Lower Proposal Costs
Process costs can eat away profits if not measured, monetized and monitored. This is not only true of major corporations, but is also true for small to medium sized businesses. Measuring processes is common in manufacturing products and delivering services. However, how often are administrative processes measured with the same scrutiny? Consider the costs for proposal writing processes for either a manufacturing or a service business.
Many businesses justify the time and money spent on proposals as a necessary evil in order to impress specific clients and be thought of more highly than their competitors. While it is understandable to a certain degree, how often is this extra time and money being spent per member of the firms sales team? This too can be a very costly process.
In addition to the obvious costs of multiple copies of the actual proposal, marketing materials, binders, delivery costs, and multi-media methods, think about the cost of negotiating revised specifications with the client. What about the costs of polishing up the proposal before it is sent to the client? Many hours are spent revising language, pictures, graphs, and financial data to submit the presentation as perfect as possible before the looming deadline. Consider too, what other projects were not being worked on because of the time being spent on the proposal process? This opportunity cost should be evaluated especially when the proposal process is excessive. Client proposals are highly subjective and emotional in nature. There is no payment for proposals that do not turn into sales.
Depending upon the complexity of how and where the details are derived, the solution to measuring, monetizing and monitoring proposal costs may be more involved than other processes. This is not a reason to avoid the analysis. Reviewing past proposals and the steps required to complete them will reveal parts of the process that can be systematized. In other words, there will be certain pictures that are commonly used that can be housed in an electronic library. The firms history, size, and current achievements can also be in a library where the language used is ready to plug into the proposal without re-writes. Even labor rates and common material costs can also be a part of the library so time is saved in creating them or re-verifying them. Once the common proposal elements are identified and labor dollars attached to them, the variable parts of the proposal process can be estimated more easily to obtain the overall proposal cost.
When the proposal process cost is known, decisions can be made as to how much time will be spent attracting specific types of clients rather than wildly spending considerable time on proposals for clients with lesser potential. This results in utilizing company resources more effectively.
