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Seven Key Formula for Winning Cost Proposals

In a highly competitive environment with tight budget constraints, your cost proposal solution needs to be not only relevant, but also responsive, competitive and persuasive.

In terms of cost, it is almost impossible to have an impact on the technical proposal. But you can follow seven fundamentals that will go a long way toward making your final proposal a successful cost-effective proposal as well.

1. Obtain and use current customer information – know the market factors that drive prices.

Knowing what your customer is is the first step. You’re just making assumptions about customers without knowing their previous purchase history, their budget pressures, authorized program funds, discounts for program support, customer service, and reservations as well as their independent cost estimates and whether they’re cost effective or performance oriented. not You must acquire your intelligence ethically.

2. Know what your company does for business.

We’ve heard many times from many companies that they can’t find out what the job entails until the final RFP comes out. That’s hogwash. With a draft RFP you can get a quick estimate of what your cost of doing the work will be. Without an RFP proposal you should have enough intelligence about the purchase to estimate what it will cost you – even if it’s a rough estimate. Remember that this is not an exact science and the closer you get to the actual RFP the more accurate you will be. Knowing the cost early will help you get creative in the next step. If you wait until the last RFP comes out, you’re too late to make a creative difference in your pricing (as distinct from cost) because you’re too busy to guess what the actual costs are. With early knowledge about your expenses, you can make many creative choices for success.

3. Know what your competitors’ costs are to do the same business.

Without competitive information, you’re just guessing what it takes to win. This information is readily available through GSA Advantage, Internet searches, FOIA requests, and subscription search services such as EZGovOpps and GovWin. Find out who your competitors’ friends are and how they will fare by looking at past wins by your competition and their friends. Gather intelligence about the company’s investments they will make in the project and what their possible approaches are to the request. Using your competitors’ small hoops to get a lower price, such as changing workplaces to achieve a lower base, introducing advanced productivity tools, greening employees. Companies tend to do the same things over time. You also need to consider whether your competitors are dominant or not. Executives tend to take fewer risks and think less ‘outside the box’.

4. Provide a well-designed work breakdown structure (WBS) that links to the performance work statement and is supported by a baseline of estimates.

We believe that without a WBS to estimate the work described in the performance work statement or statement of work, you cannot adequately consider all the elements related to performance. You may leave some items out or potentially double up on your estimates. We often find that a three-level WBS is sufficient for estimating work. Additionally, we find that contractors often estimate at all levels of the WBS, not just the third level, causing confusion and estimating incorrectly. When you develop this level of detail, it’s easier to see where you can adjust, cut, or increase your expenses.

5. Actively define your company’s investments in the project you are applying for.

Corporate investments are things your company does to increase project performance or efficiency (training, recruiting, transportation), investments in property, plant, and equipment, and project-specific depreciation by the company in indirect rates. All these types of investments are held by the company and are not refundable items by the Government.

6. A company that is easy to do business with.

Give them what they want and more. The company that wins is the company that simplifies the evaluation, presents the data (technical and cost) in an organized systematic manner, and presents the data in both written and electronic forms. Even if the RFP does not require electronic format, submit it to the government. Keep all the formulas so that the evaluator can easily follow your thought processes. Remember, the firm that provides them with a written and electronic version that they can follow is more likely to score points with the reviewers.

7. Be cost competitive and creative about it.

If you have completed all the remaining steps before this, this step is the easiest (really). This means you sharpen your pen and your mind on labor rates, employee greening, reducing redundancy, competitive pay structures, indirect and new competitive rates, direct offers when possible, and company investments.

All these details aside, there must be a visible unity of purpose and thought among all the elements of the proposal. Simply put, you cannot describe anything in the technical or management proposal that is not recognized in the cost. Many (perhaps most) recommendations are very difficult to follow from one volume to another. However it may seem, there should always be a known relationship between elements, even if you have to create it for yourself.

Most projects or products, either implicitly or explicitly, have a work breakdown structure. For projects it is usually something like a statement of work structure. For products it may look like a feature. However, it does happen and although it is difficult to agree on its characteristics, there is such a separation. The most suitable match for connecting different volumes is this partition.

There is no specific rule in the solicitation, this allocation will create a reasonable, easy to explain and important relationship between the technical proposals and the cost. “But the customer didn’t ask us to do it,” you say. Yes, you may be right, but you don’t want to win. Customers want to buy from companies that are easy to do business with. A great way to start cementing that influence might just be to make your offer easier for the competition to understand. “But it’s a lot of work to do these kinds of assessments,” you might say. Do you want to win?

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