All too often we are called in to commercially review projects that are financially in a difficult position.
In a majority of cases the issues start with the submitted bid price. To be ‘competitive’, package prices, prelims & programme are slashed in the hope that these can be made back during construction. This is a recipe for disaster. Wining loss making work rarely ends well.
Below are few simple suggestions to help avoid this situation:
- To be competitive your bid should be based on your best package prices, your most efficient use of prelims & your quickest but most realistic programme. The emphasis here is on ‘your’, how others bid is their business;
- Every bid should make commercial sense, if you’re constantly losing bids – review & improve your own processes to improve your competitiveness;
- Use profit improvement plans but be honest & realistic in their potential;
- Conduct a thorough specific risk analysis. Identify the risks to a project, their risk profile & the costs to mitigate;
- Produce a cash flow forecast to ensure the project is cash-flow positive;
- Make sure you fully understand & have priced the requirements of the tender.