How creating the Basis of Estimate first can improve proposal writing

Often preparing the pricing is that last thing people do when working on a proposal. This is especially true with proposals for services where people have to figure out what their offering is going to be before they can price it. However, a good argument can be made that proposal pricing should be done first. In between those two sits the basis of estimate (BOE). 

A BOE is a combination of the data and formulas you’ll use to calculate an estimate, such as the price for doing something. A BOE does not require a lot of writing to prepare. But it does require that you think things through well enough to calculate them. Or at least to identify what the variables are. You may be able to get things started just by understanding what the variables are and how to turn them into the formulas that will produce the estimate you need. Then you can collect the data later.

When companies do their pricing last, they sometimes fall into the trap of figuring out what to offer by writing about it. This is extremely risky and can send a proposal into a death spiral. You should design your offering before you write about it. This is much easier said than done because there is no single way to design an offering. Does this mean to create a diagram or blueprint? That’s not normally appropriate for a service proposal. 

But what is appropriate for a service proposal is to calculate how many people, in what roles, at what level of effort, with what tools, materials, and resources will be required to accomplish the project goals. If you do this first, even at a high level, you will have to think through what you approaches are. You will have to quantify them. And before you write anything you can determine whether they fit the budget.

You may find creating the BOE to be… challenging. But you have to do it sooner or later or you can’t price your proposal. And if you do it first, then proposal writing becomes describing an approach you’ve already figured out, instead of a tangled mess of figuring it out while rewriting it with every little change until you run out of time.

If you want a better proposal experience and a higher win rate, you should do everything possible to begin creating the BOE sooner.

Here are some things you can do to streamline creating the BOE. 

• Create templates that do the math for people
• Create lists of possible variables to consider.
• List sources of data or possible formulas to use for quantifying the variables.
• Don’t try to produce final pricing. You might not need to prepare any pricing at this stage. Sometimes just figuring out the variables is enough.
• Consult with the people who do the pricing for your company and find out what inputs they usually need. They might even be able to provide formulas. They might appreciate getting the inputs required up front.

Guide people to answer questions like these:

• Do you know what you need to know in order to make the required estimates? Do you have the details you need to perform the calculations necessary?
• How do you quantify what you have to do to meet the RFP requirements/specifications?
• How many people at what level of effort do we need? What are the variables that determine that? Location, shifts, productivity?
• What tools, resources, or other things will be directly required to fulfill the contract? Do you need a Bill of Materials (BOM)? Are there supply chain concerns?
• Will you have teammates? How will the effort be divided among them? How do they impact what will be needed?
• What things will be needed that are indirect, outside the project, or not billable under the contract like invoicing or HR support?
• Is our approach feasible? Extra credit if you determine whether you can deliver at the price-to-win.
• Does the BOE account for what you need to do to add value, differentiate, and win the proposal?

You can make preparing the BOE part of the planning people need to do before they start proposal writing. Consider holding a review of the BOE before writing can start. The discussions that fall out of doing that will benefit the proposal immensely.