Welcome to part two of Negotiation for RFAs, RFPs and RFQs here at Aidpreneur. In this section we will be discussing critical issues for negotiating the substance of a piece of work you’ve been selected for. Specifically, I’ll talk about the work itself, staffing required for the work and the finances you need to make sure the work gets done.To start: no matter what type of work you’ve proposed to perform for your client, there are basically three areas you should focus on when discussing your implementation. How you will perform the work, when you will perform the work and what does success look like.
In your proposal, you should have spent a substantial amount of time describing how you will achieve the objectives you’ve laid out for your project. This includes the method you use, the social levers you’ll manipulate, specific technologies or processes that you bring to bear, etc. Because this is your technical solution, it’s rare for your client to ask for substantial changes – after all this is a huge reason of “why” you were selected in the first place. More often, your client will request adjustments to your budget first, and look for ways for you to adjust your proposed technical solution and work plan to fit the amended budget. This happens so often, that over at ISG, we actually enter into these initial negotiation discussions prepared for the client to talk about budget first, budget in the middle and budget last. Ultimately, this “budget driven” negotiation is a result of how donor funds are allocated. Before the tender was released for bids, the client earmarked a particular pot of money for the awarded project. Now that they’ve selected a solution, they need to fit your solution into that finite box. While I will talk about negotiating the financial aspects of your contract in more detail in a few minutes, I want to underscore that this is really a critical negotiating opportunity that hangs on your ability to negotiate on value versus cost. While your client will almost always be cost driven, given the nature of finite budgets and earmarked funds, it’s always in your best interest to negotiate on value.
Here’s an example: let’s say that you have responded to a tender to provide water and sanitation services, and that your technical solution has three components to it: building latrines, providing capacity building training and setting up local councils for oversight and maintenance. If you negotiate on cost, what typically would happen is that you would end up providing all three of those services, just on a smaller scale – fewer latrines, limited training and less support for community councils. However, if you negotiate on value, rather than looking at those three services and how to fit them into a smaller budget, you can look at how you can add really high value to a smaller geographic area or more limited beneficiary group. By doing this, you’re saying to your client that you would rather deliver massive value for a fewer number of people, then deliver poor quality for a larger scope or larger group of people.
One way your client may ask you to modify your technical implementation is to leverage or capture potential synergy opportunities with other implementing organizations or similar programming in the area. However, this shouldn’t present too much of an issue provided that your client is not asking for a wholesale change in your methodology or process that could specifically affect your ability to achieve your objectives.
The critical bottom line when negotiating how you will perform the work is to make sure that any changes in your technical solution are also reflected in your work plan, your staffing and – most importantly – your budget. Remember: you get paid for your expertise, and you should never give it away for free (unless, of course, you or your organization is a pro bono provider as your business model).
The second area of focus when negotiating the work you perform is when you will perform it. Unlike the nuts and bolts of your technical solution, this is a fairly typical negotiation point. In my experience, a typical donor or client negotiation position sounds something like: everything needs to happen yesterday, this project is the most important project, your work is incredibly time sensitive and there is a finite window for completing the work. However, the reality that I have experienced over the last decade suggests that none of these negotiating positions are true. Now, this doesn’t mean that you should blatantly ignore deadlines, delay your deliveries or, generally, treat this project any less important than you would another. The best strategy is to be compliant with the tender requirements and prepare a realistic timeline that would allow you to implement the work you’ve proposed at a professional, non-anxiety producing pace. This allows you to have room during the negotiation for adjusting – for example, agreeing to bring forward your deliverables on a tighter timeframe in return for a broader dissemination timeline. As with before, it’s critical to remember that any changes to your work plan should be reflected in your technical solution, your budget and your staffing if necessary.
The final area focus when negotiating your work is your definition of success. It’s critical that you come to a very clear agreement with your client about what will be accepted as a successful outcome for the work that you’re going to perform. With contracts – as I’ve mentioned before in other trainings – there is always a finite deliverable or deliverables that you must produce in order to satisfy the contract. While this sounds like it would make everything easy, sometimes that deliverable is “a report” or “a presentation” or “a database”. In all of these cases, it’s incredibly important not only for your sanity, but for the financial health of your company, to define in writing with the client what exactly the deliverable looks like, tastes like, smells like, feels like and sounds like. The more detail that you can agree upon the better. For other contracting vehicles, such as grants, you are only beholden to delivering your, “best effort”. While this provides you with, usually, a substantial amount of leeway regarding your ability to achieve your stated objectives, it’s still a good idea to spend time going over what these objectives are, and how you will indicate success with your client. In both cases of a contract and grant, I once again advise you to always under promise and over deliver!
A second critical focus area when negotiating substance is your staffing solution. This includes your implementation team, any partners that you’ve signed on and your proposed management staff for the project. As with your technical solution, it’s rare for your client to ask for major changes to your implementation team, because this is usually a key reason why you were selected for the work (and in the case of an individual practice, it’s only reason they considered you for the work). However, your client may still request that you make staffing adjustments to fill holes in your team for needed technical expertise or to provide additional support staff to ensure that your lead technical personnel will have the support they need to do their job properly. While minor adjustments are fine, it’s usually a good idea to hold the line on any major requested changes to your staffing. If you’ve done your job correctly during the proposal development process, you will have developed goodwill with your proposed staff about the work they will be doing in the level of effort on the assignment, and you want to honor these agreements and relationships.
At the same time, it’s critical for you to understand your ability to change technical staff before or during the project. Because many times your staff are a key reason why you have been selected for the project, there are usually specific rules or approvals necessary in order to change one individual for another. But, life happens: people get sick, they have family events, they have career changes, etc. And, in ISG’s experience, sometimes people just don’t turn out to be great at implementing projects – even with a thorough review and interview process during your proposal development, sometimes people just don’t see eye to eye when the work really begins. In all of these cases, you’ll need to replace a staff person and you just need to know what your client requires for this to be acceptable. The bottom line here is that you should always propose your most relevant and highest qualified team for the work at hand. At the same time, within your practice or business you should maintain as robust and as deep a network as possible so that you’re always able to call on these high-quality people, it also pays have a pool to draw from if and when you need a replacement.
The second staffing area to pay attention to during negotiations is the partnerships you’ve aligned to implement the work. As with your core staff, it’s rare for a client to ask for changes to these partners because they offer important technical or local knowledge and expertise for you to deliver your proposed solution. My advice is that you should always cultivate as deep and as substantial a relationship as possible with your partners during the proposal development stage to make sure that you have a solid working relationship and a common culture. Any time you can work with the same partner on multiple projects you should do it. When you’re delivering your technical solution, ultimately, you want your client to feel like there’s only one organization at the table, speaking with one voice. Of course, while it seems obvious, you always need to make sure that any changes to your technical solution, work plan or budget that affect your partners are vetted through those partners before agreeing with the client.
The final staffing area to discuss during negotiations is your project management. Because this management is internal to your practice or company, it is again rare for the client to ask for changes to your management team. What I’d like to highlight here is that contract negotiations are a fantastic moment for you and your project management to begin establishing a relationship with your client. As such, you really want to make sure whenever possible, your project manager or management team are involved in the negotiation process. Beyond that, two critical pieces to negotiate that are specifically related to your management are your deliverables and your reporting requirements. For your deliverables, as I’ve mentioned before, you want to be as specific as possible and ensure there is a clear understanding on both the client-side as well as your project management. For reporting requirements it is in your best interest to report regularly, but as infrequently, as possible to reduce the administrative burden on your management staff so they can focus their time on delivering high-value for beneficiaries and stakeholders.
The third and final area to consider when negotiating substance is your finances. Unsurprisingly, this is where most actual contract negotiation discussion takes place. As I’ve mentioned earlier, this is because most clients are cost driven and not value driven because they have a finite budget and they want to squeeze the most work they can into the funds they have earmarked. Unfortunately, this also means that there are quite a few occasions where the most valuable solution is overlooked in favor of a solution that fits the earmarked budget.
When negotiating your finances there are two broad areas you need to consider: the costs of performing the work and the overhead or fee that you will charge for the work. When it comes to the costs of performing the work, in my experience, this is really the true home of under promising and over delivering. For example, put yourself in the shoes of your potential client: if you say that you’re going to deliver 10 trainings, and then find that you are gasping for breath at the end of the project to make sure you have enough budget to fulfill this requirement, or worse yet are unable to fulfill the requirement, this really reflects poorly on your practice and your company. When this happens, you’ve essentially given control of the project to your client and, you’ll quickly find yourself doing everything they demand. However, if you promise to deliver six trainings, and then end up over delivering with eight or 10 trainings in the same budget, you’ve completely changed the dynamics of your relationship with your client, the nature of your reporting and your ability to highlight success and you will remain in the driver’s seat of the work. (The only caution here is to not under promise too much – otherwise the client will question the value for money of your proposal).
The format of your financial proposal will vary widely from client to client, depending on the level of detail required, the format they required and of course, depending upon the necessities of the project you’ll be implementing. In the experience of ISG, we found that the greatest costs are associated with your staff and partners – and rightly so. But ultimately, it’s up to you to know the costs associated with performing the work you propose, and this is where experience and local knowledge really play a key factor. As with the other sections, the bottom line here is that any changes related to the cost of performing the work must be reflected in your technical solution and your work plan.
Along with the cost of actually performing the work, you will also want to charge overhead and/or a fee to the client. In our industry, there is an inherited bashfulness in this topic even though we all know the necessities of keeping an office open and having proper administrative staff available to support programming. While there are a number of variations, for-profit businesses usually charge a fee for their work and use what’s called “loaded rates” for their staff and partners’ time. This fee and these rates are what is used to maintain the company and provided the necessary administrative support. With not-for-profit organizations, a budget usually details all specific overhead costs and expenses. The critical piece I want to highlight here is simple: the more detailed that you provide in your budget, the more areas your client has to negotiate on. I can’t tell you how many conversations I’ve been involved with where a client has whittled down individual line items on overhead. Don’t get me wrong, I do not recommend hiding fees or overhead expenses at any time; this is not the same as a loaded rate for your services. With a loaded rate, you are including your overhead and feet in that rate. At the end of the day, there are two critical things you want to ensure when negotiating finances: first, that you always ask for exactly what you want – no more and no less. And second, make sure that the fee or overhead you ultimately accept truly provides enough for you to stay in business and properly support the work that you will be implementing.
Your negotiations on substance should ultimately result in a revised terms of reference, work plan or technical proposal that will be attached to the formal contract – either in-line or as an annex. When this is been completed, it’s time for you to read through and examine the legalese in the written contract to make sure you understand your duties and obligations and those of your client. This is the topic of the next training in this series. Thank you for watching this section on negotiation for RFAs, RFPs and RFQs. Remember, if you have any questions at all please contact us at training@Aidpreneur.com.