A significant part of the UK’s business community is dependent on winning work through competitive bid / tender processes. What are some of the ways that bidding is likely to be impacted by the coronavirus and, importantly, what steps can buyers and bidders take to mitigate the effects?
Before listing these, it is worth stating that it will be vital that Government and the wider public sector do not turn off the spending taps and thus reduce the opportunities coming to market. Instead, the taps should be turned on full, with public sector spending acting as a much-needed stimulus to an economy that could very easily be about to tip into recession.
Below, I list six likely impacts of the current situation on bidders and provide suggestions on steps that can be taken to minimise disruption:
1. Business Continuity / Resilience Plans – The coronavirus, and the steps that are being taken to contain its spread, will act as a stress test for resilience planning. Whilst obvious mitigations include the promotion of homeworking, it will be important to check with your bidding staff that they have the necessary infrastructure at home e.g. a desk and chair that are suitable for long periods of home working as well as high speed broadband (where available). Check your resilience plans and update them as necessary to reflect the potential realities of coronavirus spreading.
2. Covering Staff Sickness – How would you cope with 10% of your staff off sick for several weeks? What about 25%? Or even 80% (at the outer range of the numbers which could be affected)? Many organisations need to submit a number of bids every week. Do you have robust contingency arrangements in place? This could include having several bid writing / bid management consultancies on your approved list of suppliers.
3. Issuing of Tenders – Whilst buyers could hold off issuing tenders until the worst of the coronavirus has passed, this would likely have the effect of pushing the construction industry into recession. It would also run the risk of missing out on much of the better weather of the spring-autumn period which is prime time for the construction industry to get on with what they do best. If the virus ends up with considerable spread, then buyers providing longer windows for bidders to submit their bids would help e.g. allowing 6 weeks where it would have been 4, or 8 weeks where it would have been 6, etc.
4. Meet the Buyer Days – These may be curtailed if there are restrictions on public gatherings. However, the majority of these could still go ahead as online meetings / webinars. Site visits could be staggered to avoid too many people coming together at one time.
5. Contract Change Control Provisions – The issue here is really risk-sharing. Contracts should have an appropriate level of risk-sharing. Ask the contractor to take most of the risks and not only will costs rise but some contractors may go bust. What about the change control provisions within contracts around price increases e.g. for significant currency fluctuations where these affect the costs of materials and / or labour? Bidders now have coronavirus preparations / mitigations, plunging stock markets and a potential recession to add to the uncertainties of a Brexit trade deal (or lack of one) and a possible Scottish independence referendum. Having proportionate risk-sharing and fair change control provisions can both increase the number of bids received and improve the viability of contracts.
6. Credit Rating and Working Capital – Buyers will want assurance that they are contracting with companies with a low risk of failure during the contract period. Checking credit ratings, payment performance and ensuring that there are sufficient working capital / banking facilities in place will be important factors in uncertain times.
This may turn out to be a very testing time for both bidders and buyers – both having to cope with a few more uncertainties than they would prefer. Nevertheless, opportunities will be there for both buyers who wish to progress with projects and bidders who are able to articulate their propositions and solutions in ways that provide answers to the questions that will be in the minds of buyers.