Chapter 3 Proposed Solutions 2

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  • Chapter 3 Proposed Solutions 2

    1. 1. Chapter 3 Proposed Solutions
    2. 2. Learning Objectives <ul><li>Second phase starts when the RFP becomes available and ends when an agreement is reached with a contractor </li></ul><ul><li>Proposal marketing strategies </li></ul><ul><li>Bid/no-bid decision </li></ul><ul><li>Development of a winning proposal </li></ul><ul><ul><li>proposal preparation process and elements that may be included in a proposal </li></ul></ul><ul><ul><li>pricing considerations </li></ul></ul><ul><li>The evaluation of proposals </li></ul><ul><li>Types of contracts between the customer and the contractor </li></ul>2
    3. 3. Real World Example <ul><li>Vignette : KJM & Associates – A project and construction management firm </li></ul><ul><li>Company growing by 30% per year. Has six offices. </li></ul><ul><li>Recent projects – $24 million airport garage project in Spokane and a $6 million Dallas-Fort Worth airport project. </li></ul><ul><li>Project management successes helped Karen J. Mask earn an Outstanding Woman Owned Business Award. </li></ul>4
    4. 4. Real World Example <ul><li>Vignette : Waste Management </li></ul><ul><li>Georgetown, a Texas city, was looking for a private hauler to collect garbage at the city’s 10,506 residential and 433 commercial accounts </li></ul><ul><li>A request for proposal was released and numerous bidders submitted proposals. </li></ul><ul><li>Texas Disposal Systems (TDS) convinced the city of Georgetown that they could provide the best quality, and they won the contract even though they were not the lowest bidder. </li></ul>4
    5. 5. Proposed Solutions <ul><li>In many situations an RFP does not involve soliciting competitive proposals from external contractors, and the second phase of the project life cycle may be completely bypassed. </li></ul>3
    6. 6. Pre-RFP/Proposal Marketing <ul><li>Should not wait until formal RFP solicitations are announced before starting to develop proposals </li></ul><ul><li>Develop relationships with potential customers </li></ul><ul><li>Maintain frequent contacts with past and current customers </li></ul>5
    7. 7. Pre-RFP/Proposal Marketing (Cont.) <ul><li>Be familiar with a customer’s needs and requirements </li></ul><ul><li>Consider this marketing or business development; no cost to the customer </li></ul><ul><li>May prepare an unsolicited proposal </li></ul><ul><li>Efforts are crucial to the foundation for winning a contract </li></ul>6
    8. 8. Bid/No-Bid Decision <ul><li>Factors to consider: </li></ul><ul><ul><li>competition </li></ul></ul><ul><ul><li>risk </li></ul></ul><ul><ul><li>mission </li></ul></ul><ul><ul><li>extension of capabilities </li></ul></ul><ul><ul><li>reputation </li></ul></ul><ul><ul><li>customer funds </li></ul></ul><ul><ul><li>proposal resources </li></ul></ul><ul><ul><li>project resources </li></ul></ul>7
    9. 9. Bid/No-Bid Decision (Cont.) <ul><ul><li>Be realistic about probability of winning the contract </li></ul></ul><ul><ul><li>A lot of non-winning proposals can hurt a contractor’s reputation </li></ul></ul>8
    10. 10. Developing a Winning Proposal <ul><li>A selling document – not a technical report </li></ul><ul><li>Convince the customer that you are the best one to solve the problem </li></ul><ul><li>Highlight the unique factors that differentiate you from competing contractors </li></ul><ul><li>Emphasize the benefits to the customer </li></ul><ul><li>Write in a simple, concise manner </li></ul><ul><li>Address requirements as laid out in the RFP </li></ul><ul><li>Be realistic in scope, cost, and schedule </li></ul>9
    11. 11. Proposal Preparation <ul><li>Can be a straightforward task performed by one person or a resource-intensive effort requiring a team </li></ul><ul><li>May designate a proposal manager </li></ul><ul><li>Schedule must allow time for review and approval by management </li></ul><ul><li>Can be a few pages or hundreds of pages </li></ul><ul><li>Customers do not pay contractors to prepare proposals </li></ul>10
    12. 12. Proposal Contents <ul><li>Proposals are organized into three sections: </li></ul><ul><li>Technical Section </li></ul><ul><ul><li>understanding of the problem </li></ul></ul><ul><ul><li>proposed approach or solution </li></ul></ul><ul><ul><li>benefits to the customer </li></ul></ul>11
    13. 13. Proposal Contents (Cont.) <ul><li>Management Section </li></ul><ul><ul><li>description of work tasks </li></ul></ul><ul><ul><li>deliverables </li></ul></ul><ul><ul><li>project schedule </li></ul></ul><ul><ul><li>project organization </li></ul></ul><ul><ul><li>related experience </li></ul></ul><ul><ul><li>equipment and facilities </li></ul></ul>12
    14. 14. Proposal Contents (Cont.) <ul><li>Cost Section </li></ul><ul><ul><li>labor </li></ul></ul><ul><ul><li>materials </li></ul></ul><ul><ul><li>subcontractors and consultants </li></ul></ul><ul><ul><li>equipment and facilities rental </li></ul></ul><ul><ul><li>travel </li></ul></ul><ul><ul><li>documentation </li></ul></ul><ul><ul><li>overhead </li></ul></ul><ul><ul><li>escalation </li></ul></ul><ul><ul><li>contingency or management reserve </li></ul></ul><ul><ul><li>fee or profit </li></ul></ul>13
    15. 15. Pricing Considerations <ul><li>Be careful not to overprice or underprice the proposed project </li></ul><ul><li>Consider: </li></ul><ul><ul><li>reliability of the cost estimates </li></ul></ul><ul><ul><li>risk </li></ul></ul><ul><ul><li>value of the project to the contractor </li></ul></ul><ul><ul><li>customer’s budget </li></ul></ul><ul><ul><li>competition </li></ul></ul>14
    16. 16. Proposal Submission and Follow-Up <ul><li>Submit proposals on time </li></ul><ul><li>Hand deliver expensive proposals or send 2 sets by different express mail services, if necessary </li></ul><ul><li>Continue to be proactive even after submission </li></ul>15
    17. 17. Customer Evaluation of Proposals <ul><li>Some look at the prices and select only from the three lowest-priced proposals </li></ul><ul><li>Some screen out prices above budget or whose technical section doesn’t meet all the requirements </li></ul><ul><li>Some create a proposal review team that uses a scorecard </li></ul><ul><li>May submit a best and final offer (BAFO) </li></ul>16
    18. 18. Customer Evaluation of Proposals (Cont.) <ul><li>Criteria that might be used in evaluating: </li></ul><ul><ul><li>compliance with SOW </li></ul></ul><ul><ul><li>understanding of the problem or need </li></ul></ul><ul><ul><li>soundness of the proposed approach </li></ul></ul><ul><ul><li>contractor’s experience and past success </li></ul></ul><ul><ul><li>experience of key individuals </li></ul></ul><ul><ul><li>management capability </li></ul></ul><ul><ul><li>realism of the schedule </li></ul></ul><ul><ul><li>price – reasonableness, realism, and completeness </li></ul></ul>17
    19. 19. <ul><li>A contract is: </li></ul><ul><li>A vehicle for establishing customer-contractor communications and arriving at a mutual understanding and clear expectations </li></ul><ul><li>An agreement between the contractor, who agrees to provide a product or service, and the customer, who agrees to pay </li></ul><ul><li>Must clearly spell out the deliverables </li></ul><ul><li>Two types of contracts: fixed price and cost reimbursement </li></ul>Types of Contracts 18
    20. 20. Types of Contracts (Cont.) <ul><li>Fixed-price contract </li></ul><ul><li>Price remains fixed unless the customer and contractor agree </li></ul><ul><li>Provides low risk for the customer </li></ul><ul><li>Provides high risk for the contractor </li></ul><ul><li>Is most appropriate for projects that are well defined and entail little risk </li></ul>19
    21. 21. Types of Contracts (Cont.) <ul><li>Cost-reimbursement contract </li></ul><ul><li>Provides high risk for the customer </li></ul><ul><li>Provides low risk for the contractor </li></ul><ul><li>Is most appropriate for projects that involve risk </li></ul><ul><li>Customer usually requires that the contractor regularly compare actual expenditures with the proposed budget and reforecast cost-at-completion </li></ul>20
    22. 22. Contract Provisions <ul><li>Miscellaneous provisions that may be included in project contracts: </li></ul><ul><ul><li>Misrepresentation of costs </li></ul></ul><ul><ul><li>Notice of cost overruns or schedule delays </li></ul></ul><ul><ul><li>Approval of subcontractor </li></ul></ul><ul><ul><li>Customer-furnished equipment or information </li></ul></ul><ul><ul><li>Patents </li></ul></ul>21
    23. 23. Contract Provisions (Cont.) <ul><ul><li>Disclosure of proprietary information </li></ul></ul><ul><ul><li>International considerations </li></ul></ul><ul><ul><li>Termination </li></ul></ul><ul><ul><li>Terms of payment </li></ul></ul><ul><ul><li>Bonus/penalty payments </li></ul></ul><ul><ul><li>Changes </li></ul></ul>22

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