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You are here: Home / Archives for Proposals

Jan 02 2019

Stop! Should You Really Submit that Proposal?

 
By Scott D. Butcher, FSMPS, CPSM

Note: this blog post originally appeared as a LinkedIn Article as “Proposals: Red Flags and Dirty Tricks.”

If you’ve spent any amount of time creating proposals, then you’ve undoubtedly seen all sorts of questionable behavior by proposal requestors. Sure, they send out an RFP (or post it online), asking for responses, acting like they want many proposals in order to make an informed decision. And then then they create traps to disqualify those proposals so they don’t have to read them. Some common approaches:

  • Extremely tight proposal deadlines making it almost impossible to respond
  • Limited number of pages, making it almost impossible to be responsive to the RFP criteria
  • Strict requirements on font, point size, spacing, etc. – little things that make it easy to get your proposal disqualified (“You used 10-point font size? Off with your head!”)
  • Vague language with no knowledgeable person to contact for clarity
  • Highly restrictive requirements for staff experience, license/certification, or relevant past experience
  • Outrageous project schedule requirements or contract terms (that may not even be insurable)
  • Continually revising the RFP and changing the requirements / scope while not changing the due date

These are all red flags that demonstrate the pitfalls of responding to a proposal unless you really know the client/agency and have an established rapport with them. That’s not to say that you need to have a deep relationship with every client you submit a proposal to (how often are the final decision makers / selection committee members “hidden” to the proposers, anyway?), or even that a good relationship would prevent some of these behaviors. Rather, these are clues that if you’re not “in the know” about the opportunity, then you shouldn’t waste your time submitting a proposal (the proposal requestor doesn’t want it, anyway!).

In many cases, your competitor very well may have written the RFP document. They wrote it so restrictively that only their firm could check all the boxes! And you know what? You’d do the same thing if given the opportunity (and many of us have). However, there’s also a trap here. Another bad behavior you’ll come across is the proposal requestor that reaches out to you for a proposal and detailed scope of work to a project that may not be well-defined. “What do you think this project will take?”, they ask. And then after you spend many hours pulling something together, everything goes quiet – or you get ghosted. You thought you had a 95% probability of being awarded the project, yet they won’t even return your calls or emails. And then, low and behold, one day an email arrives from that prospect. Unfortunately, it contains a Request for Proposal which just happens to include that detailed scope of work you developed – almost verbatim. And they sent the RFP to your competitors, as well. So essentially you did all the legwork for the RFP, and now you have to bid to get the project.

Most of my time is spent in the architecture, engineering, and construction (#AEC) space, but I’ve been involved with proposals from other perspectives as well, particularly in the nonprofit realm. Recently I saw some of the same old red flags and dirty tricks in an RFP – as well as a new one! These included:

  • Sending RFPs to groups that had no business in actually responding – they didn’t have the qualifications or the capacity
  • Including RFP requirements so time-consuming that it would be impossible to comply in the allotted time
  • Including RFP requirements so cost-prohibitive that few (if any) recipients could submit a truly responsive proposal

You may be shaking your head because you’ve seen this kind of thing before. But here’s the new one:

  • Not publishing any limitations on word count or file size (only that the proposal must be electronically delivered in a single Word document), and then rejecting any file 1 MB or larger at submission

So you could spend weeks working on the proposal, trying to cross as many t’s and dot as many i’s as possible (not that it was possible to get them all!), finalize the proposal just before the deadline (the world most of us work in), click the link to upload the file, and only once you have attempted to submit the file find out that there is a limitation on file size!

I don’t have a fundamental problem with file size limitations, but there are two glaring issues here:

  1. Not making proposers aware of any file size limits in advance.
  2. Requiring files to be less than 1 MB – what is this, 1993?

The average smart phone photo is probably 2 or 3 MB – no different than it was in the early days of smart phones, thus a 1 MB file is small by today’s standards. For most proposals, it’s downright tiny. Therefore, a 1 MB file size limit would be a “red flag” had it been published to proposers. Not disclosing that limit and essentially using it as a way to reject proposals is a downright “dirty trick”!

You can argue whether there was Machiavellian intent, or it was simple ignorance that caused the issue. However, when you look at the other red flags – before even getting to this little trick – you can clearly see that the proposal requestor had little interest in actually receiving any proposals.

They had already pre-ordained the winner – and perhaps the “winner” was the status quo. (A colleague once told me that the biggest competitor will always be the status quo.)

If you make the RFP so restrictive, invite unqualified groups to submit, and then create a layer of “security” to disqualify any potentially-responsible proposals, it’s easy to say, “We didn’t receive any proposals that met our criteria, so we are going to (fill in the blank).”

And in this case, the blank may be “proceed as planned,” “stay with our current firm,” or “not move forward with the project/initiative.”

Downstream, however, there’s a feeling of frustration, disappointment, even dejection. Large amounts of time have been wasted in pursuit of an opportunity that was never going to pan out. The opportunity costs can be staggering when this kind of thing happens.

I’m a big proponent of making quality, objective Go/No-Go decisions based upon data and facts (as opposed to the all-too-common subjective, “Sure we can do that!” decisions). And yet, there are many red flags that go unnoticed or are intentionally ignored, costing organizations huge wheelbarrows of cash and their employees massive black holes of productive time.

What are some of the proposal red flags and dirty tricks that you’ve seen?

Interested in upping your proposal game? jdbIQity offers a four-hour proposal workshop for project managers and marketing professionals to learn about best practices and proposal trends. Contact Scott Butcher at sbutcher@jdbe.com or 717-434-1543 to learn more.

Connect with Scott

  • LinkedIn: https://www.linkedin.com/in/scottdbutcher
  • Twitter: https://twitter.com/scottdbutcher

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Feb 12 2018

Stop Tracking Your Hit Rate the Old-Fashioned Way!

Hit Rate

by Scott D. Butcher, FSMPS, CPSM

Ah, the hit rate. The much-maligned, quasi-useful metric by which many firms live and die. Also known as win rate, this is a very simple formula to judge the “success” of marketing efforts.

The SMPS Foundation recently published Measuring for Success: A Look at Hit Rates & Other KPIs in the A/E/C Industry. Their definition of hit rate is “total number of proposals submitted to total number of proposals won,” and they found that 92% of design and construction firms use this metric.

So it’s safe to say that this metric is almost universal. But is it really valuable?

Let’s say you submit ten proposals, and win four. The math is pretty simple: 4/10 = 40%.

This can be useful when benchmarking your efforts, particularly when compared against yourself, like your hit rate for this year compared with last year. If your hit rate grows from 38% to 40% you are demonstrating improvement. You can also use hit rate to compare divisions, offices, or market sectors. So it does have some value.

It is when you try to compare this metric against other firms that you run into problems. When do you mark something as a win? Is it when you get the verbal confirmation that you won? Or when a contract is signed? Our when you send the first invoice (or receive the first payment)? Likewise, what projects do you count in your metric? Do you count every task order or delivery order under a contract? Do you count the small, non-competitive projects that your clients just hand you? Do you count only proposals to non-clients, or do you count existing clients as well? Do you count only those projects in which you are prime, or do you include subconsulting or subcontracting engagements as well?

Every firm has their own approach, so when you compare your hit rate to others, you are not necessarily looking at apples-to-apples data.

But my concern with hit rates goes deeper. Can a simple hit rate calculation be a useful metric for predicting backlog – or marketing success?

Let’s take those ten proposals, and dive a bit deeper:

Hit Rate Example

Using the standard hit rate metric, we can see that we pursued ten projects and won four, thus our 40% hit rate. Based upon published industry surveys, this seems reasonable and fairly typical. (The SMPS Foundation research revealed an overall hit rate of 42%.)

Yet if we dig deeper, we can see a major problem. We’re winning work, but we’re not winning the projects with the largest fees.

  • Dollar Value of Projects Won = $210,000
  • Average Fee Per Project Won = $52,500
  • Dollar Value of Projects Lost = $1,656,000
  • Average Fee Per Project Lost = $276,000

Whoa! There’s a major issue here. We’re failing to win the large projects. Unfortunately, our hit rate doesn’t tell us that. It tells us that we are at 40%, generally aligned with hit rates of other A/E/C firms.

That’s why I’m a big fan of the dollar-based hit rate, which I refer to as “conversion rate” – in other words, the dollars proposed that we are converting to bookings (and eventually revenue).

So our conversion rate is total value of dollars won to total value of dollars proposed.

  • Dollars Won = $210,000
  • Dollars Proposed = $1,866,000
  • Conversion Rate = 11%

A metric of 11% is vastly different than a metric of 40%. (Flip it around: with a conversion rate of 11%, you are losing 89% of the dollars you pursue!)

Per the SMPS Foundation, fewer than 40% of A/E/C firms use this second metric, which I find far more valuable. Using the standard hit rate metric, you could potentially see hit rates of 60% or 70%, and yet your firm could be gasping for air because not enough work is coming in.

Hit rate is easy to calculate, and there’s no reason not to track it, especially for trending purposes. But if you really want to know how you are doing and what workload is coming into your backlog, track conversion rate, or whatever you want to call it. That’s a better measure of marketing success and a metric that will provide greater value for your company. And remember that this Key Performance Indicator (KPI) is internal. Because of the myriad ways of choosing which data to include in hit rates / conversion rates, you will be challenged when trying to compare your stats with other firms. So track it and compare it year-to-year or quarter-to-quarter. Track it by project manager or division or office or market sector. Follow the trends to determine if there are certain types of projects you regularly win – or lose. Track it at least quarterly, if not more often, and take corrective action if necessary. The conversion rate (or dollar value hit rate) can be a very useful KPI, but you need to make the data work for you, and monitor it continually.

Are you tracking “hit rate” or “conversion rate”? Which metric do you feel is most valuable for your firm?

To learn more about the SMPS Foundation hit rate research, surf to www.smpsfoundation.org.

Connect with Scott

  • LinkedIn: https://www.linkedin.com/in/scottdbutcher
  • Twitter: https://twitter.com/scottdbutcher 

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Written by Scott Butcher · Categorized: Firm Management, JDB IQity, Marketing, Proposals · Tagged: A/E/C Management, Hit Rate, Proposals

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