£3.5bn bid costs could tumble

The staggering annual spend on bidding and winning construction work is about £3.5bn, according to construction marketing specialist MarketingWorks managing director Philip Collard. He believes that construction consultancies and contractors could halve this figure, resulting in savings of nearly £2bn.
"There is a shortage of precise figures, but we estimate that consultancies spend 7% to 8% of their income on win-work activities while contractors spend 3% to 4% of their turnover. They could halve those figures if their win-work costs were more focused," said Collard.
"Within a six-month period of us working with construction group Shepherd, its win rate jumped from one in eight when we started to a much better figure of one in two.
"We help companies become more selective in identifying the jobs they are likely to win and those they won't win. We worked with Gleeds on its new strategic business development plan and at Arup we helped to redesign its bidding process," said Collard.
A construction consultancy typically spends 40 hours on average on each bid, running up costs of £4,000, according to findings by MarketingWorks. It has worked with 50 of the top 250 consultancies, either giving in-house assistance or providing a training programme.
With contractors, the cost of a standard bid is put at £10,000, the result of 100 hours of input, while a more involved D&B submission could rack up a higher figure of up to £25,000.
Over the past eight years, MarketingWorks has collaborated with 500 UK contractors.
"In a construction group, we find it's a cultural thing," said Collard. "We try to get them to be more selective. By dropping half of eight proposed bids, they can go wider and deeper into the remaining four, looking for better solutions. As a result, they become the preferred solution provider.
"Clients don't make decisions on lowest price, but rather on value. That makes it easier to become the preferred provider. It is only when the client has said, 'we want you', that it turns to the issue of price.
"Interestingly, a survey carried out by Leeds University of 300 clients found that enthusiasm was the most important issue for picking a contractor. In most proposals, contractors make the mistake of talking about themselves, their history and method statement, instead of putting the focus on the client, its business and how they could improve it," Collard said.
MarketingWorks is organising the fourth annual construction marketing conference, Bidding to win - how to win more and lose less, on 29-30 October at the Novotel Hotel, Euston Road, London.