1. Chapter 3 Proposed Solutions1 1

2. Learning Objectives
Second phase starts when the RFP becomes available and ends when an agreement is reached with a contractor
Proposal marketing strategies
Bid/no-bid decision
Development of a winning proposal
proposal preparation process and elements that may be included in a proposal
pricing considerations
The evaluation of proposals
Types of contracts between the customer and the contractor 2 2 2

3. Real World Example
Vignette: KJM & Associates – A project and construction management firm
Company growing by 30% per year. Has six offices.
Recent projects – $24 million airport garage project in Spokane and a $6 million Dallas-Fort Worth airport project.
Project management successes helped Karen J. Mask earn an Outstanding Woman Owned Business Award. 4 4 4

4. Real World Example Vignette: Waste Management
Georgetown, a Texas city, was looking for a private hauler to collect garbage at the city’s 10,506 residential and 433 commercial accounts
A request for proposal was released and numerous bidders submitted proposals.
Texas Disposal Systems (TDS) convinced the city of Georgetown that they could provide the best quality, and they won the contract even though they were not the lowest bidder. 4 4 4

5. Proposed Solutions
In many situations an RFP does not involve soliciting competitive proposals from external contractors, and the second phase of the project life cycle may be completely bypassed. 3 3 3

6. Pre-RFP/Proposal Marketing
Should not wait until formal RFP solicitations are announced before starting to develop proposals
Develop relationships with potential customers
Maintain frequent contacts with past and current customers 5 7 5

7. Pre-RFP/Proposal Marketing (Cont.)
Be familiar with a customer’s needs and requirements
Consider this marketing or business development; no cost to the customer
May prepare an unsolicited proposal
Efforts are crucial to the foundation for winning a contract 6 8 6

8. Bid/No-Bid Decision Factors to consider: competition risk mission
extension of capabilities
reputation
customer funds
proposal resources
project resources 7 11 7

9. Bid/No-Bid Decision (Cont.)
Be realistic about probability of winning the contract
A lot of non-winning proposals can hurt a contractor’s reputation 8 14 8

10. Developing a Winning Proposal
A selling document – not a technical report
Convince the customer that you are the best one to solve the problem
Highlight the unique factors that differentiate you from competing contractors
Emphasize the benefits to the customer
Write in a simple, concise manner
Address requirements as laid out in the RFP
Be realistic in scope, cost, and schedule 9 16 9

11. Proposal Preparation
Can be a straightforward task performed by one person or a resource-intensive effort requiring a team
May designate a proposal manager
Schedule must allow time for review and approval by management
Can be a few pages or hundreds of pages
Customers do not pay contractors to prepare proposals 10 17 10

12. Proposal Contents Proposals are organized into three sections:
Technical Section
understanding of the problem
proposed approach or solution
benefits to the customer 11 18 11

13. Proposal Contents (Cont.)
Management Section
description of work tasks
deliverables
project schedule
project organization
related experience
equipment and facilities 12 19 12

14. Proposal Contents (Cont.)
Cost Section
labor
materials
subcontractors and consultants
equipment and facilities rental
travel
documentation
overhead
escalation
contingency or management reserve
fee or profit 13 22 13

15. Pricing Considerations
Be careful not to overprice or underprice the proposed project
Consider:
reliability of the cost estimates
risk
value of the project to the contractor
customer’s budget
competition 14 25 14

16. Proposal Submission and Follow-Up
Submit proposals on time
Hand deliver expensive proposals or send 2 sets by different express mail services, if necessary
Continue to be proactive even after submission 15 28 15

17. Customer Evaluation of Proposals
Some look at the prices and select only from the three lowest-priced proposals
Some screen out prices above budget or whose technical section doesn’t meet all the requirements
Some create a proposal review team that uses a scorecard
May submit a best and final offer (BAFO) 16 29 16

18. Customer Evaluation of Proposals (Cont.)
Criteria that might be used in evaluating:
compliance with SOW
understanding of the problem or need
soundness of the proposed approach
contractor’s experience and past success
experience of key individuals
management capability
realism of the schedule
price – reasonableness, realism, and completeness 17 30 17

19. Types of Contracts A contract is:
A vehicle for establishing customer-contractor communications and arriving at a mutual understanding and clear expectations
An agreement between the contractor, who agrees to provide a product or service, and the customer, who agrees to pay
Must clearly spell out the deliverables
Two types of contracts: fixed price and cost reimbursement 18 34 18

20. Types of Contracts (Cont.)
Fixed-price contract
Price remains fixed unless the customer and contractor agree
Provides low risk for the customer
Provides high risk for the contractor
Is most appropriate for projects that are well defined and entail little risk 19 35 19

21. Types of Contracts (Cont.)
Cost-reimbursement contract
Provides high risk for the customer
Provides low risk for the contractor
Is most appropriate for projects that involve risk
Customer usually requires that the contractor regularly compare actual expenditures with the proposed budget and reforecast cost-at-completion 20 37 20

22. Contract Provisions
Miscellaneous provisions that may be included in project contracts:
Misrepresentation of costs
Notice of cost overruns or schedule delays
Approval of subcontractor
Customer-furnished equipment or information
Patents 21 39 21

23. Contract Provisions (Cont.)
Disclosure of proprietary information
International considerations
Termination
Terms of payment
Bonus/penalty payments
Changes 22 41 22