Best practice guidance for tendering to win business in UK civil nuclear supply chains

Transcription

1 Best practice guidance for tendering to win business in UK civil nuclear supply chains Prepared by Evan Wright, Consultant, EOSCP INTRODUCTION Part 1 General Tendering Advice 1.1 Pre proposal/tender activities Market and Customer Intelligence Receiving the ITT 1.2 Preparing the proposal/tender Structure and scheduling the tender Ensuring compliance with the tender s online, structures and size Graphics and photographs Winning themes Establish the technical baseline offer Making your disadvantages positives Pricing strategy Review and company sign off 1.3 Executive summary & covering letter Executive summary Covering letters 1.4 Publication of the Tender Plan ahead 1.5 Tender submission 1.6 post submission actions Presentations and questions 1.7 Customer feedback Part 2 Specific advice for tendering to Tier 2 contractors 2.1 Introduction 2.2 Tier 2 tender environments 2.3 Tender timescales 2.4 Tender process Part 3 Top tips for successful tendering

2 Introduction The UK nuclear industry, including operation, decommissioning and future new build activities, offers major high-value opportunities for engineering and design businesses. To be successful in this very competitive sector, winning companies need to write first-class tenders. This document gives best practice guidance for tendering for nuclear supply chain work and is based on experience gained over many years of bid writing and evaluation by nuclear industry specialists. Advice given is 'high-level' and is not a precise step-by-step guide for writing a tender. Who is the guidance for? SMEs tendering for sub-contracts to either Tier 1 site licence companies (e.g. Sellafield Ltd) or Tier 2 management contractors within the nuclear industry (e.g. Doosan Babcock, Amec, Jacobs etc). Suitable for both new entrants and experienced contractors. Suitable for non-nuclear work in other high-integrity sectors such as oil & gas and pharmaceutical. Some definitions... A Tier 1 company is a nuclear site licence company such as Sellafield Ltd and Magnox North and South. A Tier 2 company is any company that tenders directly to a Tier 1 company. In the context of this document Tier 2 companies are regarded as large management companies such as Amec, Doosan Babcock and Jacobs. A Tier 3 company subcontracts to a Tier 2. Guidance is given in two parts: Part 1 covers general tendering advice and Part 2 covers specific advice for tendering into nuclear Tier 2 organisations. Whilst of fundamental importance to successful tendering, the document does not cover pricing and risk in detail. It is recommended that before reading this document, the reader first reads the EOSCP document 'UK nuclear market opportunities', available via This document explains the fundamentals of the commercial structure of the industry and outlines business development strategies for SMEs in the sector. We update this guidance (Jan 2011) with kind permission of TWI. It was originally produced in 2009 as part of the Northwest Supply Chain project (NWSC), funded by the North West Development Agency (NWDA). We have endevoured to be as accurate and up to date as possible. Please check with the WCDA s Energy Opportunities Supply Chain Project (EOSCP) if you have any questions. Learn more at Acknowledgements We are grateful to Mark Watters (Nuclear Director, Cumbria of Doosan Babcock), Tony Lawrence (Relationship Manager, Amec), Zoe Whittle (Supply Chain Ombudsman of Sellafield Ltd) and Sam Dancy (Market Development Manager of the Nuclear Decommissioning Authority) for their valuable contributions to this document.

3 Part 1 - General tendering advice This document is primarily aimed at companies tendering into Tier 2 organizations for significant subcontracts within large projects, for which the Tier 2's are themselves tendering. Typically Tier 2's will be tendering for project contracts in the order of 1m to 250m. However, the principles outlined in the guidance can be applied to the preparation of any tender. 1.1 Pre proposal/tender activities It's assumed that your company has decided its strategy to tender for contracts in the nuclear sector and that you fully understand why you want to do it and the commitments required to win business Market and customer intelligence Tender submission timescales are generally tight, therefore in advance of the Request for Quotation (RFQ) or Invitation to Tender (ITT), it is important to find out what opportunities are coming to market, when and what their scope will be, and how it fits into the customer's business. Also, find out as much relevant information as you can about the customer and your competition. You can do this by attending trade events and arranging one to one meetings with buyers. You will gain an understanding of the customer's general requirements and those specific to the opportunity you are considering. For a specific contract opportunity find out... Is the customer confident about award timescales? How strong is the competition? Where do you fit in the competition? Be honest! Where does the customer think you fit in with the competition? What is the scope of work? Think about how you will provide it in a better way than the competition. Will you need to team with another organisation? If so, understand why and build your partnership early before someone else beats you to it, and then demand their full commitment 1. 1 Guidance on best practice in partnering can be found in PAS 11000:2006. This is a strategic framework to improve collaborative relationships in organisations of all sizes. Go to for more information.

4 1.1.2 Receiving the ITT The ITT may be preceded by a request for prequalification. If so, treat this like a tender but also as an opportunity to communicate with the customer about the subsequent contract. If you have gathered your intelligence and communicated with the customer, the receipt of the ITT should not be a surprise. If it is a surprise then you may be in a weak position compared with better prepared competitors. Always acknowledge receipt of the ITT. To bid or not to bid? This seems obvious but you need to ask yourself some hard questions. Bid preparation is time and resource-intensive. Honestly compare your capability and competitive position with the opportunity, customer and competition. Estimate what it will cost you to win the bid and decide if this is good business. Decide 'Bid - No Bid'. Only bid if you have a realistic chance of winning if the opportunity is real and will make you an acceptable return. If you decide NOT to bid Tell the customer and explain why Don't burn your bridges! For example, if you have capability gaps, tell the customer what they are and say how you will rectify this for future tenders Ask for a meeting and seek advice about what you need to change in your organisation or strategy to win business in future. If you decide TO bid Assign proposal responsibilities, such as who will lead and write each tender section, e.g. technical offer, safety approach, pricing, commercial terms and delivery schedule Consider who will type, print, bind and despatch the tender Understand the customer's evaluation criteria and weighting. Then put most effort into those aspects of your tender where you will get most reward. Remember though, the whole of your tender responses must excel!

5 1.2 Preparing the proposal/tender Structure and scheduling the tender Using storyboarding to structure a tender Storyboarding is a proven technique used to structure tenders and to ensure compliance with the ITT. Storyboarding is a group activity facilitated for the bid team by the bid manager. Storyboarding is done in a room where there is wall space to post the pages so all involved can refer to them as the storyboard and tender develop. The bid team brainstorm, debate, agree and record on flip chart pages the key points that need to be communicated in each section of the tender. Using storyboard ensures that the tender's messages are consistent across all the sections of the bid. Ensure that senior managers buy into the storyboard, particularly those that will be asked to sign the final tender. Regularly check the bid team understands the storyboard. You should produce a simple tender programme showing what, who and when. Work back from the submission date and include partner contributions, then communicate key dates to all people that are involved in writing or approving the tender. Producing a tender is a project in itself with duration, cost, deliverables and, not least, people to manage. The leader (sometimes called bid manager) is in reality a project manager. To help you to manage the tender preparation, consider producing a project plan similar to the one below.

6 Sample project plan Preparation & submission of tender Who? : Analyse bid, define offering & engage partners JPJ Analyse bid as lead organisation Identify and engage partners Define bid offering and partnership roles Assign bid writing roles & responsibilities 2: Write bid, cost & price the tender EMW Write technical offer Write safety approach Write quality approach Estimate cost Set price Define commercial terms Write executive summary and winning themes Bid review and final modification 3. Assemble and submit bid NME Type up bid Print and bind bid copies Get bid signed off Despatch to client Depending upon the scale and complexity of the opportunity be prepared for long hours of smart working (otherwise don't bid, because you won't win)

7 1.2.2 Ensuring compliance with the tender's outline, structure and size Prepare a compliance matrix to list all the things the customer wants to see responses to, for example CVs Price schedule Management structure Key staff Track record Your understanding of the scope Your technical approach to deliver the scope Innovations Safety record Insurances Risks Exclusions Tick them off the list after you have included in your tender the detail required by the customer. If the ITT includes returnable schedules, ensure these are completed, signed by the appropriate person and included with the tender. Structure your tender responses as instructed in the ITT, or if there is no instruction by the customer, it is sensible to structure it in the same order and using the same headings as those used by the customer in their ITT. Evaluation criteria are often published in ITT's by customers. Make it easy for the assessors to find information in your tender which demonstrates your capability linked to these criteria. The tender should have an executive summary which summarises its content and its winning themes (see section 1.3). Each section of your tender response should have an introduction, body of information and conclusion and include one or two relevant winning themes. If the ITT specifies a page or word limit per section and or page, stick within it Graphics and photographs Where possible use relevant tables, graphs, pie charts etc and photographs to relay information. The golden rule, to maintain the interest of the reader (who awards the contract) is to aim for 1/3 white space 1/3 graphics and 1/3 text on each page.

8 Graphics and photographs can be powerful in communicating information. For example, if you have five years of safety awards, scan and reduce these and put them all on one page in the safety section of the tender. Similarly, include in appropriate sections relevant accreditations and professional body memberships such as Investors in People awards and ISO 9001:2000. Draw pie charts to show, for example, the proportion of staff you have in each discipline or trade and use captions like 'we can fully resource this contract with the right people.' See the example below. Similar charts could be used to communicate information about the type of equipment you have or the breakdown of your business turnover by sector. In all cases only communicate relevant information to help enable the customer to select you Winning themes The most important question to answer in the tender is WHY select US? Winning themes support this. What is a winning theme? A supported claim. An advantage compared to a competitor. A compelling argument. A conclusive reason why the customer should select you. Six winning themes are a sensible number. Include one or two technical capability themes, one or two management capability themes and one or two safety themes. Also consider track record and commercial themes. Example winning themes 'We are the only UK contractors that have done this type of work before'. 'Our safety record in this industry has been recognised by five gold awards'. 'Our manufacturing facilities and procedures demonstrate performance in excess of the ITT requirements'. 'Our programme duration reflects low risk linked to our experience to apply alternative methods if problems arise'. 'Our local labour force can rapidly mobilise'.

9 1.2.5 Establish the technical baseline offer Decide what you are offering at the outset of the tender and don't chop and change during tender preparation. If you do change your offering, rigorously control technical change and ensure it is accounted for in your commercial offer. Be careful you don't over engineer and add cost. Establish whether the work is on or off-nuclear site. The time periods required for gaining access to a nuclear site are longer than you may be used to with other customers, and the amount of administration and documentation is more than for non-nuclear customers' sites Making your disadvantages positives There may be weak areas of your bid that you need to mitigate. If you have no nuclear experience, counteract this by stressing your experience in other industries with similar quality and technical standards, using wording such as 'We are the leading contractor of choice in the petrochemical industry for this type of work and have completed [xxx] projects. We will bring this experience to the nuclear industry where similar high standards are required and which will be met by us.' If your last contract was delivered late or fell short technically you should highlight how you have learnt from the experience, using wording such as 'Our programme and cost schedules are underpinned by the lessons we have learnt during project [xxx] and we have confidence that the changes we have made will enable us to deliver on time and within budget' Pricing strategy The NWSC project does not offer specific assistance with commercial aspects of tendering. However, competitive pricing, risk, exclusions and value for money may be the overriding factors in the customer's decision to place a contract with you. This will often be the case if all other aspects of your tender are equal to the competition.

10 1.2.8 Review and company sign off Review Depending upon the size of your company you will be likely to have different procedures for review and sign off, but be aware that the two things are different. Appoint someone or a team who has not been involved in your tender preparation to review it as if they are the customer. Make appropriate change but allow enough time in the tender programme for this activity and follow-on actions, which is sometimes called a 'Red Review'. Sign off A duly appointed person within your company will need to sign off the tender. While it is being written, keep this person informed of progress, developing cost estimates and the risks. Don't leave sign off until the last minute, otherwise if the signatory queries any aspect of the tender, you could be working all night to incorporate their changes and, inevitably, mistakes will be made. 1.3 Executive summary & covering letter Executive summary An executive summary is intended to help the reader understand the context and structure of the whole tender. It is aimed at the buyer's senior executives who don't have time to read the whole tender. What should and shouldn't be in the executive summary? It should contain all the winning themes. It should be a true summary of the tender. It should be concise. It should follow the same structure as the tender. It should guide the reader to the relevant main sections in the tender. It should not contain any information that is not explicit in the main body of the tender Covering letter

11 This is a business letter of no more than one page to thank the customer for the opportunity to tender. It should provide assurances from the senior signatory, that the customer's requirements will be met in an efficient and effective manner. 1.4 Publication of the Tender Plan ahead Tenders for large contracts with complex scope and site works elements can be large documents. Customers, particularly Tier 1's, often require multiple paper copies, plus an original signed copy and electronic copies. Be clear about what they have requested and have ready the required stationery, such as binders, quality paper, discs and equipment. Don't run out of ink at midnight and expect to punch holes in 200 sheets in five minutes with a one sheet punch! For a large tender, have enough people on hand to do the collation and binding. Include a simple index page. Have a box or boxes to hand, and package and label the tender in accordance with the instructions to tenderers. 1.5 Tender submission The main concern is to submit the proposal on time. Be sure that you know what this date and time is. If practicable take the tender by hand to the person named in the ITT as the recipient. If this cannot be done, use a reliable guaranteed delivery method. 1.6 Post submission actions Presentations and questions The customer may require you to present your tender or answer written questions. Take as much care with this as with the primary tender. After short listing of bidders, customers will often base their choice on what is explained in the presentation or offered as answers to questions. Customers will sometimes use this opportunity not just to clarify your tender but to add scope and or reduce your price and their risk. If this is the case, then to make decisions, you will need good market intelligence and the same level of expert commercial advice which was applied to the content of the tender.

12 1.7 Customer feedback Whether or not your tender is successful, seek feedback from the customer at a meeting. Send someone who understands your business and the tender but try to avoid sending anyone who prepared the tender. Note the positive and negative comments and use the information to improve future tenders. This can be an excellent opportunity to build customer confidence in your organisation. Part 2 - Specific advice for tendering to Tier 2 contractors 2.1 Introduction Large Tier 2 organisations are those who tender for nuclear site prime contracts such as AMEC, Doosan Babcock, Nuvia, Costain, Jacobs and Redhall Group. Their requirements from the Tier 3 supply chain flow down from Tier 1 requirements and for Tier 3 SME's that are unfamiliar with nuclear work these can be daunting. For this reason it is sensible to establish relationships early with Tier 2 organisations and seek to be included on their approved supplier lists as early as possible before actual tenders are required from you. 2.2 Tier 2 tender environments Large UK nuclear contracts let to Tier 2 organisations typically include 30% work for subcontracts. The Tier 2 company will be under time pressure from the primary Tier 1 customer, but will need to fully understand the scope of work, produce a Work Breakdown Structure (WBS) and coordinate and write sub contract specifications and enquiries before inviting Tier 3 sub contractors to tender. Sub contract tenders will be needed by the Tier 2 well in advance of the primary customer's return date so that the Tier 2 can evaluate and co ordinate responses and build these into his overall tender. For these reasons the time available to the sub contractor to produce a sub contract tender can be very short.

13 The Tier 2, ought to produce sub contract tender packages for you which will enable compliance with Tier 1 needs. In return you will be expected to produce a tender which is compliant and right first time. Tips for a successful relationship with your Tier 2 company The Tier 2 will be under severe pressure to deliver the primary tender to the Tier 1 customer, so react quickly to their ITT. They are your customer and they will not look kindly upon incomplete or late submissions from you. Seek regular meetings during your tender period. Be as flexible as you can be without compromising your own business. Be aware that their scope, technical solution and commercial strategies may change during the tender period. Help them to manage the effect of this on you. 2.3 Tender timescales Typically a Tier 1 contract tender period is 8 weeks. The Tier 2 contractor will need to spend about 2 weeks setting strategy and preparing sub contract packages, about 4 weeks to produce the tender and 2 weeks to review and gain internal approvals. It is a high pressure environment for all. As a Tier 3 sub contractor you may only have three weeks to prepare and submit your sub contract tender. Careful planning and project management, as described in section 3, is vital. 2.4 Tender process The more that you can prepare in advance the less pressure you will be under! In advance of the Tier 2 ITT you will need to... Decide if you will sign an exclusivity agreement and non disclosure agreement. Have to hand QA accreditations. Have to hand health and safety statistics and performance. Have to hand insurances and, if required, a broker to quote for any top ups. Have proof of relevant commercial track record, such as working for demanding customers in nuclear, oil & gas and other high-integrity industries. Have to hand CV's, training and SQEP (Suitably Qualified & Experienced Personnel) records of staff. Have references from similar customers for similar work. Have a good understanding of your cost base and price structure.

14 ...and the Tier 2 company will require from you... A competitive quote. Concise answers to all questions in electronic format which can be edited, copied and pasted into the primary tender document using native format. Well written company capability sheets using graphics and photos. A detailed schedule and cost break down in accordance with the WBS. Any assumptions and exclusions listed clearly. All certificates and accreditations in electronic format. Risks clearly identified and quantified, if possible. Answers to all questions - these are likely to be cut and pasted into the primary tender. Accountability. You and your Tier 2 customer will need to be able to trust each other. You should meet them during the tender period to Play back the scope of your work to fully understanding what is required Suggest ideas and innovations Honestly appraise your capability Build relationships Understand their drivers, constraints and internal processes. From the Tier 2 company, expect Fair and reasonable terms and conditions Clear instructions Real opportunities and not price checks. This might not always be the case, but industry bodies, led by NDA, are working to establish common principles for supply chain interaction. For further information, go to When you have won the sub contract, serve them well and seek long term relationships.

15 Part 3 - Top tips for successful tendering Comply with all reasonable requests from the client. Provide information and answers to questions in full and in formats required. Submit a compliant bid. If necessary, be clear about any technical and commercial assumptions and/or exclusions. Don't 'hide' them and put them in one place. In the post-bid, negotiation phase, avoid introducing changes not covered in your bid as the bid could rapidly become non-compliant. Don't assume that the client's past experience of you is a substitute for answering questions - often the client can only use the information presented. Always provide examples and evidence to support answers. Accept that there may be frustrations in working in the environment your client works in. Seek ways in your bid to illustrate your knowledge and understanding of the client's working environment. Look at information provided by your client e.g. web sites, procurement plans. Providing unrequested information can be frustrating for the client and may be seen as 'padding'. Accept that some requirements flow down from the client's customer. Balance selling your company in the tender with detail of what is going to be delivered and how it will be done. If you have no nuclear experience, counteract this by stressing work you have done in similarly regulated, controlled and hazardous environments and industries. Draw parallels with the nuclear industry. When invited to present the tender by the client, use this as an opportunity to explain a written answer in more detail. Stick to what is required (as this is what is of real interest) and don't 'pad' the presentation out with information not requested. Answer any Requests for Clarification in full - don't restate what you have already written in your tender. Requests for clarification are made for a reason; the original answer wasn't adequate.