The Bid or No-Bid Decision: A Framework That Takes Ten Minutes

The scarcest resource in a small contracting business is not capital. It is the attention of the two or three people who can actually prepare a bid. Deciding quickly not to bid is therefore worth almost as much as deciding to bid well, and it is a decision most firms make slowly and by default.

Here is a framework that takes about ten minutes.

The five tests

Run them in order. Fail one and stop.

1. Can we qualify?

Check turnover, similar work, registration class and any bid capacity formula against the notice.

This is first because it is binary and it is cheap to check. If you fail and no relaxation or joint venture route is open, nothing else matters.

2. Can we fund it?

Not just the EMD. The performance guarantee's margin money, mobilisation, and retention deducted from early bills while you are paying suppliers.

Against your current bid capacity, including what you have committed on live bids and existing contracts.

A contract you win and cannot fund is worse than one you lose.

3. Can we execute it?

Capacity, in the honest sense: people, plant, and the attention of whoever would run it, over the completion period, alongside what you already hold.

The failure mode here is winning and under-delivering, which costs a guarantee invocation, liquidated damages, and a record that follows you.

4. Can we win it?

Look at who else is likely to bid and what the buyer has paid before. Past award data tells you the discount to estimate this buyer typically accepts and how many bidders usually turn up. See reading award data before you bid.

Where a buyer consistently awards at a discount you cannot match profitably, the honest answer is that this is not your tender.

5. Do we want it at a price that wins?

Price it roughly, including the financing costs: EMD held, guarantee commission and margin, retention, and the running bill cycle.

Then compare that against the price that would win, from test four. If the winning price is below your cost, stop. Bidding to "stay visible" with a price you cannot deliver on is how firms acquire loss-making contracts.

When to say yes despite a weak test

Deliberate exceptions, made consciously:

A strategic buyer. A first contract with a department you want as a repeat customer can justify a thinner margin, once. It does not justify a loss, and it does not justify it twice.

Building the record. A contract that produces a completion certificate unlocking a category of larger work has value beyond its own margin.

Genuine spare capacity. Where people and plant are idle, the relevant comparison is contribution against idleness, not full-cost margin. This is a real argument and also the one most often used to justify bad decisions, so apply it honestly.

The habit that makes it work

Write the decision down. One line: the date, the tender, the verdict, and which test decided it.

Two months later that record tells you something no individual decision does: whether you are failing consistently on capital, on eligibility, or on price. Each of those has a different fix, and without the record you will guess.

Firms that keep this discover surprisingly often that they are failing on one specific eligibility criterion across many tenders, which is a solvable problem once it is visible.

What this replaces

The default process is: a tender looks interesting, someone starts on it, three days in a problem surfaces, and the bid is abandoned or submitted weakly. The cost is not the abandoned bid. It is the tender that was not prepared during those three days.

Avsar runs tests one and two automatically against your company record, citing the clause and page for each verdict, so most no-bids resolve before anyone opens the document. See the eligibility engine or live tenders.