LTD Talks: Tenders & Bidding

All industries experience growing pains. Some learn to deal with them through regulation, policy, and education. For others, it goes unchecked and unattended until it becomes a deep-rooted and systemic issue that is passed off as ‘part of the culture’. The global architecture and design (A+D) industry is a case of the latter, where certain practices generally accepted as ‘business-as-usual’ have only done more harm than good for all players involved in the market. 

We invited industry veterans to the Cosentino showroom in d3, to discuss this very state of affairs in the hope of finding some solid solutions. Brett Cameron of CIAAD, Kevin McLachlan of NomadK, Keenan Grote from 3sixty Consult, Richa Singh from Ericsson, and Ben D’Souza from Love That Design took apart the status quo of the tenders and bidding process whilst exploring the possibility of changing the culture, at least here in the UAE. 

Clockwise from top left: Keenan Grote, Managing Director, 3SixtyConsult; Brett Cameron, Executive Board Member of CIAAD; Richa Singh, Real Estate Director at Ericsson; Kevin McLachlan, COO/Co-Founder of NomadK Design Studio; Ben D’Souza, Co-Founder of Love That Design.

The Bidding Process: A Zero-sum Game?

There’s a mix of frustration, a hint of disappointment, and a strong sense of hope in the air as our expert panel explains the tender and bidding process for global A+D projects. Brett, as a founding member of CIAAD and a seasoned design professional, has had access to various governing bodies around the world, including the UAEs Ministry of Culture and Knowledge Development (our roundtable discussion came about as a result of his research and white paper on the tendering and bidding process in the UAE ). His experience and findings reveal an implicit yet shocking admission. “With each project comes a huge, sometimes crippling, loss of resources (both in talent and finances) due to the current design process, that is mostly unavoidable,” says Brett.

The current design process starts with any project – a client identifies an opportunity or problem they need solved, executives discuss it internally, and after figuring out high-level needs, they reach out to players in the market, aka a tender. The requirement is to return with a proposed solution that contains an incredible length of detail, which is a resource-intensive process. 

Often, a client will ask for multiple solutions. All for free.

If you’re running a design agency, you’re at the biggest risk here. Your company needs to win one project a month to remain profitable. Brett takes a generous estimate at the average success rate to be 25 percent, assuming only one in four projects are successful. Most agencies have to work on multiple project bids at a time to increase their odds of winning. Given a timeline of one month to work on a bid, they find themselves cramming work for each project into a week. Since resources are being consumed to prepare a bid, the cost of the winning bid has to ensure it pays for the other lost bids (a dicey situation keeping in mind the competitive nature of the bids). So what the client sees in a bid is usually a solution with an inflated cost but with its quality compromised. Even a competitively priced offer doesn’t cut it, and is often presented without the necessary details to make the right decision. 

“Only in the design sector are creative and technical professionals paid only if and after a project is won. The time and effort spent in creating that solution are simply not taken into consideration,” says Brett. When you see it on a global scale, approximately $2 billion of billable hours are lost every year.

The pie isn’t getting any bigger, but the industry sees more players enter every year. Competition is heavy and the winner’s share tends to not be valuable enough. Wondering what existing and well-established designers feel about the situation, we direct our question to Kevin, who brings decades of experience to the table. 

“The system is broken if you ask me, yet, no one’s fixing it,” he says. “Competition is only getting tougher. We bid for around two projects per week, and as a business owner, it’s a stressful process made worse when you know you may not get paid for that creative work. Clients often ask for concept designs, which we try to avoid unless we have a relationship with them or believe there’s a high chance of winning. It’s not worth it and we don’t get paid for the attempt. We bid on a project for an 18 building plan including designing concepts. We didn’t win it, but the work was worth at least Dhs 250,000.” To make things worse, projects tend to go on hold. His company, Nomad, has experienced around 30 projects on hold. 

“Unfortunately, you can’t always get by without submitting a concept,” says Kevin. “It’s a part of the chase and comes with the business opportunity, but anyone with enough experience knows that they don’t contribute a lot of value. To add to the problem is the copyright issue, and it’s a big one in my opinion. When I design something, it belongs to me. I’ve come across multiple examples in the region where we’ve not won the project, but our designs have been used without permission. It’s simply unethical!”

“We bid for around two projects per week, and as a business owner, it’s a stressful process made worse when you know you may not get paid for that creative work.”

– Kevin McLachlan COO/Co-Founder, NomadK Design Studio

And how do project managers feel about this situation? “Concepts just don’t add value at the early stages of a project, especially not before the tender has been awarded,” says Keenan. “When we work with clients, we work on costs, timelines, and procurement strategies. There are too many unknowns at the beginning and concepts don’t shed any light on the solution. We’ve worked with concepts in the past for architectural projects, but even then, there are sizeable changes between the concepts and the final output. On a recent project in Abu Dhabi, we simply couldn’t convince the client to do without concepts. A major A+D firm won the job, and the final build wasn’t even close to the initial concept presented.”

“We treat our work with clients like a marriage,” says Kevin. “It’s a long-term partnership, and we want the best for all stakeholders involved. The problem arises when the process is value-engineered.”

The fees charged by design firms are so minimal, it’s comparable to a speck of dust in the grand scheme. Margins are just 10 percent or less, but the risk is 10 times that. Around 25 percent of clients don’t pay even that, and too many don’t pay the final fees. 

“That’s your profit vanishing right there,” says Kevin. Getting paid is particularly troublesome in the Middle East, where accepting a tender also means accepting the stipulations that come with it, like performance bonds, bank guarantees and payment schemes that heavily favour the client and not the service provider. 

Hate the Players or the Game?

The system has been around for a long time, and not just in the UAE. Some seasoned professionals have come to accept that the industry simply can’t or won’t find a solution on its own. That is, not without the intervention of another, more influential stakeholder. 

Furthermore, this culture exists even in the most mature markets. Despite understanding the very real possibility of not getting paid for the creative work put in, firms will still bid competitively with concepts or basic renders. “You can’t tell firms to not be competitive, and you’ll still find a couple of agencies willing to bid that way for a project,” says Brett. “They might get selective about who they bid for, but a client can always find someone.” To which Kevin adds, “the design industry can be its own worst enemy”. 

Richa adds from her perspective as a client: “Design firms and creative professionals are simply stuck. It isn’t a case of not wanting to change the system or not knowing how. A problem like this takes collective effort, and we won’t see progress with people not cooperating. It’s a responsibility shared by the company and the employees. Firms need to vet clients out and analyse the opportunity – is it worth the time and resource that will be invested?”

There is certainly a good amount of educating that needs to be done here. “I believe there’s a proper learning curve involved that designers are not going through,” says Richa. “Do we really need to bid the way we’re doing now? Or can we do it in a more lean manner, co-creating with the client using mood-boards or other such tools?”

“This culture started at the very top level, and now it’s trickled down into the lower levels of the market. Change has to be made at that top level, by the government itself”

– Keenan Grote, Managing Director, 3SixtyConsult

Ben looks at the problem from a more innovative angle. He brings technology into the debate, and questions how well the industry has used modern tools to streamline processes. “A lot of the forces perceived as threats by the design industry actually stem from a large gap in communication,” he says. “Sure you have problems like costs and payment, but effective communication is also key. We’re not seeing that happen internally in design firms, at least not as well as it should be. Once the communication is clear, teams can better talk amongst themselves. How else can they evaluate which client to work with?”

Keenan flips the situation to the client side. “It starts with the client,” he insists. “They’ve got a considerable amount of influence over the bidding process. Taking time to hire a good project manager, doing their due diligence, understanding budgets and setting KPIs is key to a smooth project. So by the time you send the tender to pre-qualified companies, the bidders already have some headway and understanding of what the client expects. This culture started at the very top level, and has now trickled down to the lower levels of the market. Change has to be made at that top level, by the government itself.”

Possible Solutions?

So how do we fix this? Or is there a plan in place?

Our panel agrees that the best chance we have at fixing the problem involves decision-makers at the highest level. In the case of the UAE, it would be the government and relevant ministries –  the policymakers.

“It’s a problem with the culture, which can be hard to change,” says Brett. “So we have to convince the leadership that this is something that needs to be changed to regulation and policy. The government here is extremely quick if you get the message to the people. It all depends on how you tell that story.”

Kevin and Keenan collectively share ideas on how design firms can stay competitive and still put their best foot forward. “I recently worked on a project where the client insisted on concept designs right at the beginning of the tendering process,” says Keenan. “As a middle ground, we worked with the design consultants to provide storyboards and pitch their ideas in a way our client would understand. It was a win-win for everyone. It gave our client some direction to work with. There are solutions to these things, but it requires good communication and an open mind.

“Government projects are poorly put together and can be overbearing – too many clauses and too much power in the hands of the client. They want to hold a tremendous amount of power over their suppliers and service providers. Someone needs to realise that your partners won’t function at their best when you don’t give them any room for flexibility.”

“The time between receiving the brief and making changes is usually short. With timelines like that, you’re not going to get someone’s best work.”

– Brett Cameron, Executive Board Member, CIAAD

Risha adds, “As a client, I would ask myself if my design partners really understand my company. For great design to happen, those conversations and engagement need to take place. Designers need to understand the needs of their client and the organisation they’re designing for, not simply at an aesthetic surface level, but from a cost and functional level. Limiting conversations to a very contractual level and not really collaborating doesn’t help anyone. Co-creation is great but shouldn’t be done for the heck of it.

“Realistically speaking, designers aren’t given a healthy amount of time to work,” says Brett. “The time between receiving the brief, designing, pitching and making changes, are usually short. With timelines like that, you’re not going to get someone’s best work. A lot of that stress can be removed if designers have some basic understanding of what clients want.

Stats will show that designers are paid less today than 15 years ago. The rising cost of living combined with increasing job uncertainty doesn’t help. The work now is more challenging and demands five times the amount of effort as before. However, there are options to make life a little easier. “The only thing that can make our work easier is software,” says Kevin. “We can deliver faster, easier and better than we used to. And there’s potential to do more if we invest a little time to explore options.”  

Clients currently shortlist based on a design firm’s past work, i.e a merit-based system. However, that’s superficial to say the least, and not very effective. “Smaller boutique firms have an advantage in this case,” Kevin adds. “They work on smaller projects, wrap them up quicker, and can hence publicise more, making it seem like they’re working more. The larger players working on big developments have to wait years before they can market what they’re doing!”

It’s not easy to simply scout the internet looking for potential bidders, which is still a fairly people-centric process. “Lovethatdesign.com was built to solve the problem of discovery and transparency into the work being produced in the region,” says Ben. “We help potential clients and contractors find designers based on their past work through a fun and captivating system. And we keep it free because we want to level the playing field for everyone. Our goal has always been to democratise this process. Technology has come so far. People just need to buy in, but they don’t want to invest the time and resources.” 

There’s a caveat though. “Technology can be a double-edged sword,” he adds. “The tools used should be ones that are well designed and developed specifically for the industry. If not, it’s just bad ROI and a counter-productive effort.”

Next Steps

Economies thrive on healthy competition. And when creativity thrives, it leads to great results for the end consumer.

“Clients and competing firms have to agree to disagree to a system where work is not rewarded,” says Keenan. “You’ll end with grateful partners who are willing to work harder. We have to also work with clients, and mainly the government, to do away with clauses that are draconian and pointless. It may have started as a culture but can be undone with technology.”

“Everyone needs to do their bit, but we need someone from the client’s side who will really own the project”

– Richa Singh, Real Estate Director from Ericsson

“Stakeholders have to ensure that an environment is fostered where engagement and transparency is present,” says Brett. “Synergy needs to be created. We have to focus on a process that ensures the best solution, and not the best price. This way, you’ll attract talent of the best kind in the market”. 

The question still remains as to whether clients will want to put in their effort and due diligence. “They’ll have to,” says Richa. “Everyone needs to do their bit, but we need someone from the client’s side who will really own the project.”

At the very least, we need to establish a system of respect. Something we see Kevin try to emphasise when discussing solutions. “Being asked to work for free is a huge red flag,” he says. “We need to collectively agree to not take up that kind of work. We absolutely can’t let the industry go down that slope.”

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