Price to Win (PTW) Analysis

First off lets agree that the price to win does not always equate to being the low bidder. To the contrary, it has more to do with understanding your positioning, and the competitive landscape. In many respects, it is normally worth the expense to hire an independent organization who specializes in doing this analysis. They already have large databases of information on most of the companies you will be competing against. However there are some constants that you can and should do on your own:

1. Survey your company’s existing cost centers to identify one or more that most closely matches the geographic area the work will be performed in, the type of work to be performed, and that you think (at this time anyway) will be your first and second choice.
2. Segment out the type of contract your pursuing. Be it Cost Plus Fixed Fee, or Award Fee, Time and Materials, or Fixed Price.
3. Establish whether it is a contract that requires you to bid a level of effort, or one that requires you to create a staffing profile.
4. Identify who you have in-house or with your partners that will be identified as key personnel.
5. Assess the difference between your cost centers based on what the rates are for work to be performed at the Government site, or work to be performed at your facility

Now let’s examine the competition. Ask the following questions:

1. Do they already have a market presence? If so what contracts are they, and FOIA (Freedom of Information Act) them. This also helps you discern what the customer is accustomed to paying, and potentially what they can afford.
2. If they are a current incumbent, how well are they performing? If you can find out what their Contractor Performance Assessment Report (CPAR) scores are, then you should be able to discern how well liked they are. Yes this does impact your price to win.
3. Collect bidder information from Industry Days the Government holds. This should help establish who is serious about bidding and who is likely to be a prime or subcontractor.

Now try to determine just how much lower, or higher, you can afford to be against those companies competing against you. I will say that if your not already in a market space, then it’s likely you will have to bid aggressively to ultimately win.

Several other aspects of your bid should be taken into consideration when preparing your price to win analysis. They include:

• -> The technical solution. In essence, what are you offering the client, and therefore how do those technical distinctions become manifested in your price?
• -> What you can afford to bid for execution purposes. This becomes much more germane when pursuing Firm Fixed Price, or even Time and Materials contracts.

There’s much more to write about here but I thought it best to collect some of your feedback so we can embellish the conversation. Happy PTW’s!

For more information, contact Jim McGuirk at http://www.mcguirkconsulting.com