You're in a competitive bidding situation for a new project contract.
The buyer-customer calls for BAFO submission (Best and Final Offer)
What's you game plan and BAFO strategy to be?
Game Theory
You could fall back to game theory ideas:
- You can't cooperate with your competition, so you are adversaries
- You and your competitor both view the situation as zero-sum; there's not a win-win compromise solution
- Everyone has about the same tools to manipulate (Cost, Schedule, Scope)
- You may have some intelligence regarding customer's expectation of what is a winning BAFO strategy re cost, schedule, and scope.
- You may have some intelligence about the bidding history at BAFO of your competitors.
- Everyone has the same timeframe-- there is only one due date for the BAFO.
- The game is fundamentally unstable: You're seeking maximum optimization, not some sub-optimum stability point with your competitor (assuming the customer is only going to make one winning award, which is not always the case)
Making it to BAFO in the first place
If you've made to the BAFO, then you've made the cut on minimally acceptable cost, schedule, and scope.
If you're bidding to a government agency, you've also made the cut on past performance, financial strength, and regulatory compliance.
If you've got subcontractors and specialty SMEs then that cast has made the cut with you.
Do's and Don'ts
- Do read carefully the invitation to submit a BAFO. The bias of the customer may well be exposed in the wording of the invitation.
- Don't bait and switch at BAFO key personnel, labor mix, or technical approach unless you can point to specifics from the customer's feedback to you that suggests that such cuts would be welcomed.
- Do offer a bottom line discount to price if you're bidding fixed price, but
- Don't jiggle labor rates, labor mix, and labor participation unless you can point to customer comments that justify such. You should anticipate there will be change orders and you will not want rates, mix, and participation to be compromised for the future opportunity.
- Do wiggle the schedule if there are productivity improvements you can point to down the line
- Do rearchitect the schedule to remove constraints and improve probability of success on the critical path. Justify this with analysis you've done since the initial submission.
- Do take advantage of any independent R&D that will feed into the project.
- Don't do anything unilaterally that will damage your credibility in the eyes of the customer. Unsupported changes are often viewed as unworthy business practices and new risk.
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