I Hate to Bid II

Why do I hate to bid? In a previous post, I bared my inner feelings and said that I felt it implied a lack of respect for us as engineers. There are other reasons. Let me tell you a story.

Some time back we provided a bid for the engineering on a large project to a client. The bid package itself from the client was very well done. It provided a detailed and complete scope of work, along with exactly defined deliverables and schedules. We were bidding against only two other companies. The facility in question was nearly identical to another facility that we had designed in the past year.

While the individual project manager for the client was new to us, we had a long and successful track record with the client. Given all these things, we thought we knew with a high degree of precision the manhours necessary to complete this project. And so we entered our bid with a fair degree of optimism.

We received word sometime later that we had been unsuccessful and that another company had been selected for the bid. We made our usual attempt to gain information from the client about the bid, i.e. how high were we, where did our bid fall short, etc? As usual, the client would not reveal anything, even the identity of the winning bidder. This is pretty standard procedure for all clients. God forbid that we learn anything that might help us do a better job on a bid for that client in the future. It seems to me that most clients think engineering companies major decision in a bid is to determine whether we want a 600% profit margin or are willing to live with a 500% margin.

As is the case in such situations, we went on to other things. In our disappointment at losing the bid we simply voiced the platitudes we always use. These are generally to the effect that "the client did not appreciate our special expertise" or that "the competitor had bought the job".

A few months later, a chance encounter allowed a visit with the client project manager. In the course of the conversation, the client project manager opened up with a rare degree of candor and openness about ForeRunner's bid and his selection process. I applaud and salute him for speaking to us about the issue.

It turned out that we had submitted a bid with the lowest price. On the basis of lowest price and manhours, we were the clear winner. But in fact, we had come in third out of 3 bidders. We came in last. The client had made his selection based on a matrix of different factors. Ratings in each of the catagories in the matrix were based on "soft" criteria, that is a score based on subjective feelings.

As it happens, the client project manager is an experienced professional with good judgement. I would use subjective criteria myself to select an engineering contractor. But we did spend some $ 20,000 to put together a bid. Instead, we participated in a beauty contest.

To pursue the metaphor further, a bidding situation can be compared to a poker game. It is a game with its own set of rules. A beauty contest is a different game with a different set of rules. It is hard to play the game when we don't know what the rules are.