Tendering for contracts and winning engineering business

Work on a contract starts several years before construction begins with the tendering process. The EDC company monitors developments in various business sectors, meets potential clients and establishes plans for the future while the client evaluates several options to find the best solution for its business development.

Often the EDC company provides skilled technical staff to perform studies and evaluate alternative technologies and options for a client. This is a vital part of getting under the skin of the client’s business and understanding how the viability and the execution of the project may be assessed. Graduate engineers can play a key role at this stage, working at the client’s premises to collect data and help perform test runs. The data becomes an integral part of establishing preferred options and developing the design basis.

Once the design basis is finalised, the client issues an invitation to bid to several preferred contractors. These companies assess whether to bid by considering criteria such as ‘chance of success’, bidding costs and availability of resources. If all these factors are favourable, then a proposal is prepared.

Plans are made

Intense activity follows to establish the cost of the work and the work plan needed to implement the project. The EDC company identifies key resources that demonstrate its previous experience with the work and the client – a previous good relationship can be a significant factor. Extra engineering work may be needed to clarify the basis of the tender and to enhance the quality of the proposal. It’s a team effort to work efficiently against a tight schedule and budget. All the work needs to be well documented and substantiated with examples.

It is critical that everyone fully understands the client’s requirements. This is particularly true of safety and environmental issues, which receive a high priority. The contractor must demonstrate familiarity with both local and national legislation and have a good track record of sustained improvement. Once cost is determined, the commercial team establishes the price at which the work will be offered to the client and whether any incentive scheme is applicable. The legal group then reviews the contract to ensure there is a fair and equitable basis for the work. The proposal documents together with a commercial summary of the company’s benefits and plans for the work are assembled and dispatched to the client.

Waiting for the client to say 'Yes'

Anxious waiting follows while the client reviews the bids received. The proposal may require clarification as the client explores the different approaches taken by the bidders. Questions arise but this can be an advantage. It helps the bidder find out what is important to the client and how the process is going. Nominated leaders of the proposed project team together with the sales and legal team take time to address issues raised by the client. This can result in senior company executives leading a large project team to ensure understanding and establish that the price is right.

Finally, when the client’s management agrees to the investment and the contract is awarded, there is time for a well deserved celebration, but the hard work has only just begun!

John Sheffield is the former commercial vice president of M.W. Kellogg Limited.