How to use marginal gains to drive improvements in Pre-Construction

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The digital evolution of Pre-Construction is happening right now!

These insights were informed by our own Bid Cost research with Reading University and recent industry research by McKinsey Global Institute.

Also additional concepts positioned by Matthew Syed in his book Black Box Thinkingwww.myConsole.co.uk

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Marginal GainsThe whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together- Sir David Brailsfordwww.myConsole.co.uk


The concept of Marginal Gainswww.myConsole.co.uk


Note the need for concurrent data analyse & monitoring www.myConsole.co.uk


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Are you embracing failure?

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Learning from failurewww.myConsole.co.uk


Challenges of Learning from Failurewww.myConsole.co.uk


Needs a progressive attitude, proactive behaviours and institutional culture

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In complex organisational systems, success can only happen when we admit our mistakes, learn from them and create an environment where it is safe to fail www.myConsole.co.uk


How can others apply these lessons?Environments where it is safe to fail

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# Individuals are not intimidated of admissions because they recognise their value*Note Aviation has ambitions to increase quantity of real-time data so as to render black boxes redundant as all information will have been transmitted to a central database

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Cross Industry Digitalisation Adoption

Construction has been very slow in adopting digitalisation hence it presents a significant competitive advantage for early adopters www.myConsole.co.uk


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MarketingWorks has helped over 2,000 construction firms to implement client-centric work winning behaviours, processes and culture. We recently conducted extensive bid cost research across over 8 billion of bid data.

37% of Bids are won not due to price, but due to a combination of client-centric behaviours Background

Research conducted in collaboration the University of Reading

Average cost for contractors winning bids: 60kAverage cost for consultants' winning bids: 24Kwww.myConsole.co.uk


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Bid Cost Research Overview

The reality is that on average, each bidder is spending at least 0.5% of the project value on bidding

The actual costs will also include hidden costs, imported costs and overheads

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This sets out the total bid cost as a proportion of project value (BC/PV%). We have to first point out that these are average costs across the complete sample of 250m projects

Overall this data set suggests that when consultants and contractors invest more in the work-winning process on a bid, they are more likely to win. In this sample, the investment in bids that won is 25% greater than for bids that lost. (The average cost of bidding for losing bidders was 0.48% and for winners, 0.65%. ) We recommend that the additional expenditure, however, needs to be focused on the right things i.e. client-centric, aligned activities.

The data that we have gathered gives rise to some interesting questions and indicates certain patterns.This shows that winning bidders tend to invest more in winning work. As the median number of bidders is five (so four losing bids plus one winning bid) this tells us that the actual cost to all of the bidders for the total sample of projects being bid in this study will be much higher. The actual costs will also include hidden and imported costs not captured here and is something that needs research in the future.If the cost for clients assessing the bids were to be added, it would be significantly higher; this is something that needs research in the futureIt would be too generalised a comment to say that if a company is spending less than 0.5% of the project value in work winning; they are increasing the probability of losing the bid, because there are significant variances in sectors and procurement routes. However, we can infer that underinvestment will result in negative outcomes.

Table source: Professor Will Hughes based on data from the 2014 MarketingWorks Bid Cost Survey

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There are differences emerging from this data that indicate different attitudes, approaches and behaviours that distinguish between winning and losing bidders, although this is an area that we would like to explore in more depth in future research.

Contractors Winning Activities vs Contractors Losing ActivitiesMore time in planning and pursuit; intelligence gathering; meetings to distil client objectives more focus; relationship buildingSlightly more time on PQQDouble the time in Decision to bid More than twice as much time Selecting/briefing bid manager; Strategy settingSlightly more time on identifying/agreeing cost requirementsMore time but less external inputs on identifying proposal requirements More time on editing boilerplate, and writing bespoke content and more external inputsMore time on finalising CVs, case studies, graphic design and document production (but spend more externally too - could be external printers?) Slightly more hours on final review. (Also increased external cost but relatively modest.)More time on internal reviews/governanceinterview rehearsalinterview/negotiationspost bid evaluationdissemination of lessons learnt

(Interestingly losing bidders spend more externally maybe winning bidders have invested in capability in-house or possibly losing bidders are more likely to think is about production qualities?)These are average costs across the complete sample of 250m projects

Graph source: Simon White, from data in the 2014 MarketingWorks Bid Cost Survey

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Again, there are differences emerging from this data on consultants that indicate different attitudes, approaches and behaviours that distinguish between winning and losing bidders. The winning bidders spend more overall on: Strategy Intelligence gathering PQQ Meetings to understand needs Appointing bid team Understanding proposal requirementsLess spend on Graphics, refining CVs and case studies Interview Shaping generic content, etc. Internal reviews Rehearsals + interviews (ideas flow through from proposal)

(This graph shows results with the significant Utilities win for a Consultant removed from the data set as it is having a massive impact on the averages. Including the outlier in the averages paints a picture that is not supported by the remaining data set. It has been removed from the bid cost graphs going forward.)These are average costs across the complete sample of 250m projects

Graph source: Simon White, from data in the 2014 MarketingWorks Bid Cost Survey

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Bid cost as a % of project value by project value bands

Source: MarketingWorks Bid Cost SurveyGraph - Professor Will Hughes Source: MarketingWorks Bid Cost SurveyGraph MarketingWorks Note the smaller the project, the higher your bid costwww.myConsole.co.uk


In the graph it can be seen that the proportion of bid costs vs project value is higher, for the projects where the project value is less than 5m and are significantly greater for projects of less than 2m value. Here the win rate will have a considerable influence on the pipeline/ cost to win/ processing systems. Efficiencies are crucial to avoid unnecessary spend.In the pie chart you can see that the largest sample of bids submitted was for projects less than 2m in value and the next largest was the 2-5m range (which probably reflected the market in late 2013 to 2014.) For these smaller projects, the proportion of bid cost to project value is highest. It is critical for all companies to understand the pipeline; the number and nature of the opportunities and the likely costs to win them, but particularly so where there are many, smaller bids. Companies have to be sure that they have the necessary processes, systems and tools in place, with people mobilised, empowered and enthused to do their best. Efficiency is crucial to avoid unfocused activity and unnecessary spend.Once a culture of improvement based on achieving success develops and becomes more pervasive it drives a more client-focused approach that becomes self-sustaining through improved staff motivation and morale.Regarding the largest projects, their occasional nature means that there is less opportunity to make efficiency gains as part of day to day activity and they therefore need a special focus. Although the % of project values invested in winning work is lower, the actual spend will be significantly high, along with the risk. Effectiveness is critical to ensure that a winning bid is developed, aligned with efficiencies to minimise loss of focus and unnecessary spend when budgets are higher.This is something to consider for organisations that dont measure the costs vs return. This consideration should form part of the selectivity decision.. 16

Typical Pre-Construction Environmentswww.myConsole.co.uk


Digitalising win work flows delivers key marginal gains & bidding accountabilitywww.myConsole.co.uk


Industrys procurement requirement Is beyond just digitising work flows, Needs bidding accountability and resource management in work winning function.

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Best Practice prompts to drive winning disciplines, behaviours, and productivityChecklist of each individuals Responsibilities for every stage of every opportunityA personalised window into every opportunityIndustry Leading AnalyticsDescriptive, Predictive and Prescriptive AnalyticsPersonalised dashboards withinsight on BUs, clients, frameworks, opportunitiesTransparency, Metrics, &informed decisionsWinWork Process Excellence

Based on best practice work winning processes Embedded Bid Reviews and Governance checkpointsProprietary selectivity engine informed by proven algorithms and historical performance dataIndividual Performance

Win More

Bid LessConsistent BehavioursPredictable ResultsIndustry Leading AnalyticsWinWork Process ExcellenceIndividual PerformanceIntegrated BD ManagementOne stop shop for integrated management of Frameworks, Clients, Opportunities, Win Plans, Bids, Project Handover, Closedown and Case StudiesEnd-to-end closed loop for lessons learnt, delivery collateral and metrics

Integrated BD Management myConsole drives consistent winning behaviours and predictable results through a combination of industry leading sales management approaches, personalised productivity tools, and state of the art analytics


Enables high performance work winning environments

Empower your team with cloud based win workflow collaboration tools that improve client centric behaviours to increase win rates and leadership insight

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Date post:	21-Feb-2017
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How to use marginal gains to drive improvements in Pre-Construction

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