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Procurement in Major Projects: A Guide for Aboriginal Suppliers

This presentation provides Aboriginal suppliers with information on procurement in major projects. It focuses on the procurement process, finding business opportunities, marketing strategies, bidding, and writing proposals. Suitable for Aboriginal companies at various stages of business development.

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Procurement in Major Projects: A Guide for Aboriginal Suppliers

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  1. What you need to know about procurement in Major Projects

  2. Who is this presentation for? • Aboriginal suppliers just starting out • Aboriginal companies considering procurement as a part of their business development plan? • Aboriginal companies who want to learn more about procurement.

  3. What is procurement? • Course focuses on corporate procurement, not public procurement. • Government procurement has different strategies and approach. • We will discuss the procurement process, the business process, and why it’s a continuous cycle. • The most important thing is bidding and contracts.

  4. The Procurement Process • Research/sales/marketing/initial contact • Establish vendor relationship / qualify as vendor • Receive Request for Information, Request for Proposal (RFI, RFP) • Submit proposal or bid • Awarded bid (if successful) • Contract signing • Perform the work / work signoff • Repeat from beginning

  5. Where do you look for business? • Moving from general to specific… • Business directories • Individual marketing / contact with company management • Bidding systems / vendor systems • Contact with the procurement department or individual buying units • Mostly, it’s trial and error, common sense, knowing your industry, and understanding the procurement cycle

  6. How do you market your company? • Define your core products / services • Define your message and brand: what makes your company special? What is the unique value your company offers to a customer? • Maintain your good reputation • Develop business and social relationships • Listen to people’s needs to develop opportunities

  7. Who is a good customer for you? • Determine what kind of customer is the right fit for you. • Know your customer: what they do, how financially solvent they are, how they pay the bills. Talk to other suppliers, search credit reports, Google the customer. • Look at your current customers: who is your key customer right now? What works in the relationship? What doesn’t work? • Can you improve relations with your key customer right now? • Can you translate that into improved relations with all customers – old and new? • Can you market your strengths to new customers?

  8. Who are you a good supplier for? • Know your business: what you are capable of? • What is your cashflow? • What are your financing needs? (Is the customer is a late payer?) • Can you develop a friendly banker? Use commercial credit? • Negotiate favourable payment terms and payment methods to keep your business afloat. • Pitfalls of procurement contracts: they can be large, and impact total cashflow. • “Don’t put all your eggs in one basket.”

  9. What is a bid? • Bidding for a job: quoting a customer a price for a unique job or mix of products/services. • Why do it? • When is it worth the effort? Can your company afford the research, overhead, administration and licensing required? • When is it not worth the effort? • There are different kinds of bids and proposals available: RFPs, RFIs, RFxs, etc.

  10. How do you bid? • The bidding process • Bidding systems / vendor systems • Vendor qualification • Contact with the Procurement department • What is an absolute “no go” • Testimonials and references • Partnering, joint ventures, economic development

  11. The Bidding Process • Research the bid • Establish the vendor relationship by qualifying as a vendor, if required • Receive Request for Information, Request for Proposal (RFI, RFP) – usually from the vendor system • Submit a proposal or bid • Bid awarded(if successful) • Negotiate terms and conditions / sign the contract • Perform the work / work signoff • Repeat from beginning

  12. How do you write a proposal? • Writing a proposal vs. submitting a bid • Ask questions, do your research, always clarify. • Review licensing and insurance requirements for the job / for the industry. • Write it all down, including assumptions. Take nothing for granted. • Look carefully at the bid’s evaluation criteria. • Submit the bid or proposal in the proper format, and on time. • Ask for feedback.

  13. How do you price the job? • Chose a pricing method or rationale. • Be aware of your material and labour costs, your margins, and your profits. • Create value for your client, and explain the value to the client. • Make the business case for doing business with you (instead of someone else). Keep selling the contract throughout the life of the contract.

  14. Value and Perception • Be aware of the implications of charging a “Premium.” • Demonstrate good value to the customer. • Demonstrate competence and professionalism. (This will help overcome stereotypes and perceptions.) • Seek out mentoring or partnering if you need help in order to grow the business. • Make the business case to the customer. Demonstrate savings, if you can.

  15. How do you develop capacity? • Analyze how much work your company can do at any given time. • Project current and new workload. • Run scenarios, e.g. partnering with another supplier to get a larger contract. • Consider subcontracting services to get the job done. • Have a plan for how you will grow the business.

  16. You won the bid, what’s next? • Negotiate terms and conditions. Know your rights and obligations under law. • Sign the contract. • Know the reporting requirements, and the payments schedule • Understand the work in progress. • Keep track of milestones and delivery dates. • Keep moving the job forward to completion. Address any hurdles or bottlenecks immediately.

  17. You lost the bid, what’s next? • Talk to the customer, if possible. • Ask for a quality audit of bid, or an interview. • Ask for formal feedback on your bid. • Debrief and discuss evaluation criteria (e.g. experience requirement, insurance requirement) this gives you more intelligence about how criteria and rules are applied. • Know when (and why) it is an absolute “no go.” Do your own debrief. • Get back in the game and look for the next opportunities.

  18. How do you keep the job on track? • You’ve won the bid! Celebrate your successes! • Following through, live up to the bid. • Take care of the license, insurance, and administrative requirements. • Keep up with the reporting, milestones and delivery requirements. • Manage the work on a daily basis. • Manage the customer’s expectations.

  19. What happens when things go bad? • How do you exit well? • Determine when you have to exit. • Have an exit strategy. • Always seek legal advice if you are unsure of your rights and obligations.

  20. How do you finish the job? • The customer must take final delivery. • Finalize all invoicing and payments. • Resolving any outstanding issues and claims. • Both sides should sign off. Don’t leave yourself liable. • Learn where/when to draw the line on change orders. (What does the contract say? Do you have goodwill? Do you plan to work with the client again?)

  21. Are you ready to do it all over again? • Procurement is a process, while you are winding down one project, you are often starting another. • You will be doing continuous marketing, and searching for opportunities. • Always debrief a project: how can you do things better next time? Did you make any money? Did you maintain your margins? • Evaluation – follow up with your customer, letters of testimony. • Self-assessment and templates.

  22. Get to Know the Procurement People at the company • Major projects bring opportunities. • When you look at major projects they have a huge supply chain. • How can you as a small business or development corporation become part of this supply chain? • Do you have a product or service you can offer? • Are you on a supplier list? • Talk to the procurement people and find out how you can work with them.

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