The first serious engagement with a new project is typically the proposal (aka bid, quotation or tender). It’s a golden opportunity to set the project up for success. That’s why I want to tell you what to put in a proposal. I want you to think about 3 ways to use the tender to improve your profit margin.
You’ll be working up a proposal no matter what the bid process looks like… Whether you’re on a panel, submitting a competitive tender in response to an RFP, or even if your work is “sole sourced”.
Of course, the proposal is a great way to showcase why you are the best candidate for the job. But it’s not just a marketing brochure spruiking capability statements and swish photographs. It’s also a prime (and often missed) chance for you to set the scene for project risk management. That sets the project up to achieve a great outcome… and sets your up for making a profit.
3 ways you can improve your proposal
1. Take control of the SCOPE
The proposal is where you can control the scope of your services or works. Seasoned blog readers know my thoughts about scope creep: it’s the enemy of profit. If you get your scope right in the proposal, you have set a baseline for negotiating variations and confirming when the client is asking for work that is outside of scope… and, therefore, when you can charge additional fees. Poor variation management is like a drain on your profit. Use the proposal to plug the profit drain right from the start.
If you describe your scope sufficiently (to the extent you can without disclosing your secrets about the margin), it also helps the principal during the tender evaluation process. If your price differs from your competitors, but it’s clear that you’ve considered items that they’ve left out, the principal will get a better understanding of why your proposal delivers better value… even if the dollar amount isn’t the cheapest in the bunch.
2. Include CLARIFICATIONS: Show that you’ve cast a professional and critical eye over the contract
Taking charge of the project contract is an important aspect of project risk management. Sometimes my clients don’t include contract terms or clarifications in their proposal… they’re worried they’ll seem “contractual” or difficult to work with.
But in my experience, principals are much more nervous about proposals that don’t mention the terms of engagement. That’s because it suggests you didn’t even read or think about the contract! Or worse, that you will launch a shopping list of clarifications after you’ve been awarded.
Principals expect you to submit some reasonable departures to help balance the project risk… some friendly negotiation is the way to end up with a robust project contract. It helps manage expectations, so that everyone knows who is doing what, by when, and how much it is going to cost.
3. Attach your own TERMS AND CONDITIONS
If the project is sole sourced and the principal didn’t mention a contract, that doesn’t mean ignorance is bliss. That’s when you should attach a set of reasonable, practical and plain English terms and conditions (preferably drafted by a lawyer) to your proposal, setting the ground rules for how the project will be delivered.
Either way, you want your proposal to be a “contractually binding offer”. That’s a fancy legal way of saying that you should structure your proposal so the client can say “YES! Get started on Monday”, no negotiations required.
Do you need help with what to put in a proposal?
How SoundLegal can help
Tender stage contract review
We can provide you with a tender stage contract review (read about why you need one here). Our review will explain the legal and commercial risks. We’ll present it in a professionally drafted clarification schedule that you can insert straight into your tender.
Professionally drafted terms of business
Drafting Plain English, practical terms of engagement is our bread and butter.
Your business may have muddled along for a few years with a cheap template you bought online or some T&Cs you copied from a competitor… If one of your 2023 goals is investing in a professional document that manages your legal risk in a way that reflects your brand and how you do business, time is ticking. We’re more than halfway through 2023! Get in touch now, and we’ll roll it out quicksmart so you can boost your profit margin for the rest of the year.
We’d love to talk to you about all of your proposal and contract needs. Don’t forget to ask about our new “KICKOFF CONTRACTS PACKAGE” deal, which includes a 60 minute business risk consultation and professionally drafted contract template.
