Bigger contracts = bigger margins

Bigger contracts = bigger margins

Bigger contracts involve the careful process of pre-qualifying questionnaires (PQQs) and tendering – documents that prove your organisation is best equipped for the job in terms of skills, experience and managing budgets. Kevin Dowd offers some helpful advice for businesses looking to break into the public sector and local authority arena.
Helping the public sector to cut energy costs and carbon emissions has been top of the Government’s agenda for some time now, thanks to the gains that can be made from the refurbishment and upgrading of public building stock as well as new build green schemes.
Initiatives, such as the Green Deal, Renewable Heat Incentive (RHI) and Feed-in Tariffs (FITs), are encouraging local authorities to embrace renewable technologies and energy savings measures in order to meet the carbon dioxide targets imposed on them. This change in focus is resulting in vast opportunities for appropriately trained renewables engineers.
In fact, the scope in the non-domestic sector has been further enhanced by the Government’s recent announcement that it is to expand technologies eligible for the commercial RHI, to include:
• Water heat pumps at 2.5p/kWh
• Biogas between 200 and 600kW at 5.9p/kWh
• Deep geothermal at 5p/kWh
The tariff levels have also been increased for large-scale biomass (2p/kWh), solar thermal (10p/kWh) and ground source heat pumps (Tier 1 – 8.7p/kW and Tier 2 – 2.6p/kWh). This move is sure to see a surge in calls for ‘green-ready’ installation firms, who can help support the RHI and the commercial sector in reducing its carbon footprint.
First things first
Building services engineering projects in the public sector can be sourced in a number of ways. Contract notices can often be found in newspapers and trade magazines, while government tender notices are posted at www.contractsfinder.co.uk.
Firms can also search for ‘above threshold’ contracts on the Tenders Electronic Daily (TED) database – www.ted.europa.eu or by contacting your local Enterprise Europe Network – www.enterprise-europe-network.ec.europa.eu.
To be considered for the larger public sector contracts, organisations are required to express their interest through a pre-qualification questionnaire (PQQ). This document is effectively a marketing tool to prove that an organisation can meet the requirements of a project over and above its competitors.
The awarding body will assess the financial status, the technical or professional ability, and integrity of a business, considering factors such as experience and qualifications of staff.
PQQs are compiled periodically rather than when a specific tender or job comes up. For a business to be eligible for most contracts in the public and private sector, it must have ‘passed’ a PQQ.
Once a business has passed a PQQ it will stay eligible for a set period. Even if an organisation doesn’t win the initial contract, compiling these documents is a useful process that will help clarify aims, strengths and weaknesses.
Tendering for a job
Once the closing date has passed, each PQQ is scored and the highest scoring firms will then be invited to tender. Passing a PQQ is not a guarantee of work, but it is a positive in-road to bidding for a contract among a smaller pool of competition.
At tendering point, further elements of your business will be assessed, including contract specifications and terms, etc.
An ‘Invite to Tender’ is likely to include:
• A letter of invite to tender instructions to tendered
• Background information
• Evaluation guidance
• Instructions for submission
• Specification
• Standard conditions for contract
• Pricing schedule
• Form of tender
• Non-collusive tendering certificate.
It is vital at this stage that a business assesses whether it can match the requirements in terms of skills, experience and other factors – such as diversity and environmental policies. Equally, staffing levels near to be taken into account to fulfil the brief without jeopardising existing workloads.
If a firm matches the brief, the following will need to be addressed when completing the tender documents:
• Background research into the requirements of the job and purchaser
• Writing the bid
• Planning the delivery method
• Costing the work – staff, time, materials, transport, fixed costs and contingency funds.
• Identifying partners where necessary
• Keeping informed and managing the bid stages
• Producing a professionally-presented bid
• Pricing the bid – getting the balance here is key. Being too expensive or too cheap could prove a deal-breaker.
Case studies of successful projects of a similar nature, scope and scale will also go some way to proving that a business is a real front-runner for the contract.
These are essentially references and provide an opportunity to demonstrate innovation, successful scheduling and how value was added to a project.
Aligning with quality training providers recognised for their industry best practices will also help any business stand out from the crowd. For example, any renewable technologies or Green Deal training, completed through the National Skills Academy for Environmental Technologies, will give a clear message that staff are trained to the highest standards and meet all legislative requirements.
For jobs involving renewables or other low carbon technologies, suppliers may be asked to demonstrate their technical capacity in relation to the environment. Qualifications are sometimes also required, but only where environmental issues are directly related to the contract in question.
Think big
Now really is the time to expand into the public sector arena, given the size and scope of projects available. Following the right advice on PQQs and the tendering process will help installers tick all the boxes and requirements for a successful, progressive business.