Chapter 3

Proposed Solutions
 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
 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
 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 4
even though they were not the lowest bidder.
 Proposed Solutions

In many situations an RFP does not involve

3
 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
 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
 Bid/No-Bid Decision
• Factors to consider:
– competition
– risk
– mission
– extension of capabilities
– reputation
– customer funds
– proposal resources
– project resources
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 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

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 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
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 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

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 Proposal Contents
Proposals are organized into three sections:
• Technical Section

– understanding of the problem

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

12
 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
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 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
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 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

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 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
 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
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 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
 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

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 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

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 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

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

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