Build Magazine August 2015

Build Magazine 12 hese are all too familiar statements when our clients ask us to identify process and control breakdown within projects which are not going to plan. Blame often falls at the door of the project director for failing to deliver the project, or even the quantity surveyor who has been unable to effectively manage the budgets. But is it always their fault or was the project doomed to fail before the first spade went into the ground? When projects go wrong too many construction organisations fail to effectively challenge themselves on the root cause of the issue. The elephant in the room is often that the opportunity was always too risky or the bid price was based on achieving subcontractor or value engineering savings that were unrealistic. Most organisations within the construction sector will have bid management capability which supports operational staff in evaluating and responding to opportunities. Whilst this capability may vary in size and shape, from a single commercial manager through to a whole team of surveyors and estimators, the bid management process remains critical to the success of these organisations. A strong bid management process helps an organisation make informed decisions by enabling them to: • understand the opportunity and the associated risks; • assess the resourcing and capacity implications on other projects and the wider business; • encourage innovative thinking as to how the customer’s requirements can be best achieved; and • establish a price that generates an acceptable return comparable with the risks identified. This investment in bid management does, however, come at a cost. ‘The MarketingWorks Bid Cost Survey 2014’ was a joint research project by Market- ingWorks and the University of Reading that assessed bid cost investment in the construction industry. It concluded that, regardless of the size of an or- ganisation, significant time and cost is incurred during this process. It calculat- ed the average cost of winning a single bid for a project valued between £2m - £250m was a staggering £60,208 with an average of 483 hours being committed. Proportionally, projects valued at less than £2m cost more to bid for, at 1.2% of the total project value, placing greater importance on an organisation’s win ratio given the sizeable investment. Despite the upturn in the sector there have recently been a number of public, high profile examples where major construction firms have revealed significant losses within their construction divisions or on individual projects. Through Bid Management… or Bid Mismanagement? “This project is over budget, we aren’t going to deliver on time, the customer is not happy with us”. T