The Tender Trap: The Cost of Winning EPC Tenders at Any Cost
Winning EPC tendering isn’t rocket science—almost any outfit can win tenders by promising more for less. But then comes delivery—which can swallow project margins whole if it hasn’t been properly planned. So avoiding that ‘tender trap’ is at the heart of great tendering in EPC. Mark is Executive General Manager at a major Australian engineering, procurement and construction (EPC) company specialising in mining, energy and non-process infrastructure. “Making money is the art of great tendering”, says Mark. With 20 years’ experience, Mark knows what he’s talking about— and knows the stakes are higher in EPC than most other industries. When Mark’s organisation tenders, it commits to delivering a complete, working facility to big customers—like major miners and resource multinationals. “It’s got to be on time, at the right price, with turnkey performance to spec—and that means finding staff across the spectrum of engineering and construction”, says Mark. Mark relies on Cybalink to help his organisation fill key roles at critical times through the tender and delivery process—he talked with us about how outsourcing supports expert EPC tendering and delivery.
‘Make or break’ margins
The contractor with the most people usually wins. We’re unique that way—we directly employ everyone needed for projects—from peggies and labourers to trades and drafters to management, and all kinds of engineers.
Recruitment is labour-intensive. “It takes us 40-50 hours to process every new hire in-house, but with Cybalink managing most of that process, we can cope with the volume of people, speed everything up and offer a more competitive price.” Presenting the right pricing structure and people lays the foundation for successful tendering and delivery. “You win a lot of work, you deliver, you retain your profit margins. Then you become an employer of choice—always building a better team. You start competing on reputation instead of price. And it snowballs from there.”
But there are big risks—and ‘tender traps’. If you underprice a tender, take on too much work, or fail to find the right people—you’ll risk snowballing in the opposite direction.Dialling down bureaucracy
A team of business developers and estimators create Mark’s tenders—Mark reviews the drafts before submission. Being in charge of project delivery, he knows what the tenders will mean in practice. His first priority’s always to check the commercials—are the rates realistic? How long will it take to get the job done? And what management structure and staff will be required? There’s never enough time to analyse every detail of a tender, so getting the right people is part of risk mitigation—competent, driven staff can make up for minor flaws in timelines and pricing. That’s where Cybalink’s focus on recruitment processes for the best specialist candidates comes to the fore. Finding that focus is a big ask. Mark’s advice is to look beyond the surface before starting an outsourcing partnership. “Some outsourcers have a superficial understanding of the industries they serve—but if the going gets tough, can retreat into fine-print SLAs”, says Mark.
Big culture, strong fit
Cybalink clearly have an in-depth understanding of E&C and the Australian market. They know how things work here, and they adapt to our company culture—they’ve become part of our team, doing things our way. And they’re really flexible. They move fast, with zero fuss.
As a specialist EPC outsourcer, Cybalink’s learnt that culture and integration are crucial. Cybalink first understands and then extends the workplace culture, offering team members ready to hit the ground running—with the right game plan for the team. The range of available talent provides an edge in its own right. “It’s hard to find people here in Perth, but Cybalink seem to have an endless supply on tap in the Philippines. This enables us to come up with new creative ways of structuring projects—another big selling point in tenders.” “It’s a strategic partnership”, says Mark. “With Cybalink, we confidently go after tenders that take us to the next level.” Getting tenders right and having the human resource power to deliver on them makes a big difference in EPC—so when it’s time to avoid the tender trap and deliver on projects, Cybalink likes to make that choice easy.
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