How to Decide Whether a Tender Is Worth Pursuing: Bid/No-Bid Decision Frameworks

Introduction

Every tender consumes time, money and people. The difference between a well-chosen pursuit and a wasted effort can be huge: lost margin, missed deadlines, and team burnout. A repeatable bid/no-bid decision framework reduces guesswork, focuses resources on the right opportunities, and improves win rates over time.

Two-step approach: Quick screen then scoring

Use a two-step process: first a rapid "quick screen" to discard clearly unsuitable tenders; then a deeper scoring model for opportunities that pass the screen.

Quick screen (5–10 minutes)

Quick screens are binary must-have checks. If any are failed, reject the tender immediately or flag for further strategic review.

• Eligibility & compliance: Can we legally bid? Do we meet mandatory requirements and certifications?
• Capacity & timing: Do we have staff and delivery capacity within the tender timeline?
• Commercial fit: Is the tender within our target sector, contract size and margin expectations?
• Conflicts & ethics: Any client conflicts, exclusivity clauses, or unacceptable contract terms?
• Cost-to-bid: Is the estimated bid cost (hours, external advisors) acceptable relative to potential value?

Scoring model: a quantitative decision

If a tender passes the quick screen, assess it against weighted criteria. Scores turn subjective judgment into consistent, auditable decisions.

Sample weighted scoring criteria (total 100 points)

• Strategic fit: 20 points (alignment with growth strategy, referenceability)
• Probability of win: 20 points (past win rates with client / competition intensity)
• Estimated margin & revenue: 20 points (expected profit and revenue opportunities)
• Delivery risk: 15 points (technical complexity, supply chain, resource risk)
• Cost-to-bid & internal effort: 10 points (bid team hours, external costs)
• Contract & legal risk: 10 points (unfavorable terms, indemnities, penalties)
• Client relationship & strategic upside: 5 points (long-term value potential)

Example calculation

Imagine scores (out of each criterion's max): strategic fit 16/20, probability of win 12/20, margin & revenue 14/20, delivery risk 10/15, cost-to-bid 8/10, legal risk 6/10, client upside 4/5. Total = 70/100.

A typical threshold might be: pursue if >=70, review if 50–69, decline if <50. Set thresholds to reflect your company’s appetite and resource constraints.

Key fields to evaluate in your framework

• Win probability: Consider historical win rates, incumbent relationships, incumbent performance, and competitors likely to bid.
• Margin and lifetime value: Look beyond contract value to cross-sell, renewal, and strategic positioning.
• Bid cost: Estimate hours for proposal, pricing model development, solution design, and any consultants.
• Delivery feasibility: Check resource availability, subcontractor options, and technical fit.
• Contractual & legal exposure: Identify onerous clauses, penalty regimes, or payment risk.
• Strategic alignment: Does it open new markets, create references, or enhance capabilities?
• Timeline & administrative burden: Tight RFP timelines can increase bid cost and risk.

Decision tools and techniques

• Decision matrix / scorecard: The primary operational tool for objective comparison.
• Decision trees & expected value: For complex tenders, estimate expected value = probability of win × contract value − cost-to-bid and delivery risk-adjusted costs.
• SWOT/PESTLE: Useful for strategic or high-risk tenders with political or regulatory impacts.
• Red flag checklist: Contractual clauses, single-supplier mandates, unrealistic KPIs, or mandatory subcontracting that raise immediate concerns.

Governance: who decides?

Establish clear ownership and approval levels. Typical governance layers:

1. Bid manager: performs quick screen and builds the scorecard.
2. Bid review board / commercial committee: reviews scorecards for high-value or borderline opportunities.
3. Executive sign-off: required for very large, strategic, or high-risk pursuits.

Practical rules of thumb

• Automate the quick screen with a short form to speed triage.
• Use conservative win probabilities when you lack client intel.
• Include a realistic contingency for delivery risk in margin calculations.
• Track why past bids were won or lost and feed that data into future probability estimates.
• Don’t let one charismatic sales person override the framework without documented reasons.

Post-decision actions

• If you decline: send a polite regret and, where appropriate, maintain the relationship for future opportunities.
• If you pursue: allocate a bid lead, finalize the bid plan, and set milestones for solution, pricing and reviews.
• After outcome: run a win/loss analysis and update your scoring criteria and win probabilities.

Common pitfalls and how to avoid them

• Bias: Guard against optimism bias by requiring evidence for high win-probability ratings.
• Inconsistent scoring: Standardize definitions and calibrate scores periodically across teams.
• Underestimating bid cost: Track real bid costs and use them in future quick screens.
• Ignoring strategic value: Sometimes a low-margin bid is worth it for a key reference or strategic entry.

Template: Quick screen checklist

• Mandatory requirements met? (Yes/No)
• Resource availability within timeline? (Yes/No)
• Estimated cost-to-bid acceptable? (Yes/No)
• Unacceptable legal terms? (Yes/No)
• Strategic fit? (Yes/No)

Final thoughts

A robust bid/no-bid framework saves time and focuses energy on opportunities that matter. Start simple: implement a rapid quick screen and a basic scorecard, then refine with data from each win/loss analysis. Over time your thresholds, probabilities and scoring weights will become better predictors of success — and your win rate and profitability will improve accordingly.