In our today’s discussion, we will try to do analysis of some common pitfalls while bidding which ultimately proved very costly to the company.
For the ease of our discussion lets hypothetically consider the situation of Dispute or arbitration i.e. Company A is about to start the arbitration, now let’s divide this situation into two-part (a) pre- arbitration and (b) post arbitrations.
Today, we will keep our eye and brain into (a) pre- arbitration situation:
Background: Biggest disadvantage of this situation is as nobody can predict whether transaction will go into dispute, typically this situation is from Match making till honeymoon i.e. invitation to bid, RFQ, RFP, various meeting (Technical / commercial), draft agreement, bidding, ultimately award concluded with executed Contract and kick off.
For the afore stated stage following are typical pitfalls committed by the companies because of poor bidding strategies:
1. In enthusiasm or pressure, companies focused mostly in reviewing the SCOPE and payments and least bother about other conditions.
2. Other conditions are sometimes in the contracts are more important like licenses, obligations, handover of project site, Force majeure etc. This problem is mostly faced in high stake matters like EPC, BOO etc.
3. As good practice, always develop your team for bid review and participation process, primarily this team must comprise of techno, commercial and legal, in most of the cases companies gave more weightage to techno and commercial while completely ignoring legal review or now a days for formality’s sake few companies use some standard Google review .
4. There is nothing like our understanding or gentleman promise with the client, whatever the query or clarification it should be in writing.
5. Most of the companies thought records or side communications are needed just till contract stage, on the contrary all these records are very vital while preparing for arbitration.
6. Record keeping is the key and it must be process driven and not the person driven.
Please note above are just the basic pitfalls bidder must be cautioned about, each of the above point can be further dissected in independent module.
With our experience of 360 degree from bid to arbitration, we had witnessed several pitfalls or self-goals committed by companies, some of these are discussed above, hope useful for our readers and to enable them to avoid mistakes and built robust processes !
