In chasing work, architecture, engineering and construction firms have always weighed and scrutinized up-front costs and resources—mindful of not over-extending themselves, underperforming and jeopardizing client relationships, future work and company profits.

But in a changing marketplace of more complex procurement choices, firms see new challenges to find the best project proposals to embrace and develop vetting approaches that make the "go-no-go" decision the right one.

"Go-no-go regimens are more and more prevalent, and in all cases much more rigorous," says Scott Braley, principal of marketing consultant Braley Consulting & Training, Atlanta. "Firms of all types are screening pursuits and prospects much closer, and committing to the cost of a proposal is better thought through. The higher the cost of proposal preparation, the more focus is paid on the potential for a win."

The emerging post-recession economy has been a blessing and a curse for many firms, providing new opportunities but also adding cost and resource pressures in bid and proposal decision-making for large and small firms alike.

"There is still a pervasive fear about the post-recession economy and competition, fear that we must submit to stay in the game," says Robert Brustlin, CEO of engineer VHB, ranked at No. 76 among the ENR Top 500 Design Firms. "Compression and expectations have both intensified. We are compressed for time, with shorter turnaround for proposals and with expectations for more, more, more technology and visualization on myriad projects, not just the megaprojects."

Canuso Jorden, a $50-million Pennsylvania contractor, feels the resource pressure on work pursuits, which William Long, principal and vice president, attributes to "a net outflow of personnel, both at the trade and management levels." He adds, "Fees contracted substantially, and they have only rebounded slightly. In many cases, [both design and construction] firms are spending a large portion of their potential profit" to chase work and "are becoming much more selective and evaluating their return on investment."

Industry consolidation is a complicating factor, Brustlin says. "The continuing proliferation of mergers and acquisitions has made go-no-go decisions more difficult," he says.

"Larger and medium-size firms continue to partner extensively on pursuits despite the growing in-house capabilities of these megafirms, so we carefully assess why we are being added to a team and the likelihood of playing a meaningful and substantive role on the project once it is awarded."


Firms are taking note of proposal requirements that now mandate labor-intensive, project-level detail, such as floor plans, renderings, LEED scorecards and even preliminary energy models, says Scott Butcher, vice president of JDB Engineering Inc., York, Pa.

"This is a critical issue because, when proposals go beyond the marketing department and require significant input from senior technical staff, we need to be very selective in deciding which projects to pursue," he says. According to Butcher, such detail may ultimately prove useless, even in a project win. "You've only created a hypothetical solution," he says. "We've walked away from many opportunities because of the amount of up-front work required in the proposal stage."

Project stipends are few and far between and usually only available for more complex procurements, and the amounts offered seldom defray all expenses of a pursuit, say industry observers. Some also note challenges in accounting for a stipend. It is not "earned revenue," says Elizabeth Hensley, U.S. marketing director of architectural practice at Dewberry.

However, project proposal reimbursements are not always a key component of the decision-making process, insiders say. "Design-build is up to 10 times more expensive in up-front costs than traditional design-bid-build jobs, although there are no risks associated with design changes, thereby adding a little more margin," says Corey Newcome, division manager of Las Vegas Paving, which had $268.5 million in revenue in 2013.

The company spent over $2 million pursuing a $234-million, 5.5-mile design-build widening of Interstate-15 in Southern Nevada, despite a $300,000 state stipend for bid finalists. Las Vegas Paving was motivated by the potential to please a repeat public client, the Nevada Dept. of Transportation, and boost its status as the agency's go-to general contractor.

"Factors that complicate the go-no-go process almost always have to do with the client and not wanting to disappoint," says Kirk Kistner, vice president of marketing and business development at Bartlett Cocke General Contractors, a $388-million San Antonio firm. He says pursuit costs are steady, but one challenge is gauging how chasing one project will affect "a larger and potentially more profitable project we will not be able to acquire because we have tied up resources."

Gilbane Building Co. Inc. has developed a multi-tiered risk assessment for go-no-go decisions. "We look at whether it's a onetime opportunity or a client for life," says Executive Vice President Dennis M. Cornick. "There are certain internal triggers on project type, size and contractual relationships that require it to go up to a corporate review committee."

Others note more C-suite involvement in pursuit decisions. Anchorage-based geotechnical engineer Dowl HKM now includes senior executives as go-no-go decision-makers "because the investment level is so high," says President Stewart Osgood. "We do not pass this off to project managers and mid-career people." Adds Texas-based marketing consultant Bernie Siben, "One purpose of the process is to help a firm principal say no when no is the right answer."

Weighing P3 Costs

Fluor Corp. Senior Vice President Richard A. Fierce notes the added expense now linked to public-private-partnership pursuits. "It would be difficult to try to put any metric on that, but the need for additional outside advisers is a big piece of it," he says. "P3s also include additional work and services to estimate, such as the operations and maintenance scope and renewals.

The trend toward larger short lists may cause contractors to avoid bidding certain prospects, particularly when combined with shrinking bid stipends." Bartlett Cocke decided "not to chase P3s as a prime due to political challenges and the extreme cost of the pursuit," says Kistner.