CHAPTER 3

Developing Project Proposals

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Learning Outcomes
• Develop relationships with customers and partners
• Decide whether to prepare a proposal in response to a
customer’s RFP
• Create a credible proposal
• Determine a fair and reasonable price for a proposal
• Discuss how customers evaluate proposals
• Explain types of contracts and various terms and
conditions
• Measure the success of proposal efforts

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Project Management Project Procurement
Knowledge Areas from
PMBOK® Guide
Management

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Pre-RFP/Proposal Marketing
• Begin developing the relationship before RFP is prepared
• Can help client identify needs
• Better position to win the contract
• Develop a more clearly focused response to RFP
• Pre-RFP and pre-proposal efforts are business development
• No cost to the customer
• Help build the relationship

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Decision to Develop a Proposal

• Development is costly and time consuming

• Contractors must be realistic about their probability
of winning a contract
• Evaluate bid/no-bid decision
• Many non-winning proposals hurt reputation
• May be hard to decide to no-bid an RFP

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Bid or No-Bid?

• Factors to consider
• Competition
• Risk
• Mission
• Extension of capabilities
• Reputation
• Customer funds
• Proposal resources
• Project resources

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Creating a Winning Proposal
• The best idea to solve the
problem
• Highlight unique factors
• Emphasize benefits to the
customer
• Be simple and concise
• Addresses requirements from
RFP
• Be realistic

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Proposal Preparation

• Proposal team
• Can be one person or many
• Various skills and expertise
• Proposal manager for large proposals
• Proposal development
• Time for writing, review, and management approval
• Length dependent upon the RFP requirements
• Cost of proposal development is part of normal business
costs

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Proposal Contents

• Three sections
• Technical
• Management
• Cost
• Detail level
• Depends on complexity of the project
• Requirements from the RFP

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Technical Section

• Understand the need

• Proposed approach or
solution
• Benefits to the customer

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Management Section

• Description of major tasks

• Deliverables
• Project schedule
• Project organization
• Related experience
• Equipment and facilities

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Cost Section
• Include estimated costs
• Labor
• Materials
• Equipment
• Facilities
• Subcontractors and
consultants
• Travel
• Documentation
• Overhead
• Escalation
• Reserve
• Fee or profit

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Pricing Considerations
• Competition
• Price
• Not overpriced or
underpriced
• Factors
• Reliability of cost estimates
• Risk
• Value of project to the
contractor
• Customer’s budget
• Competition level

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Simplified Project Proposal

Complex Simplified
• Large number of pages • Statement of the
customer’s need
• Defined sections • Assumptions
• Charts and figures • Project scope
• Tables of information • Deliverables
• Resources
• Schedule
• Price
• Risks
• Expected benefits

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Proposal Submission and Follow-up

Submission Follow-up
• On time • Be proactive
• Formatted properly • Professional manner
• Sent in manner required • Follow RFP guidelines
• Hard copies
• E-mail
• Electronic form
• Two sets by different
delivery methods

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Contracts

Agreement Types
• Contract must be signed • Fixed Price
before starting work • Price remains fixed
• Establishes • Low risk for customer
communication • High risk for contractor
• For well-defined projects
• Agreement of deliverables
with little risk
for a certain price
• Cost-Reimbursement
• Price for actual costs
• High risk for customer
• Low risk for contractor
• For higher risk projects
© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Critical Success Factors
• Customers and partner organizations prefer to work with people they know and
trust. Relationships establish the foundation for successful funding and contract
opportunities.
• Establishing and building trust is key to developing effective and successful
relationships with clients and partners.
• The first impression one makes on a client is crucial to developing a continuing and
fruitful relationship.
• Pre-RFP/proposal efforts are crucial to establishing the foundation for eventually
winning a contract from the customer.
• Do not wait until formal RFP solicitations are announced by customers before
starting to develop proposals. Rather, develop relationships with potential
customers long before they prepare their RFPs.
• Working closely with a potential customer puts a contractor in a better position to
be selected as the winning contractor. Learn as much as possible about the
customer’s needs, problems, and decision-making process during
pre-RFP/proposal marketing.
© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Critical Success Factors (continued)
• Becoming familiar with the customer’s needs, requirements, and expectations will
help in preparing a more clearly focused proposal.
• Be realistic about the ability to prepare a quality proposal and about the
probability of winning the contract. It is not enough just to prepare a proposal;
rather, the proposal must be of sufficient quality to have a chance of winning.
• A proposal is a selling document, not a technical report. It should be written in a
simple, concise manner and should use terminology with which the customer is
familiar.
• In a proposal, it is important to highlight the unique factors that differentiate it
from competitors’ proposals.
• Proposals must be realistic. Proposals that promise too much or are overly
optimistic may be unbelievable to customers, and may raise doubt about whether
the contractor understands what needs to be done or how to do it.
• When bidding on a fixed-price project, the contractor must develop accurate and
complete cost estimates and include sufficient reserve.

© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.
Summary
• Interested contractors develop proposals in response to a customer’s RFP.
• Relationships establish the foundation for successful funding and contract
opportunities. Relationship building requires being proactive and engaged.
• Contractors should develop relationships with potential customers long before
customers prepare an RFP.
• Because the development and preparation of a proposal take time and money,
contractors interested in submitting a proposal in response to an RFP must be
realistic about the probability of being selected as the winning contractor.
• It is important to remember that the proposal process is competitive and that the
proposal is a selling document that should be written in a simple, concise manner. In
the proposal, the contractor must highlight the unique factors that differentiate it
from competing contractors.
• Proposals are often organized into three sections: technical, management, and cost.
• Customers evaluate contractors’ proposals in many different ways.
• Once the customer has selected the winning contractor, the contractor is informed
that it is the winner, subject to successful negotiation of a contract: fixed-price and
cost reimbursement are the two types of contracts.
• Contractors measure the success of their proposal efforts by the number of times
their proposals are selected by customers and/or by the total dollar value of their
proposals that are selected.
© 2018 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for
classroom use.