How to decide whether to bid for a tender

Decide whether to bid by testing separate gates in order: mandatory eligibility first, then evidence on the submission date, the deadline plan, price and margin, cash funding and capacity — and only then record a named Go, Conditional Go or No-Go decision. A strong margin cannot repair a failed mandatory requirement, and a profitable price cannot pay suppliers before the buyer pays you.

Start with mandatory eligibility

Start with mandatory eligibility. A high potential margin cannot repair a requirement that the bidder does not meet. Record each mandatory and scored requirement with its exact source page, owner, status and evidence. “Partially met” is not the same as ready.

Keep mandatory and scored requirements apart. A mandatory requirement is pass or fail: one unmet item excludes the bid, however good the rest is. A scored requirement adds points according to the buyer's published weights. If you estimate your own score, use only the buyer's entered weights and your own entered scores, and treat the result as a self-assessment — never as a prediction of the award.

A mandatory requirement marked “not applicable” needs a written reason. Without one, a reviewer cannot tell a deliberate judgement from an item that was skipped.

Test documents on the submission date

Test documents on the submission date. A certificate available today can still be invalid if it expires before the bid deadline or required delivery period. Version files, record the signer and keep an exception when a mandatory item is waived or not applicable.

Also check the practical constraints the tender states: language, file format and maximum size. A final, valid document that exceeds the portal's size limit is still a submission problem. A draft is not evidence until it is final.

Plan the work back from the deadline

List the tasks that must finish before submission — clarification questions, supplier quotes, signatures, translations, uploads — with an owner, a start and a due date. Any task due after the deadline is a visible failure, not a footnote. Prerequisites must form a sequence with no loops: if task A waits for B and B waits for A, nothing can ever start.

Calculate price using the intended convention

Calculate price using the intended convention. If cost is 80 and the target margin is 20% of revenue, price is 80 / (1 − 0.20) = 100. A 20% markup produces 80 × 1.20 = 96. Both are valid calculations, but they are not interchangeable. Include bid preparation, translation, certification and other costs visibly.

Build delivery cost from explicit parts: direct lines (quantity × unit cost plus fixed amounts), allocated overhead and a contingency that is either a stated percentage of a chosen base or a stated amount. Bid preparation cost is spent whether you win or lose, so count it once and do not hide it inside the delivery price. Enter tax separately from the price before tax.

Model cash separately from profit

Model cash separately from profit. A performance guarantee may lock 20 of collateral without being a 20 expense; its fee of 2 is an expense. An invoice of 100 with 10% retention produces 90 at the first payment and 10 only on release. Put costs, receipts, collateral and release on dates to find peak funding.

The arithmetic is simple once every amount has a date. For each day, closing cash = opening funding + receipts − payments − collateral posted + collateral released. Peak funding is the deepest point of the cumulative position before funding. If that point is deeper than the funding you actually have, the bid fails the funding gate even when the margin is healthy. Working-capital days come from that exact schedule, not from an average payment-term rule.

Check capacity by role and week

Check capacity by role and week. If delivery needs 100 specialist hours, 70 are available and 20 are already committed, the gap is 50. A subcontracting option can fill it only if its cost, timing and eligibility are entered. Do not treat total company hours as interchangeable skills.

Work week by week. A role that is covered on average can still be short in the two weeks that matter most.

Use expected value only as your own estimate

Expected value is optional and depends on a subjective win probability. With revenue 100, delivery cost 70, probability 40% and bid preparation 5, defined EV is 0.4 × (100 − 70) − 5 = 7. That number does not predict the award and should never override a mandatory failure.

Note the convention: profit if won excludes bid preparation, and bid preparation is subtracted once in every outcome. Mixing the two conventions counts the same cost twice.

Record the decision with a named reviewer

Keep the gates independent: eligibility, documents, deadline, capacity, price and margin, funding, and the management decision itself. Do not collapse them into one score — a single number hides exactly the case you need to see, such as a profitable bid that cannot be financed.

The final status is Go, Conditional Go or No-Go. It needs a named reviewer, a date and written reasons. A Conditional Go also needs the conditions, for example “submit Lot 2 only if the renewed licence arrives by 1 December”. Keep a snapshot of every gate at the moment of the decision so later edits do not rewrite history.

Common mistakes

• Treating “partially met” as good enough for a mandatory requirement.
• Checking certificate expiry against today instead of the submission date.
• Quoting a “20% margin” that was actually calculated as a 20% markup.
• Treating guarantee collateral as a cost, or forgetting it locks cash.
• Counting retention as received on the invoice payment date.
• Adding company hours together across different skills.
• Letting an optimistic win probability outweigh a failed gate.

Checklist before you decide

1. Every mandatory requirement is met, with evidence, or has a written not-applicable reason.
2. Every required document is final and valid on the submission date, within format and size limits.
3. Every pre-submission task is owned and due before the deadline; no dependency loops.
4. Price states its convention — margin on revenue or markup on cost — and tax is separate.
5. Bid preparation and other one-off costs are visible and counted once.
6. Peak funding from the dated cash schedule is within the funding you have.
7. Each role-week is covered, or an eligible, priced subcontractor fills the gap.
8. The decision names the reviewer, the reasons and any conditions.

Limits

This method organises what you already know from the tender documents. It does not interpret procurement law or the buyer's conditions, does not write your response and cannot tell you whether you will win. Win probability, scores and weights are your own estimates. Where a legal or contractual question is unclear, ask the buyer through the clarification process or take professional advice.

Try it on a fictional tender

Tender Readiness & Bid Economics Desk exposes every gate before the recorded management decision. Open the fictional services tender to see a bid that is profitable on paper but fails a funding or capacity test.

Explore the fictional demo · See the full tool

Related: Progress Billing & Retainage Desk · Contract Renewal & Obligation Control