Choosing the Right Tenders: When a Bid is Worthwhile for Your Company

A tender promises additional revenue. At the same time, it requires calculations, evidence, an implementation concept, and coordination with multiple stakeholders. Often, work on the bid begins before it has been determined whether the company can fulfill the contract profitably and reliably at all.

A structured decision on whether to participate starts earlier. It answers the question: Is this opportunity right for our company – and can we create a viable bid under the specified conditions?

The following process describes a business and organizational preliminary review. The practical examples are fictitious. Specific procurement or contract law issues must be assessed separately.

1. First, understand the contract

The visible contract value is only one part of the decision. The scope of services, locations, duration, and implementation requirements are equally important.

A compact overview is sufficient for the initial review: What services are to be provided? Where and when? What quantities are specified? What evidence is required? What questions remain unanswered?

Facts and assumptions should be kept separate. An explicitly stated area is a different basis for calculation than an area estimated from plans. A possible contract extension should not be treated as a secured term already.

The preliminary review is intended to make such connections visible before a seemingly simple contract ties up extensive processing time.

2. Identify unfulfillable requirements early

Some requirements cannot be solved by better calculation. If necessary capacity, qualifications, or reliable implementation options are lacking, this must be addressed before detailed work begins.

An open question needs a responsible person and a deadline for clarification. Otherwise, it remains an unassessed risk until the bid is submitted.

With formal requirements, it is important to distinguish carefully between what the documents actually require and what is merely assumed internally. Whether missing information may be supplemented or what the consequences of a deviation are is not purely a commercial decision.

3. Think through the implementation before the contract is awarded

A contract does not become demanding only on the first day of service. Recruitment, deployment planning, material procurement, training, and customer coordination require lead time.

Therefore, an initial implementation review is part of the decision to participate. Who could take over the operational responsibility? What resources are already available? What else needs to be procured or organized?

Participation can still make sense if this bottleneck can be demonstrably resolved. The mere hope that someone will be found after the contract is awarded, however, is not a reliable basis for planning.

4. Assess the effort required to prepare the bid

Processing a tender also costs money. Calculation, site visits, concept work, and internal review consume working time that is unavailable for other tasks.

A simple calculation example makes the scale visible:

Based on an assumed internal full cost rate of 80 euros per hour, this calculates to 2,080 euros in processing costs. Travel expenses and external services would have to be considered in addition.

These figures are purely illustrative assumptions. For their own decision, companies should use their actual processing times and internal costs. The internal cost rate is not equivalent to a customer hourly rate.

5. Check profitability with reliable assumptions

An initial calculation does not yet have to conclusively model every individual item. However, it should show which cost blocks determine the contract and which uncertainties can change the result.

Operating personnel costs, coverage costs, materials, equipment, site management, and start-up costs should be considered, for example. Payment terms and necessary preliminary services should also be considered.

Practical example: A contract promises 240,000 euros in annual revenue. In a simplified internal review, this is offset by 224,000 euros in contract-related costs. This leaves 16,000 euros before other costs not yet considered.

If the assumed contract-related costs increase by five percent in the scenario, this cost block increases by 11,200 euros. The remaining amount drops to 4,800 euros. The example is not a forecast or a return recommendation. It shows how sensitive a seemingly sufficient calculation can be to changed assumptions.

For the decision to participate, it is therefore important which uncertainties are still open and whether they can be sufficiently clarified before submission.

6. Assess chances objectively

The chance of winning a contract can rarely be precisely predicted. Nevertheless, companies can check whether they have a plausible competitive position.

This includes suitable references, experience with comparable tasks, available resources and a concept that addresses the requirements. The deciding factor is whether your own advantage can be recognized within the intended evaluation framework at all.

A general company profile does not replace an answer to the specific task. Those who highlight particular implementation strength should, for example, be able to explain how training, coverage, and quality monitoring are to be organized.

Unsubstantiated probabilities such as "We will definitely win this contract" do not belong in the basis for the decision. Better is a brief justification with recognizable strengths and open points.

7. Consciously approve participation

The decision should be made by the functions that will later take responsibility. Depending on the company size, this is sales, operations, and those responsible for commercial matters.

A compact approval records:

• what scope of services the company wants to offer;
• what essential assumptions the calculation is based on;
• what open points still need to be clarified;
• who is responsible for processing and review;
• how much effort is allocated for the bid.

The result can be participation, further review, or rejection. The important thing is that the decision remains reasoned and comprehensible.

A rejection can be economically reasonable if the contract does not fit the available organization. Conversely, a demanding process should not be rejected solely because the processing is time-consuming. The deciding factor is the ratio of effort, realistic positioning and viable implementation.