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Commercial considerations

Commercial considerations

Alan Tawse
13. Dec 2020 | 3 min read

Commercial considerations

For the client's procurement team, the most important part of the tender submission is normally the commercial submission, where information about pricing, discounts, financial incentives and any other commercial conditions are presented. This will often be separately evaluated by a commercial sub-team, while the other parts of the tender submission are evaluated by a technical team.

 

Prepare the commercial response

To optimize the production of the tender response, the enterprise will also allocate resources to working on the commercial submission, perhaps exclusively for larger tenders. They will have to carefully study the tender documents in order to carry out their tasks.

 

Understand the scope of work

  1. Assess the scope of work presented in the tender documents, and the risk of an increase or decrease in the scope
  2. Identify the contract duration and any options to extend it

 

Understand how the pricing works

  1. Carefully read and understand the price structure and charging mechanism presented in the tender document
  2. Identify all terms and conditions that affect how and when goods and services can be charged for
  3. Understand all penalty mechanisms and incentive arrangements

 

Build a cost model

  1. Develop a plan for the cost of providing the goods and services based on the tender scope and conditions
  2. Include any capital requirements or start-up costs
  3. Factor in provision for assessed risks, commercial penalties, discounts or incentives
  4. Include the option to model different scenarios such as changes in scope

 

Develop the pricing model

  1. Based on an understanding of the cost and risk model, determine appropriate price level to meet enterprise targets
  2. Assess pricing against expected competitor pricing levels and market intelligence from comparable tenders
  3. Follow the relevant management approval process and review and refine the pricing until approved
  4. Complete relevant tender files with the pricing information, remove formulae and check for accuracy

 

Compile the tender submission

The tender support team that are compiling the completed response will have a number of specific checks that they will need to look out for.

  1. Check spreadsheets or files for format, formulae, completeness and page/print layout
  2. If required, prepare duplicate but un-priced copies of pricing files
  3. If required, apply any password protection or encryption
  4. If separate pricing files are being submitted, check any cross-referencing in the tender submission documents to align file name(s).
  5. Check and gather any other input required for the commercial submission, e.g. commercial exceptions, supplementary price books, etc.
  6. Add to the tender response being compiled as appropriate, i.e. in binder or as files for electronic delivery or portal upload

The commercial submission is just as much a marketing document as the technical part, so it is important that the commercial pages look just as professional as the rest of the tender.

 

schedule a presentation

 

Alan Tawse

Alan Tawse

Alan has worked in the oil and gas industry since 1974 in various administrative, operational and managerial roles in the UK, Netherlands and Norway. In 1993 he joined Halliburton in Norway as country manager of their new Drilling Systems division. Following a merger with Dresser industries in 1998, he moved to Business Development where he established a BD support team providing centralised expertise for tendering, contract management, market intelligence and various BD software systems. After managing up to 200 tenders and proposals annually for over 20 years, Alan retired at the beginning of 2020 with plans to explore Norway, and spend time with family overseas, He enjoys downhill skiing in the winter, golfing in the summer and following the Formula 1 racing season throughout the year.

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