Bid Duration (graded)

How do you go about defning the proper duration for a bid

procurement? Consider the time that it takes to plan for the
procurement, draft an !" and#or !$, recei%e responses, and make a
decision& 'hat could you do if you needed to fast track this bid
duration?
The period of time from which a customer decides to procure until the actual
contract procurement decision is made may vary onsiderably in terms of
duration from project to project. It will also depend upon the customer's reasons
for procurement, the customer's and the vendor's negotiating fexibility, and the
complexity of the transaction. Each of the stages woould need to be completed
in the bidding process as mentioned below.
!lan for the procurement
"raft an #$I and%or #$! This stage involves the information gathering and
potential rami&cations of underta'ing of the project. (o, this is one of the most
important part of the bidding process.
#eceive responses
)a'e a decision
The length of the time period of the bid contract would eventually depend upon
how much time the customer decides to devote to each one of the above step. *
truncated bid duration would mean cutting corners with respect to due diligence,
vendor selection, and negotiation. The customer should weigh the advantages of
completing the transaction within a certain period against the loss of leverage
and thoroughness that may result from the short period of time. +hile it is
desirable to spend time de&ning re,uirements, performing due diligence,
preparing a comprehensive re,uest for proposal, and negotiating the transaction,
sometimes the customer do need to fast trac' the bid duration depending upon
the criticality of the project. (ome of the way that customer adopts to fast trac'
the bid duration is by s'ipping the re,uest for information -#$I. process as the
customer may have advance 'nowledge of the vendor community or a preferred
vendor.
#eferences/
Textboo'
The proper duration for the bid procurement depends mostly on the si0e of the
outsourcing project and the urgency of it. If you are losing thousands of dollars
per day until the project is complete, the urgency is greater. If it is a huge project
that will ta'e many months or even perhaps years to ma'e the complete
transition, then the drafting may ta'e longer. If the competition is really sti1 and
the monetary gain from the project is ,uite high, the competing companies will
want plenty of time to develop the best o1er, especially when it involves
incentives and bonuses. !erhaps some of these may even re,uire complete
presentations because they are so complex and involved.
$ast trac'ing may be a necessity but you do not want the ,uality of the bid to
su1er for it.
(he bid procurement process can stretch as much as one to two years
in the federal go%ernment, especially on )mega) procurements& *ften
times this is due to the multiple committees, meetings, and layers of
contract administration that a !$, bid selection process must go
through& Can you think of any ways to make the process more e+cient?
The government imposes audit and surveillance re,uirements under the terms
of a contract. Extensive and stringent re,uirements are usually imposed,
however, only on higherpriced contracts. !robably, the bid procurement process
can be made more e2cient specially for lower priced contracts as they can be
exempted under a certain dollar limit from some of the documentation and
reporting re,uirements to the government.
#eferences/
http/%%www.nysscpa.org%cpajournal%3445%645%essentials%p74.htm
*nother way to ma'e the process more e2cient would re,uire that the agencies
increase the transparency of government contracting by disclosing more
information about the contract process. 8y increasing the transparency bidders
would be better understand the process and ma'e better bids. *lso,
transparency could help improve the relations between the government and
bidders who are leery of how the winning bids are selected for many of federal
government's procurements.
+ith technology, the bid procurement process is already much more e2cient
than before. The bid solicitation is now put on the web. Every one is able to
read it. In the past, only if you have a good communication channel, can you
have an access for the information of government9s solicitation. To submit a bid
today, you may send a proposal through email. In the past you have to mail it
that ta'es two to three days. :an we improve the bid procurement process more
e2ciently; <es, we can. Today, web meeting tools are very mature. =owever, I
still don9t see that cross sites conference meetings are widely used online. (ome
managers still prefer to have facetoface meeting that ta'es travel time and
costs more expenses. They thin' facetoface meetings will ma'e people to
have a closer relationship which is probably true. =owever, the travel may not
fully be justi&ed. *nother thing that can be improved on bid procurement
process is to use a good procurement platform online. $or machining and
fabrication industry, www.mfg.com is one of the best&
,sing a short list of pre-appro%ed sellers is one way to eliminate a lot of
the time and e.ort of the bid process& /re there any reasons you can
think of why using a short list is 0*( a good idea? 'hen might you
want to go through the entire bid process?
!re approved vendor is a good idea for simple, well de&ned contract where the
nature of the contract wor'%project wor' is repetitive in nature and procurement
is carried out at a regular interval may be once a year or so. 8ut, for complex
project, it is better to go through the entire bidding process for various reasons/
Technology may be complex and existing preapproved vendors amy claim to
possess the technology but they may not have it or they may not have executed
such project.
It gives a chance to a new vendor to bid on the project and in a way, can bring
in new methods, innovative ways to accomplish or carry out the project
execution
It sometimes ma'e the preapproved vendor complacent and they would ta'e
things for granted that project would be awarded to them. They also might ,uote
higher prices compared to a competitive bid process. >oing through the entire
bid process also brings in new insights and informations about the project
execution, related technology and more experienced people in the bidding
process%project.
* short list should be used when the project is familiar to the customer and has
been done before. 8y using a preferred vendor every time to do similar wor', you
are gaurunteed a similar result as the previous jobs.
*nother issue that I would bring up would be the lac' of innovation or the
hinderance of new ideas would be a direct cause of using a shortlist. 8y using
the same vendors time and time again you are getting the same result. Though
the result might be exactly what your loo'ing for, you limit the opportunity for
new ideas and new methods to come into the fold and possibly deliver a better
result or more e2cent result.
+hy using a short list of approved sellers may not be a good idea for the
following reasons/
? (ellers may become too complacent and ta'e more ris' which could
reduce the ,uality of the project.
? @ess competition may only favor the seller and not the buyer and
sometimes lead to higher cost.
? #is' ma'ing a bias decision because of long time trust.
? #is' losing out on new ideas and perhaps new technology from other
sellers.
+ill prefer to go through the entire bid process when you have a long time to
start and complete the project, or when it is a new project that none of your
short list sellers may have any prior experience.
+hen you use a vendor on a short list, you may run into some problems. If you
have only two vendors on the list, both of them may give you high price bid. If
your project need to start in a couple wee's and the bids are out of budgeted
range, your need to start another run of bidding process that may delay the
project for another few wee's. If you have a good si0e project, you may want to
go through the entire bid process from the beginning. The rule of thumb is to
have three bidders at least.
"t is said that the pro1ect manager is a %ital part of the pro1ect
procurement process& Howe%er, the bid duration stretches o%er weeks,
months, and e%en years& During that time, the pro1ect manager is not
)managing) the pro1ect on a day to day basis& 'hat else is the pro1ect
manager doing? "f he#she is assigned to manage another task, how can
they de%ote enough time and energy to the bid process for this new
contract?
In as much as we may want to believe that the project manager plays a vital
role in procurement process, which I believe he should have a minimum role. I
will say that the !) should let the contract manager assume a bigger role in the
process since it involves legal, compliance, and other long term processes.
=owever, during the bidding process the !) could use his time to develop and
de&ne the schedule, resources, deliverables, holding meetings to discuss in
detail the project scope, while also putting his prospective team together.
The 8id process should not be managed by the project manager. (ome
companies may use a bid manager. =owever, the !) should always 'now what is
happening with the process and must be able to multitas'. 8esides, the !) also
has a team where he could designate someone else to perform other tas's while
he prepares for the new contract.
Time allocation for a project manager is sometimes very challenging. It may
ta'e a project manager A44B of his%her time for two to four wee's in preparing a
project proposal for a bid. =e or she may or may not get the project funded after
all. +hile the project manager is waiting for the bidding result, he%she may be
wor'ing on another tas'%project. If the new project does get funded, the project
manager will run two or more projects at the same time which is sometime
challenging.
I have seen a few project managers only handle one project. +hen the project
was &nished, he was out of job, too. I also have seen a few project managers
who handled two or more mid to large si0e projects. =e had grown more gray
hairs in one year than anyone around him. In my opinion, it is the best for a
project manager to handle one mid to large si0e project and one small si0e
project. To the individual it is job security. To the company, it is more e2cient
that way in using human resources.
"uring the bid process, a prebid wal'through is conducted by the !roject
)anager, during which all bidders see the site and as' ,uestions relative to
scope, means and methods re,uired to estimate the construction. "uring the
ensuing bid period, the project manager and consulting team -architect and
engineer. answer ,uestions raised by the bidders, ma'ing sure all bidders are
aware of all ,uestions as'ed and answered. !roject manager is also trying to
undstand the project ris's, dependencies during this period. *lso, if the project is
complex and big, he has to accompany contract administrator for interacting and
having discussion with various other sta'eholders to answer all project related
,ueries.
#eferences/
http/%%redaf.med.nyu.edu%planningprojectdevelopment%projectimplementation
'hat are the factors are largely determined in negotiations in a B$*
agreement?
The C factors of concerned in negotiating a 8!D agreement are/
A. The underlying objectives of each of the parties.
3. The scope of services being outsourced.
C. The relative bargaining positions of the parties.
8!D agreement is largely determined by three basic factors/
A.The underlying objectives of each of the parties
3.The scope of services being outsourced
C.The relative bargaining positions of the parties.
#eference/
Textboo'
"n contract negotiation, should the pro1ect manager or the contract
manager be the leader in negotiation process?
The project manager has a speciali0ed 'nowledge about projects. +hen it comes
down to contract writing and contract negotiation, the contract manager should
ta'e a lead. :hoosing a lawyer may even be better because he%she has
'nowledge of business laws and terminology that can be e1ectively put down the
contract and protect the company.
"s it critical to ha%e a contract negotiation strategy in a B$* process?
$or a 8!D process, it is critical that a contract negotiation strategy is developed
and documented. It needs to identify outcomes by classifying them as essential,
highly desirable and desirable. The methodology for conducting negotiations
and the structure of the contract negotiation team needs to be determined. =igh
level objectives over and above the immediate contract need to be clearly
identi&ed. $or example, *8: wanting to gain entry into a certain mar'et. This
will identify whether *8: is prepared to accept less favorable conditions than if
the contract was stand alone.
The negotiation strategy should loo' at issues such as what occurs in the event
of negotiations stalling or other factors occur. * fow chart of contract
negotiation processes and outcomes can be a useful way of mapping the
strategy to achieve the desired or alternate outcome.
'hat is a contract? / contract is a document that describes a
relationship between two parties, such as a buyer and seller, that is
defned by an agreement about their respecti%e rights and
responsibilities& / process of issuing a contract take the following
steps2
3 4olicitation and /mendments (!$)
3 $re-Bid Conference
3 $roposal
3 $roposal e%iew ((echnical and Cost $roposals)
3 5erifcation#0egotiation
3 Best and !inal *.er
3 6ore 0egotiation if needed
3 /cceptance
(he ob1ecti%es of contract negotiation are2
(o achie%e a framework that facilitates the work&
(o arri%e at a mutually-acceptable agreement&
(o set a positi%e tone for the on-going seller#buyer relationship&
(o negotiate a contract that is consistent with the buyer7s policies and
procedures&
emember2 a contract is a 8binding9 agreement and both buyer and
seller ha%e a legal obligation to perform&