Collaborating with other businesses can bring a number of benefits such as enhanced profile, shared resources and knowledge, and the reduction of costs and risk when exploring new markets and innovations. Increasingly, businesses are also coming together to access larger contracts.
Q1. Tell us a little more about yourself?
Gill: I have over 30 years’ experience in business management and consultancy, focussing on collaborative projects and programmes. I set up Intend Business Development in 2006, which helps SMEs and social enterprises compete with larger national players on public sector tenders.
In 2011, Gavin and I decided to collaborate to design a new training programme for consortium bidding, working closely with the CDS team. We continue to tender jointly for various contracts where our complementary skills can add value for clients, and we have worked as CDS specialist advisors for consortium co-operatives since 2013.
Gavin: I am a practicing solicitor and started my own niche legal business in 2009 specialising in business law. Before I was a solicitor I was a contracts manager in large engineering-based companies, and was frequently involved in tendering for contracts, including collaboratively.
Q2. Why is tendering an important area for businesses, including SMEs?
Gill: £11billion worth of business is put out to tender each year in Scotland alone, with a huge number of private and third sector contracts also subject to a tendering process. Although these contracts will be for goods and services that smaller businesses are well placed to provide, so many SMEs aren’t going after them, missing out on an enormous source of business.
Q3. What are the barriers for SMEs?
Gill: Particular barriers for SMEs include their small size, lack of specialist expertise, and limited resources to identify opportunities and prepare tender responses – a time-consuming process. Larger organisations can have in-house resources dedicated to the tendering process, but this is usually out of the question for SMEs. Small companies are encouraged by buyers to form consortia in order to bid for contracts, however, collaboration can be viewed as a barrier in itself. Many SMEs don’t know where to start, from finding the right partners to getting a sound agreement and working together to create a winning bid.
Q4. How can collaboration help?
Gavin: By collaborating with other businesses, increased capacity and a wider range of available resources and skills make it possible to bid for larger contracts. Coming together under a single brand in a consortium co-operative can really consolidate the members’ joint offering and put them on an equal footing with larger companies pitching for the contract. With each member business focusing on its own strengths, the customer gets a team of true specialists in their respective fields instead of a larger organisation which may not be strong in all areas.
Gill: Collaboration also means more eyes out there to spot opportunities in the first place, and the costs and time involved in the tendering process are shared, making it less of a burden on smaller businesses. An added benefit of working closely with other businesses is the significant amount of organisational learning that each partner can derive from the experience.
Q5. What are the options?
Gavin: There are different ways to collaborate when tendering. The most common approach is to have a main contractor with a number of subcontractors, however, this is rarely a collaboration of equals. Subcontractors may have little say in important decisions and can be subject to the whims of the main contractor in terms of what work they get and when they are paid.
Tools and techniques to improve the position of subcontractors in this situation are available, however for a truly co-operative collaboration where all parties have an equal say, there is the consortium co-operative model.
In a consortium co-operative, members work together for a common goal whilst retaining their own brands, identities and control. Members can be limited companies, partnerships or individuals and the membership can be of any size from two businesses upwards. Each member business has an equal say on consortium activity, no matter its size, and both exiting and bringing in new partners is simple. As a recognised legal entity with limited liability, the model provides a durable yet flexible framework for collaboration.
Q6. What support is available?
Gavin: CDS’s principal form of support is called Consortium Expert Support – it is free of charge to eligible businesses and provides assistance to form a consortium co-operative. This year CDS is also running a pilot service called Collaborate to Tender which will offer specific tendering support to a small number of eligible existing consortia. For more information about consortium support visit it our page on the Scottish Enterprise website: www.scottish-enterprise.com/collaboration.
Q7. Can you give us an example of successful consortium tendering?
Gill: A CDS client that has experienced success in tendering is Indigo House, a consultancy service for the housing and regeneration sectors. Formed by members AE Housing and is4 Housing & Regeneration, it provides consultancy support, thought leadership, research services and interim management to housing associations, local authorities and housing developers.
When tendering for new business, both companies had often found themselves up against larger housing consultancy firms including DTZ, Savills and Ernst and Young that can offer clients a multi-disciplinary practice. In order to compete, they began collaborating informally. Bidding as two separate companies provided an element of multi-disciplinary skills, but the brand was cumbersome, and the lack of formal arrangement could be concerning for potential clients. Forming a consortium co-operative and bringing their skills together under a single brand has enabled them to successfully pitch for more ambitious contracts.
Gavin: The aims of the Indigo House collaboration are to secure additional work from existing clients in Scotland, expand into the English market with a clear brand offering, build a strong network of associates as part of the co-op model who can be deployed flexibly depending on contract opportunities, and to share the costs involved in business services and activities such as events and marketing.