Are you (yet) measuring your pursuit costs?

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tracking pursuit costs

tracking pursuit costsIf your practice or contracting company wins business through RFP or fixed bid opportunities, have you developed a system to measure and manage your pursuit costs?

Yes, you  may “know” what to do, and it is tempting to push out responses and bids in greater numbers when your work backlog is lighter than normal, but do you really know how much it costs to do this stuff — and, once you do, can you redirect your resources more effectively.

Linda Koch and Dona Corlew in a SMPS Marketer article (the magazine and individual stories, of course, are available to Society for Marketing Professional Services members) point out that most architects and engineers have accounting systems to track time for billing hours for professional services.  In this case, the practices can co-ordinate with the accounting department to create a few additional time billing codes for pursuit costs.  The writers suggest these could be in four categories:

  • Client contact and strategy/positioning (activities in advance of the RFP)
  • Proposal (once the RFP goes live)
  • Presentation (preparation and performance)
  • Negotiation

Why do this? Well, as you gather the data, you’ll capture some insights into the soft costs of pursuit. (The hard costs, including printing, courier packages and perhaps outside consultant funding will be relatively low, of course.) Then you can decide if your resources are well spent on the pursuit and, as you build your database, refine your go/no go system for pursuit management.

This process may also help you in devising your compensation structures and induce more positioning-based client contact/communication — the soft stuff in advance of the RFP.) If principals and others are concerned about showing they are earning their billable hours, then the tendency to do this crucial relationship-building work is diminished if the time/value isn’t recorded.  (I can’t imagine it ever being excessive — but you may need to educate your bean-counters that a day on a golf course with some really good potential clients actually makes a whole lot more business sense than the day spent grinding out a proposal for a complete stranger, who already has relationships with another competing organization.)

The situation for fixed bid contractors may be a bit more challenging, because your existing billing and costing systems may be project rather than time-based, but you may wish to check with your accounting staff to find if there is an easy-to-record process.

As for the accounting department, creating another billing code takes just a few seconds, and once the stuff is in the system, it takes just a few clicks of the mouse to prepare the analytical reports. You should do this.

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