Despite the present circumstances with COVID-19, projects are still being discussed, bids still need to go in & we are still seeing demand for tender support.
However, all too often we are called in to review projects that are financially in a difficult position.
Issues tend to start with the 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 suggestions to help avoid this situation:
- Tender rates should reflect the works, site conditions, programme, risk etc. every construction project is different;
- If you’re constantly losing bids – review & improve your own processes to improve your competitiveness – don’t slash prices;
- Use profit improvement plans but be honest & realistic in their potential;
- Undertake risk analysis. Identify risks to a project, their profile & costs. If contractors risk are they covered in your bid;
- 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.