We rely heavily on research and a customized list of questions to obtain this figure. It's an important metric for public bids that do not have a "Not-to-Exceed" or NTE amount.
Let's start with the positives of having this number documented in the RFP:
- You are able to properly size the project.
- You can immediately gauge future interest from prospective vendors and proposers. A higher value (with few barriers to entry) will lead to more excitement and activity from your competition.
- You can use the estimated contract value to further gauge priorities and make Bid/No Bid decisions.
- The agency has the funds; they aren't exploring fundraising options or hoping for future benchmarking.
Having the dollar amount is not always positive:
- Your margins are now controlled by the market.
- Is there room to blend in innovations and added value? Most likely, you're providing these at no cost now.
- Your pricing strategy is now muddled with a new metric.
- Is the estimated contract value also the budget allotted? Do they have room for contingencies? You don't immediately know.
As you can see, the estimated value of a contract carries a dual-force with it. You must use it with care.
Most of the time, this metric is simply not shown. And there is a perfectly valid reason why: most agencies want you to propose a price.
How TKS Uses This Figure
In our clients' pipelines we have a column dedicated to estimated annual contract value, not inclusive of all options.
We use this figure to calculate if a pipeline is sufficiently "filled" each week, but it's not our only metric to make this determination. While we have certain dollar amount targets, we do not provide guarantees regarding clients' pipelines. We cannot control the release of certain pieces of information (dollar amount included), nor can we accurately estimate value ourselves.
Therefore, our $299/week starter service is propelled by the quality of our capture management, the level of support we offer, and our on-deck expertise. Not a USD figure.
Contract Value Minimums
If desired, we can set a minimum for your pipeline, such as only targeting bids with a documented annual value of >$200,000. We will include bids with uncertain values (in a separate grouping) and use questioning and research to narrow in on the value in each case.