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How SMEs Can Bid to Win in the post-Carillion World

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The collapse of Carillion (the UK’s second largest construction company) on 15th January 2018 was a disaster for its staff, sub-contractors, suppliers and shareholders. It will have significant impacts for many of its clients. But to quote Winston Churchill, “Never let a good crisis go to waste”. A crisis can, and should, provide the catalyst for new thinking, new approaches, perhaps even root and branch reform of a creaking system.  With that in mind, Chris Peace has asked me to write a series of short blogs which I hope will be of use to SMEs and larger firms as we survey the post-Carillion procurement landscape. This is the first and will be followed by three more over the following weeks.

* * *

The “subbie bashing” culture that appeared to be going on with Carillion has been shown to be not in anyone’s best interests – even the big players. I know many successful SMEs who are keen to be first-tier contractors rather than operating further down the food chain at wafer-thin margins. They would also settle for being second-tier to main contractors who don’t want them to embark on a race to the bottom on price and quality. Main contractors can demonstrate their good faith by adopting the Prompt Payment Code – payment within 60 days and, ideally, working towards adopting 30 days as the norm.

Whilst the procurement landscape has ostensibly never been more open to SMEs, there are a number of key actions that SMEs can take to optimise their prospects of success in competitive tendering.

First though, SMEs need to decide what type of contractor they are. For example, if your business was a supermarket, which one would you be? All supermarkets sell food, yet there are large variations in terms of quality and service, and hence also in prices and profit margins. Match your pitches and bids to buyers and main contractors who are looking for what you offer. If you have decided that you are a “Waitrose”, then don’t enter 80% price 20% quality contests.

The next thing to do is to ensure that you are appointable to a risk-averse public sector buyer or the procurement department of a main contractor. If you want a seat at the big table, then it will usually mean having at least the following in place:

  • Accounts filed promptly at Companies House
  • A good credit rating (preferably above 50/100)
  • Insurances to the required limits (note, these can often seem very high)
  • Access to a parent company guarantee or performance bond
  • Full set of policies and procedures covering your operations (note, these will invariably include issues such as diversity, which construction, traditionally had not been good at).
  • Quality Management System (preferably IOS 9001 accredited)
  • Environmental Management System (preferably ISO 14001 accredited)
  • Occupational Health and Safety System (preferably OHSAS 18001 accredited)
  • Health and Safety Assessment Scheme membership - of SSIP member scheme (e.g. CHAS)
  • A strong track record of excellent health and safety performance (RIDDOR stats are important)
  • GDPR compliant processes and systems
  • Robust supply chain management arrangements
  • Business Resilience/continuity plans
  • Case studies, testimonials, references for similar work

Where relevant there may be other industry-specific quality standards required (e.g. ISO/IEC 17020 for inspection services or other standards for asbestos surveying, etc.).

Good, that’s a start!  Join me next week when I’ll look at the mechanics of using this material to create a successful bid.

Andrew Morrison MSc FCIH, Managing Director, AM Bid Services Ltd

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