Some bidders avoid raising the issue of risk in proposals. Their reasoning often runs along the lines of: “Why bring up a negative?” or, in the same vein, “If the RFP doesn’t ask, why would we open that can of worms?”
In some sectors, risk is always on the table. Complex construction projects, for example, face multiple risks to on-time, on-budget completion. A bidder who did not identify and explain its strategy for mitigating risk factors would be considered naïve at best.
The fact is, every project contains risk—especially large projects that extend over multiple years.
When to raise risk in a proposal
Here’s a good rule of thumb: Whether or not required by the RFP, include a discussion of risk if either of the following is true:
- The project’s success or failure has strategic consequences for the prospect
- Your prospect’s size and business operations suggest it routinely analyses risk
So an IT solution for a financial institution meets both criteria, and a large cleaning services bid for the same institution would meet the second.
Risk identification is a big subject and beyond the scope of this post. Different kinds of projects have their own sets of risks. Project managers often brainstorm around four main categories:
- External (regulatory compliance, weather, external stakeholder actions, labour unrest, etc.)
- Internal (governance, budget, scheduling, quality management, procurement, etc.)
- Technology (components do not perform to spec)
- Unforeseeable (so-called “black swans”—rare events with catastrophic impact)
Well established risk tables exist for most project types and make a good starting point for those new to identifying risks. Begin with your industry organization or search online.
Make a four-column table with the following column heads:
- THREAT: Identified threat to success
- IMPACT: Assessment of the project’s vulnerability to the threat, ranked high, moderate or low
- LIKELIHOOD: Chances the threat will occur—again expressed as high, moderate or low
- MITIGATION STRATEGIES: Measures to reduce the chance of occurrence, and to minimize the impact if it does
Assign a row to each threat, organized in order of priority, based on vulnerability and likelihood. Within each threat organize column four by priority as determined by your risk management strategy.
Include a risk table for each section
Earlier this year we posted on how content consistency makes bid proposals easier to read and score. Risk analysis provides an opportunity to show consistency.
Analyse threats and include a risk management table for every main section, if possible. The presence of even a short table, will signal that you’ve considered the issue. Place the tables in the same location within each section—one logical place is immediately following your plan for fulfilling the section’s deliverables.
Partner with your prospect
Risk analysis is an opportunity to position your company as a partner, rather than a mere service vendor. By including risks, you will demonstrate you’re strategic and have the prospect’s best interests in mind.
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||Paul Heron, MBA, is the founder and managing partner of Complex2Clear, and leads our bid response practice. LinkedIn