Q&A: Writing a winning bid in the current mining economy
Writing a bid for a tender is always a time-consuming and costly business. In the current mining economy, it's not a process most companies can enter into lightly. Therefore, Austmine decided to catch up with member company, BidWrite, and their Director and Co-Founder, David Lunn, on what it takes to write a winning bid.
Who is the best person within a business to be involved in writing a bid? What does the dream bid team look like?
A ‘dream’ bid team for a substantial METS sector tendering opportunity must include the following seven competencies:
Account Management: This role is vital to ensuring key prospect issues, concerns and insights are introduced into the bid win theming and key messaging activity. This role is usually performed by a business development or sales person. Without this input the bid will be devoid of client insight and proposition clarity; essential for persuading the prospect to select your organisation.
Bid Management: The Bid Manager is accountable for the bid and manages bid planning, resourcing, day-to-day progress and budget and assures overall bid output quality. This role also deals with all bid team stakeholders including external relationships (JV partners, advisers, consultants etc) as well as all internal relationships – especially bid reviewers and ‘upwards’ management. Importantly, a Project Manager will not necessarily be a good Bid Manager – because of the many different pressures, influencers and constraints bidding introduces.
Analytical/Estimator experts are essential to establishing bid prices, margins, key commercial assumptions and risks and, increasingly, bid options and alternatives to offer better value and choice.
Subject Matter Experts (SMEs): SMEs provide core bid content. Examples include health and safety, engineering, operations, environment, etc. In most instances the SME has a functional ‘day job’ and contributes to bids as needed. This creates issues because busy SMEs are asked to contribute key tender content, often without much notice, on top of everything else they do.
Writing: Specialized persuasive and technical writing is used to edit existing or develop new compliant and compelling bid content. Writers tend to work closely with SMEs.
Bid Coordination: The Bid Coordinators are bid software experts and are responsible for collating bid content and formatting the content consistent with agreed style and branding requirements. They also work with the Bid Manager to keep bids on schedule.
Graphics and Production Support: Bids must be visually appealing and produced/ packaged in accordance with specified requirements. Well-designed graphics, images and diagrams are essential for persuasive bids. This function works closely with writers, coordinator and the Bid Manager to ensure overall bid cohesiveness and consistency.
How big is the ‘dream’ bid team? Wise bidders work out the investment needed to deliver their sales targets. This will then dictate how many people are involved in the bidding function and the extent to which bidding competencies are shared amongst a wider pool of staff members, resident in a select few, or outsourced.
What is the most important piece of advice you would give to anyone writing a bid for a mining contract in the current market climate?
The four principles of winning bids never change and are relevant irrespective of industry or market condition. The four principles include:
• Positioning - knowing the prospect and its key opportunity specific issues, having them know you and being front of mind before a bid is called.
• Compliance - ensuring all bid invitation requirements are met.
• Persuasion - articulating your proposition and clearly setting your bid apart from your competitors.
• Price – being ‘in the ball park’ and demonstrating a clear economic case.
What changes from bid to bid, industry to industry, or market to market is the relative importance of these four key factors.
Clearly in the current METS sector, with falling commodity prices, owners are scaling back growth projects and focusing on reducing input costs. This contrasts with a few years ago when security and continuity of supply were arguably more important than tendered prices.
But is it really all about price right now? Are resource owners suddenly not interested in supply security? Perhaps sustainable total cost improvements and production growth are really what is important? Or maybe owners have adopted a different attitude to risk and are adjusting their supply chains accordingly?
So in this market climate, just like any other market climate, the key to bidding success is positioning; really understanding what your client/prospect needs and mounting a case as to why your organization can meet these needs better than your competitors. It is, and always has been, as straightforward as that.
How difficult is it to make your bid stand out against others? How often in this mining market does it come down to differentiating on price?
In most markets (METS sector as well) competing organizations offer very similar goods and services, make the same types of claims and articulate very similar propositions. What business doesn’t offer high quality, great safety, excellent reliability and first rate value for money?
So it is hard to make your bids stand out. And when you don’t make them stand out, and neither do your competitors, the only things left for a prospect to make a sourcing decision are commercial – price, terms etc.
Interestingly even though competitors may seem similar from afar, up close they look and feel distinctly different. The job of a well-functioning sales process, bookended by a first class bidding function, is to show how these points of difference manifest as greater client benefit. Tendering and bidding is often ‘a game of inches’ – sometimes you just need to be assessed as a bit better in a few criteria to offer the best overall deal.
The simple reality is that extremely well positioned competitors can be let down by a poor bid. This is because bids are the objective base upon which buying decisions are most often assessed. Conversely, a less well positioned competitor might win if it produces a superbly articulated proposition grounded in fact.
The bottom line is that bids are always important and businesses that think price is the only thing that makes a bid stand out, even in the current market, do so at their peril.
Where typically in mining contracts are the highest risk areas, where you see most bids fall down?
Every bidding opportunity is unique. Even if the prospect is well known to the bidder, or it is a re-compete for the same goods or service supply, the market context, individual’s involved and competitive environment will likely be different.
This means that the factors important to the prospect are opportunity unique. Therefore the overall value for money judgment will be unique.
Bids fall down when they do not address this ‘uniqueness’. They fail to convince the prospect that the bidder offers best value for money, out of the competitive choices available, for that particular opportunity.
This usually happens because the bidder does not:
• understand what is important to the prospect,
• properly appreciate its competitors, and/or
• tailor the bid to specifically accommodate these factors.
On the flip side, many bidders understand very well what prospects want and can judge very accurately what their competitors will do.
So in some respects knowing how to ‘win’ a contract isn’t so much the issue – the more concerning matter is being able to deliver the contract and enjoy a reasonable return at the same time.
The major contract risk therefore becomes one of delivery; can the bidder actually do the job? Is the offer sustainable? If I am a bidder how can I prove to my prospect this is the case?
In the current soft METS sector we are all aware that aggressive pricing tactics are being used by contractors and suppliers to win work. Some might argue that owners are actively facilitating this.
If cash flow is well managed these short run tactics work.
But most observers also recognize these types of predatory tactics are finite.
Wise METS sector bidders are therefore connecting their offers to both short and longer term prospect benefits; presenting options, choice, alternatives and fully dimensioning prospect risk and reward.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”