Gestione dei Progetti Aerospaziali

2015-2016

Bidding phase
 Agenda

 Introduction

Buy and Sell process

Bidding costs and resources

Marketing Phase

 Bid no Bid Decision

 Proposal Preparation Phases

 Contract

© Mauro Mancini Gestione dei progetti Aerospaziali

 Introduction
 Marketing Phase
• Feasibility Study
 Competitive bidding Phase
• Contract
 Project execution Phase
• Provisional acceptance
 Operating Phase (warrantly period)
• Final acceptance
 Operating Phase
• Dismission

© Mauro Mancini Gestione dei progetti Aerospaziali

 Buy and Sell Process
Constitute of:
A single acquirer
with
Different contractors
that
Participate to the competition
Match against
Negotiate with the acquirer
Until
One “Contractor” wins the contract
or
The competition is cancelled

© Mauro Mancini Gestione dei progetti Aerospaziali

 Buy and Sell Process

• Three main figures:

 Marketing Manager

 Proposal Manager

 Project Manager

Critical transition from one figure to another one

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bidding Costs and Resources

Making a proposal means to invest: a

remunerative investment must to be
carefully evaluated for costs and
resources that requires.

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bidding Resources

Management
resources

Economic
Engineering
estimate
resources
resources

Supportive activities
resources

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bidding Resources

Management
resources
 Proposal Manager
– Represents society to the costumer
– Makes decisions
– Gives the right directives

 Team work whose number is proportional

to the scope extension

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bidding Resources

 Base Engineering

 Development of activities needed to

formulate an offer with its price

Engineering
resources

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bidding Resources

Economic
estimate
resources

 Two categories of cost:

– costs taken from firm database (for standard
advices)
– costs taken from external environment (for special
advices)

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bidding Resources

 Programming
 Insurance and Finance Study
 Local taxation study
 Legal agreement discipline
 Legal consultancy
 Procurement
 Customer relationships during sales activities
 Proposal writing
 Customer negotiating Supportive
activities
resources

© Mauro Mancini Gestione dei progetti Aerospaziali

 Marketing Phase

Three kind of uncertainty emerge:

 necessity uncertainty (technical requirements definition)
 market uncertainty (potential supplier individuation)
 operations uncertainty (bid management and project
management of the plant realized).

Feasibility Study: an instrument for the customer

Decision to begin the Competitive Bidding

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 Bid no Bid Decision

 STRATEGIC FACTORS

 ECONOMIC FACTORS

 CONTINGENT FACTORS

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 Bid no Bid Decision

 STRATEGIC FACTORS: two scenarios

1. The firm operates within the same market in which the “call for tenders”
is published

2. The firm does not operate on the same market in which the “call for
tenders” is published. Evaluate:
• market potential and its development in mid-term
• market profitability its forecast in mid-term
• political, economic, financial and social stability
• entrance barrier existence due to legislation, to the international
alliances, to the prevalent financial flows, to the product flowing market
• firm interest to invest and risk for entering into a new market

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bid no Bid Decision

 STRATEGIC FACTORS:
• Product has a strategic role  Firm decide to participate to the
competition for the following:

• to maintain its product leadership

• to introduce a strategic product in a market where it is absent
• to impede concurrence and to impose its product

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bid no Bid Decision

 ECONOMIC FACTORS:
• “Call for tenders” published in a country in which the firm is already
present. Firm decide to participate:
• to defend and consolidate that market
• to convert the investment already done and the knowledge already
acquired to enter

• “Call for tenders” published from a customer already served. Firm

decide to participate:
• to defend its position to the customer
• to convert the investment already done (for the initial acquisition) and
the knowledge already acquired to enter

© Mauro Mancini Gestione dei progetti Aerospaziali

 Bid no Bid Decision

 ECONOMIC FACTORS:
• Level of acquisition possibility depends on:

• Level of concurrence competitiveness

• Foreseeable or foreseen profitability coming from acquisition
• Technology positioning

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 Bid no Bid Decision

 CONTINGENT FACTORS:
1. Order portfolio size (reduced or satisfactory)

2. Facilitated credits

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 Proposal Preparation Phase
 CUSTOMER POINT OF VIEW
1. Potential supplier qualification
2. Tendering
• Tender documents emission
• Bid preparation
• Bid presentation
3. Proposals evaluation
• Preliminary report
• Potential participamts selection (short list)
• Proposal fulfillment
• Technical and commercial evaluation
• Conclusive report (list of contract winner in decreasing order of priority)
4. Negotiation
• Intent letter of the customer
• Technical and commercial final negotiation
• Financial package approval
• Authority authorizations
• Contract assignment
• Signature

© Mauro Mancini Gestione dei progetti Aerospaziali

 Proposal Preparation Phase
 CONTRACTOR POINT OF VIEW
1. Pre-qualification phase (Tendering)
2. Planning phase
• Bid planning
• Strategy definition
3. Organizational phase
• Needed resources estimation
• Preparation program editing
• Bid budget definition
• Collaborative agreement instauration
4. Elaboration Phase
• Pre-project editing
• First view of technical and commercial proposal preparation
5. Estimation phase
• Internal and external costs estimation
• Collateral burden definition
• Possible options evaluation

© Mauro Mancini Gestione dei progetti Aerospaziali

 Proposal Preparation Phase
 CONTRACTOR POINT OF VIEW
6. Revision and Approval phase
• Technical and commercial documents revision
• Estimates cash flow and risk profile evaluation
• Prices and negotiating margins approval
• Alterations agreed implementation
7. Final editing phase
• Alterations agreed during approval phase are inserted in technical and
commercial proposals

© Mauro Mancini Gestione dei progetti Aerospaziali

 The Contract

 Marketing Phase
Feasibility Study
 Competitive bidding Phase
Contract
 Project execution Phase
Provisional acceptance
 Operating Phase (warrantly period)
Final acceptance
 Operating Phase
Dismission

© Mauro Mancini Gestione dei progetti Aerospaziali

 The Contract

Regardless of the document’s complexity

(complex document or simple purchase
order) a contract is a mutually binding
legal agreement that obligates the seller
to provide the specific products, services
or results requested and obligates the
buyer to pay the seller for them.

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 The Contract

 LUMP SUM

 UNIT PRICE

 REIMBURSABLE

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 The Contract

© Mauro Mancini Gestione dei progetti Aerospaziali

 The Contract

© Mauro Mancini Gestione dei progetti Aerospaziali

 The Contract

 TURN-KEY CONTRACT

 PRODUCT IN HAND CONTRACT

 MARKET IN HAND CONTRACT

 MANAGEMENT CONTRACT

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 Contract – Risk Sharing

CONTRACT: a way of RISK SHARING between CUSTOMER and

CONTRACTOR
Ct = F + E + (1 – b) (C – E)
P = F - b (C – E)

Ct = total cost for the client

E = estimated cost
C = actual cost
F = estimated contractor’s profit
P = actual contractor’s profit
b = risk share allocated to the contractor
© Mauro Mancini
 Contract – Risk Sharing
 if b=0  reimbursable contract:
Ct = F + C
P = Ct – C = F
 If b=1  lump sum contract
Ct = F + E
P = Ct – C = F + E – C

• The principle governing risk transfer is that each risk

should be allocated to whoever is best able to manage
it at least cost
• A correct risk allocation should reduce the risk
occurrence probability
© Mauro Mancini Gestione dei progetti Aerospaziali
 Contract – Risk Sharing

© Mauro Mancini Gestione dei progetti Aerospaziali

 Contract Management
 Invoicing and payment progress
 Specifications interpretation
 Adherence to quality
 Warranties
 Change orders
 Claims
 Penalties and bonuses
 Additional contracts
 Resolution of disputes
 Contract closure
 Etc.

© Mauro Mancini Gestione dei progetti Aerospaziali

 Contract Management
• OBJECTIVE: prevent possible claims fro counter-party
and project themselves damages coming from possible
claims

• Claims possible sources:

• Contract ambiguity
• Incomplete specifications
• Risks not correctly allocated
• Unforeseen site conditions
• Client’s approvals
• Frequent order changes
• Claims rejection
• Strict interpretation of the contract
• Contractual exclusions
• Client’s obligations
• Mancini
© Mauro Etc. Gestione dei progetti Aerospaziali
 Contract Management

FINAL APPROVAL

PROPOSAL
CONTRACT COMMISSIONING
DOWN PAYMENT WARRANTY

BID BOND

BID BOND PERFORMANCE BOND

DOWN PAYMENT BOND

PERFORMANCE BOND

© Mauro Mancini Gestione dei progetti Aerospaziali

 Contract Management
• CONTRACTUAL RISK AREAS

• intermediate and final temporal deadlines respect

• scope of work limits
• changes and extra-work
• contractual exclusion clauses
• customer obligations
• payment deadline
• technical documentation approval deadline
• bonds
• civil responsibilities

© Mauro Mancini Gestione dei progetti Aerospaziali

 Contract Management
• CONTRACTUAL RISK AREAS

• taxes
• subcontracts assignment
• external events
• assurance needs
• arbitration
• bureaucracy in public offices
• penalties
• active/passive invoicing
• income/outcome

© Mauro Mancini Gestione dei progetti Aerospaziali