Getting bid writing right is not just about winning projects, it can be the difference between running a successful and profitable business and putting a practice at risk by underestimating the true cost of delivering a job.
Minesh Patel, who made the transition from large practices to set up his own small practice in Digbeth, Birmingham four years ago, will be presenting the dos and don’ts of setting fees and writing bid proposals at Guerrilla Tactics 2023: Agile Practice, which this year focusses on essential business skills for small practitioners.
Here, Minesh suggests five things to consider when you begin these important tasks.
1. To bid or not to bid?
The first decision to take before preparing a fee bid is to decide if it’s worth spending time on. A small practice’s time and resources are limited, so the chances of winning the bid should be weighed up carefully.
Questions to be asked should be: Is the project suitable for the practice and do you have the necessary resources to deliver the scope of the project on the desired timelines? Does it align with your expertise, experience and capabilities? Is it the type of work you’re interested in? Is it the right client and do your values align?
If the answers are yes, then it is a judgement call on the realistic chances of winning, informed by who and how many practices you are likely to be up against.
“Sometimes it is better to say ‘no’ quickly,” says Minesh.
The arguments may be skewed towards taking a chance if there is an opportunity to build a long-term relationship with a valuable new client, he adds.
And if a bid is not successful, the process can be regarded as a useful learning experience for next time.
2. Producing an accurate resource estimate
Arriving at an accurate and true cost for delivering the scope of services and resourcing the project is key to the whole bid writing process.
Costing must factor in practice overhead costs – rent, admin support, software licences, PI insurance and so on, plus an allowance for the amount of time that fee-earners will not be working on projects – to arrive at charge-out rates that will effectively absorb all of the practice’s incidental costs as well as the fee earner’s own salary.
Projects should be broken down into separate work stages and tasks, and provisions made for project complexity, timescales (including inflation) and risks. Cost data from similar past projects, if available, plays an important part in informing the process.
This is not an easy task, stresses Minesh, but if done properly without too many unknowns, the practice should be able to calculate an accurate break-even cost for a project before a profit margin is added.
3. Have a clear agreement in place
The appointment document must define the scope of work to be done as fully as possible to avoid ‘scope creep’ during delivery of the project. A properly scoped document will ensure that both parties are clear on what is expected of them, which will help to manage client expectations.
The appointment document should clearly set out payment terms – when payments fall due. This will help to reduce the possibility of payment disputes later.
4. Keep timesheets
Team members should be responsible for tracking their own time spent on a project across all work stages. Monitoring time sheets will help you to keep an eye on project costs and make sure that work remains within budget. Time sheets need to be particularly accurate when charging on an hourly basis.
Minesh says keeping records of time sheets will help with planning, programming and producing cost estimates for future bids and fee proposals, and will help you to calculate profitability of projects. His practice simply uses spreadsheets for timesheets, though specialist project management software is available that will also do the job.
5. Regular project reviews
Regular reviews of how real times spent on projects compare with times in the resource estimate are essential if the project is to stay on track in relation to costs. Regular monitoring allows you to spot any emerging problems at an early stage and make changes to resourcing if necessary.
Minesh says the most common mistake made by newly-formed small practices when writing bids is to undervalue their work, perhaps through a lack of confidence, and so undercharge for services: “You have to have confidence and remember that the practice is a business, not a hobby”.
He does not apply a standard profit margin to projects, and says he will consider a slightly lower profit margin if he is bidding for a high-profile project that will raise the profile of the practice, or if the project is a new area of work for the practice. Just the winning of such a project can be regarded as having a monetary value in itself, he suggests.
RIBA’s in-person Guerrilla Tactics conference takes place on 7 November 2023, featuring a packed program comprising architects and industry experts like Minesh. You can take advantage of the Early Bird ticket offer, which ends on 18 August 2023. The quickest and cheapest way of securing your space is to purchase a block booking ticket, which grants you access to both the live Guerrilla Tactics 2023 conference day and the on-demand CPD program for a discounted price. Alternatively, you can buy a ticket to just attend the conference.
Thanks to Minesh Patel, Director, Minesh Patel Architects.
Text by Neal Morris. This is a Professional Feature edited by the RIBA Practice team. Send us your feedback and ideas
RIBA Core Curriculum topic: Business, clients and services.
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