Target Pricing to win Tenders (Focus EPC Projects)

Name: Target Pricing to win Tenders (Focus EPC Projects)
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Target Price for Tenders - EPC Projects, Packages- Concept with Examples

Created bySamiran Das

Last updated 9/2021

English

What you'll learn

How to Determine Target Price for upcoming tender for EPC Projects
Evaluate cost target from Target Price
Optimisation for cost reduction
Evaluation Criteria to determine lowest evaluated bidder

Course content

1 section • 8 lectures • 38m total length

Understanding the Importance of Target Price for an upcoming Tender
Determining accurately the target price for upcoming Bids / tenders is the key to success. There is no alternative to this. Target price helps you to predict your position with respect to competition for an upcoming tender. Once you know the Target price you can work on your cost and Margins to get to the target price to win contracts
Concept of Computing Target Price for an upcoming Tender
Target Price is worked out based on past tenders lowest price for similar scope with scope adjustment done for upcoming tender. The adjustment also need to be done for Commercial Terms and Conditions viz Different Payment Terms, Risk exposure and so on
Win Loss Analysis and Cost Breakdown Structure
After every tender result , every company should undertake win loss analysis. It comprise of analysis of evaluation to understand its position with respect to competition and take measures for future tenders both on price, performance and schedule
Impact of Commercial T&Cs on Target Price0:01
The Commercial T&Cs like LD Liability, Arbitration ,suspension, Termination, Force Majeure conditions etc which may impact the Target Pricing. The delta between reference tender and upcoming tender need to be evaluated and adjusted to compute the Target Price
Scope optimization Benefits to meet Target Price0:01
Scope optimization has direct advantage on the following
- Lesser Equipment Cost
- lesser transportation cost,
- lesser erection cost
- less time for erection
Scope optimisation helps to optimised cost thus leading to optimised price and is expected to be more competitive in Bids/ Tenders
Appendixes - Working example of costing for various items
It provides detailed examples of costing for various items like Equipment, Engineering, Project management, Construction etc
Conclusion
Target Price is instrumental in winning contracts. For arriving at Target Price , it is important to consider multiple tender results for similar projects in the recent past. The question is how accurately it can be done. For this one need to have accurate Data and commercial and technical skill.
Video - Target Price to Win Tenders (Focus EPC Projects)38:24
The video outlines the summary of the course

Requirements

Students interest to build their career in commercial organisations, For working professionals, Previous experience on costing and pricing is an advantage but not mandatory as concept will be explained

Description

Determining accurately the target price for upcoming Bids is the key to success. There is no alternative to this. Target price helps you to predict your position with respect to competition for an upcoming tender.

The following factors are very important and are explained with examples

i) Past tender details of similar projects in terms of scope and price and Commercial Terms and Conditions

ii) Scope Rationalization in cases where Bidder need to assess the scope and apportion the delta in scope with its corresponding price

iii) Time schedule also is one area where adjustment need to be done since lesser schedule means lesser man-hour and vice versa.

iv) Optimized cost and that cost bought out items should be backed by qualified sub-vendor quote

v) Commercial Terms and Conditions. Impact of Commercial Terms and Conditions also to be adjusted in computing the Target Price

Once the Target price is worked out, one can reasonable be sure to draw the road map and strategy for participation in bid.

Target Price concept and examples given can be conceptualized for EPC projects in various sectors like Power, Petroleum, oil and gas, infrastructure projects, Fertilizer, Transportation etc. Also the concept is applicable for products / packages involving systems / sub systems.

Who this course is for:

Working professionals in Sales , Tendering, marketing, Contract, Project Management and Students in MBA