Let me start my post by asking you a question. If your stock broker offered you an investment that had a 30% chance of making money, would you accept it? Not likely – the likelihood of failure is just too high.
Strangely enough, many Architecture, Engineering and Construction (AEC) firms consider these odds acceptable when it comes to pursuing new work through proposals. On average, only three out of 10 proposals result in work. If my math is correct, that’s about a 30% success rate. And, for many firms unfortunately, their success rate is much lower. Many have grown to accept a success rate of around 10%. Let’s take a moment to quantify that.
Proposals can cost, on average, between $10,000 to $25,000 to prepare and submit. For particularly complex proposals, like P3 or design-build, the cost can run upwards of $100,000 per submission. So, for 10 relatively straight forward proposals, many firms are investing upwards of $250,000 with the hope of winning maybe one or two projects. I don’t like those odds. I think we can do better – much better.
But in order to do so, I think we need to shift our perspective, and challenge some of the deeply held beliefs about how to win work through proposals. I think one of the most important things you can do to increase proposal success is to learn from history – your history.
Back in 1935, Winston Churchill said “Those who fail to learn from history are doomed to repeat it.” So, my question for you is…
Are you learning everything you can from past proposals, successes and disappointments, or are you committing the same mistakes over and over again?
Early I mentioned how many firms are content with a 10% to 30% success rate. However, according to the Professional Services Management Journal (PSMJ), if you aren’t getting shortlisted on 35% – 45 % of your pursuits, you are not being selective enough.
So, how can your proposal history help you be more selective and improve your chances of success?
Why you lost, and won, past pursuits are two critical pieces of information your firm should consistently seek, and store in a way that you can easily access, evaluate and learn from when deciding whether to pursue a new RFP.
Assuming you do not have a sophisticated Customer Relationship Management (CRM) system that is designed to store this kind of information, we recommend developing a simple spreadsheet that stores what you’ve learned from proposal debriefs. As part of your Proposal Go/No Go decision making process, you should be reviewing / analyzing this information.
It’s important that you be able to analyze this data by building type, client, and location – looking for insights on why you’ve won and lost historically, and whether your firm’s competitive situation is any different today. If the data indicates that you keep losing for the same reasons, has anything changed to significantly improve your value proposition and increase your chances of success?
Taking the loss information to heart may just help your firm understand which projects to avoid chasing in the future, and the win information may provide some insights to continue winning – doing both will have a profound impact on your proposal win rate. Thank you Mr. Churchill.