Many of our clients invest substantial time and money into developing proposals, both for public- and private-sector work. Losing a bid obviously can be devastating to profit and morale. When it comes to most large investments, companies go to great lengths to preserve their worth and payoff. Yet when it comes to losing bids, people are usually scrambling to chase the next RFP opportunity. There certainly may be some kind of debrief and commitment to act upon lessons learned, but often much of it is based on conjecture.
A Sologic client who’s involved in many large proposal processes, recently shared that their company plans to start applying RCA to lost bids like they would most other problems. Specifically, he thinks that root cause analysis could be very helpful in more thoroughly understanding the causes for losing bids, identifying approaches that will improve proposal win rates, mitigating the risks involved with investing massive time and money on proposal development, and increasing the resulting rewards. Following is a summary of his points; we welcome your insights as well.
Drill down to the causes for proposal weaknesses
Currently, some companies approach the client post-award debrief as an ad-hoc activity with group note-taking and an e-mail to senior management. There’s no in-depth analysis of causes for cited proposal weaknesses, which might expose systemic problems. Unfortunately, exposing causes might also beg a predictable response from some senior managers: “We spent how much money on our proposal, yet missed these causes and solutions?” If senior managers react this way, and look for someone to blame, it could tempt people to avoid exposing causes, but that won’t help improve proposal win rates.
Develop proposals based on how clients evaluate risk
It’s crucial to think about how clients and prospects reward and penalize risk management in their RFP and proposal evaluation guidelines. All clients are risk-averse, especially government agencies. In fact, some performance-based government contracts are designed to shift as much risk as possible to the Contractor.
For example, here’s how the Department of Defense assesses risk as it evaluates proposals:
Technical Risk Ratings
Has little potential to cause disruption of schedule, increased cost or degradation of performance. Normal contractor effort and normal Government monitoring will likely be able to overcome any difficulties.
Can potentially cause disruption of schedule, increased cost or degradation of performance. Special contractor emphasis and close Government monitoring will likely be able to overcome difficulties.
Is likely to cause significant disruption of schedule, increased cost or degradation of performance. Is unlikely to overcome any difficulties, even with special contractor emphasis and close Government monitoring.
From the client Technical Evaluation Board (TEB) perspective, the superior proposal does not just explain the who, what, when, where and how. The superior proposal identifies risks in the technical approach, highlights options to avoid or mitigate risks, and substantiates rated “strengths.”
Use RCA to conduct risk analysis on proposed solutions
Typically, when project managers develop Risk Registers to support proposals, it becomes a reactive exercise based on opinions, speculation and faulty logic. And, it’s done just a couple of days before the proposal Risk Board Meeting. An unprepared project manager receives a Risk Board beat-down – an edict to increase cost contingency due to lack of remedy options that could address risk. (Risk Registers are a Risk Management tool commonly used in Project Management and organizational risk assessments, which act as a central repository for all risks identified by the project or organization. For each risk, it includes information such as risk probability, impact, counter-measures, risk owner and so on.)
Here is a more appealing proposition to help project managers impress the Risk Board and decrease cost contingency: Use RCA to improve and substantiate Risk Registers. This is especially valuable on projects that involve uncertainty, such as research and development elements or regulatory agency approvals.
- Use cause and effect charting to map client-perceived risks
- Substantiate win themes and discriminators
- Highlight risk avoidance and mitigation options in the technical approach
This will increase rated proposal strengths and decrease rated proposal weaknesses according to risk-based proposal evaluation criteria. Use all these elements to create a robust and defensible Risk Register.
Use root cause analysis to increase proposal strengths, decrease cost contingency, and increase probability of winning
Train project managers and technical professionals to implement RCA (cause and effect charting) on your next proposal. After root cause analysis training, they’ll be equipped to:
- Investigate each significant risk in the RFP and Risk Register
- Expose risks missed by competitors
- Identify solution options to avoid or mitigate risk
- Highlight risk management in the technical approach to increase rated strengths
- Justify lower cost contingency with a defensible Risk Register
Considering the substantial investment your company likely makes in proposal development, spending just a fraction of the budget on root cause analysis is likely to more than pay off in the form of higher proposal win rates. With the help of RCA, your Risk Register will substantiate less cost contingency, which means a more competitive price. Clients and prospects will identify more strengths in your technical approach, and your post-award debriefs will recognize your efforts.
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