of missing anything vital.

However, this is where you have to ask yourself; “Is that is the best use of the resources that I have?” The answer is very likely, “Not really”. Putting a high-quality tender together is a time-consuming task (even for those of us that do it full-time) so how much of your teams’ intended delivery-output compromised by trying to win more work through writing a lengthy tender response?

Conclusion

As always, there is no ‘one size fits all’ response. Every business is different, and you have to weigh up the pros and cons and decide what is best for your business. If you are able to accommodate tender writing within your team, then it would be worth your while to get professional feedback on the first few tenders that you write to make sure that you’re using your time wisely (our Tender Ready and Tender Mentor packages could come in handy for you here).

Further Support

If you can’t see a way to write your tenders internally at all, then don’t despair.

Contact our Succeed Team via phone for email for a free consultation; we promise there is no such thing as a silly question and we’ll never tell you to pursue a tendering strategy that simply won’t work for your business.

We’ll do our best to help you understand all of the ins and outs of the tendering process and, if Tender Writing is what you’re interested in, we’ll do everything we can to help you succeed.