Pros and cons of collaborative bidding
If you run a small business, you may need to consider working with other businesses to increase your chances of winning a government tender. Listed below are the advantages and disadvantages of collaborative bidding.
Advantages of collaborative bidding
- Collaboration increases the chances of winning the bid through shared resources, skills and knowledge, and the increased capacity to deliver.
- The businesses involved would have a lesser or no chance of winning the tender if they were to bid on their own.
- Collaboration gives you an opportunity to tender for larger more lucrative contracts, which you may not be able to win or deliver on your own.
- There is a growing trend for public sector contracts to be aggregated, meaning smaller businesses would not have the capacity to bid for them on their own.
- Collaborating with the right partner can have the collective benefits of shared skills, experience and expertise. This may influence the buyer when they are assessing tender submissions.
- Collaborating with other businesses means that any one business does not have to try to be 'all things to everyone'. They can instead focus on their areas of strength and expertise.
- By collaborating on a tender response, businesses can pool their resources. This can make the process of developing a tender bid easier and less expensive.
- Responsibility for writing the tender response is shared among the businesses. Each section is allocated on the basis of a partner's strength in that particular area.
- It is less likely that future tender opportunities will be missed, as collaborating businesses will be on the lookout for more tender opportunities.
Disadvantages of collaborative bidding
- There may be an imbalance of effort and workload between collaborating businesses.
- There may be disputes, conflicts and culture clashes between the collaborating businesses.
- There may be financial problems (e.g. cash flow difficulties and payment problems and how that impacts on the collaboration business model).
- Businesses involved in the collaboration may be reluctant to share information, leading to a lack of openness.
- There may be communication problems.
- There may be planning problems.
- One business may promote its own business agenda rather than the collaboration's objective (i.e. self-interest).
- Collaborating businesses may over-sell or over-estimate their capacity or abilities, and be unable to deliver to the required standard of the tender response.
- There may be misdirection from the lead business or the project manager.
- Personal conflicts and egos may get in the way of progress during contract delivery.
- Power struggles may exist between collaborating business partners or individuals.
- There may be conflicting values or ethics.