Lesson Learned #8 for BD Process Improvement - A Pipeline is So Much More Than a Tracking Tool...
(8) Use your pipeline as not only a bid tracking tool, but as a strategic planning and business analytics tool.
The pipeline is much more than a lead tracking tool – it is a strategic planning and business analytics tool that should be used to perform “what if” analysis and plan for growth. Your pipeline should be used for:
- Revenue tracking
- Bid & Proposal, or B&P, budget management
- Resource planning
To project revenue, translate the total contract value over the entire period of performance (PoP) into the actual annual revenue for your company, based on projected award date and your company’s workshare. For example, for a $2M contract with a 5-year PoP that will be awarded 30 June 2018, with all work self-performed by your company, your pipeline would include $200K revenue for 2018; $400K revenue for 2019, 2020, 2021, and 2022; and $200K for 2023. For that same size contract and PoP, as a sub with 20% workshare, your revenue would be $40K for 2018; $80K for 2019, 2020, 2021, and 2022; and $40K for 2023.
The rule of thumb for B&P costs is based on total contract value, which is often an indicator of the complexity of the bid. For a services company preparing typical services proposals, the cost of preparing a proposal can often be less than one half of one percent of contract value. On the other hand, the cost to prepare a complex proposal requiring a significant system / product design to be submitted for a program valued in the tens of millions of dollars or more, is frequently in the range of 1 – 2% of contract value. When competitive field conditions are challenging, these costs can rise to 3% or more. For example, for that same $2M contract, the B&P costs budgeted at 0.5% can be estimated as $10K. For a more complex $20M contract, the B&P costs can range from $100K (0.5%) to as much as $400K (2%). Keep in mind that B&P activities that are “absorbed” by internal resources are still done so at a cost – the time invested in these activities should be tracked as part of your B&P cost for each bid. No matter how small your B&P budget, define a plan and specific activities with estimated level of effort (time and cost) for each.
And use your pipeline to plan for resource requirements. For example, when you see trends in multiple RFP releases projected for the same timeframe, realize that you will not be able to develop all of the required proposals at once. Know your internal resource limits and either prioritize the opportunities for bid / no bid purposes or plan to hire additional resources to help during crunch time.