Knowing what a bid cost the firm
How a firm can work out what preparing a tender bid cost in staff time, value those hours, and use the cost to choose which tenders to chase.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa
Ask a firm how much it spent last year preparing public sector tenders and the usual answer is a shrug. The time was spent by partners and managers in evenings and weekends, recorded loosely or not at all, and treated as the cost of doing business. The firm knows what it won. It has no idea what the winning cost.
That makes every bid/no-bid decision a guess. A firm that knew a typical municipal audit bid consumed a week of a manager's time, and that it won one bid in several, would decide differently about the next marginal tender. This article explains why bid cost matters, how to capture it from timesheets, how to value it, and how to use it.
Why bid cost matters
A bid is an investment with an uncertain return. The cost is staff time that could have been billed to clients; the return is the margin on the contracts won. Without the cost, a firm cannot tell whether its tender work pays.
Bid cost also reveals patterns. Some kinds of tender may cost far more to prepare than others, because of the documents required, the compliance forms or the pricing schedules. Some may convert well; others never. Only by recording cost per bid can a firm see which.
Bid hours from timesheets
The foundation is time recorded against each bid. In Achekam, bid hours come from timesheets. Staff record their time in weekly timesheets that a manager, partner or administrator approves or returns, and by default time becomes billable only after someone other than the person who recorded it approves it. For bids, the approval matters for a different reason: it confirms the hours are real.
Make recording bid time a rule, not a suggestion:
- Every person who works on a bid records the time against that tender, including partners.
- Time spent in evenings and weekends is recorded too; unrecorded time is the main reason bid cost is underestimated.
- Timesheets are approved weekly, so the bid's cost is current while the bid is live.
Time Reports offers ten reports for a chosen period, including staff time and engagement time, exportable as CSV, XLSX or PDF. At the end of each bid, total the hours recorded against it, by person.
Valuing the hours with rate cards
Hours become a cost once they are valued. Achekam lets a firm keep rate cards, and on Rate Cards & Realisation, time that has no rate is counted as unvalued rather than estimated. Make sure every person who works on bids has a rate, or their time will drop out of any valuation.
For bid cost, decide which rate to use and stick to it. Two common choices:
| Rate | What it tells you |
|---|---|
| Charge-out rate | The fee income the firm gave up to prepare the bid |
| Internal cost rate | What the bid actually cost in salaries and overheads |
Either works, as long as every bid is valued the same way. AccountingTools' explanation of job costing describes the underlying idea: accumulating the costs of each job so they can be traced to it. Treat each bid as a job.
Keep the bid's cost separate from its price. A bid's price in Achekam is built line by line as cost plus markup from the firm's rate card and locked as a version, and a bill of quantities read in by AI changes the price only when a person applies it. That price is what the buyer would pay for the work. The bid cost is what the firm paid to ask. Bid pricing and the bill of quantities covers the price side.
Comparing cost with results
Once each bid has a cost, keep a simple register at the end of each bid: the tender, the buyer, the bid cost, the outcome, and, for wins, the expected margin on the contract. After a year, the register shows which kinds of tender the firm wins, what each win cost to secure, and whether the margin on the contracts covers the cost of all the bids, lost ones included.
National Treasury's eTenders portal lists advertised, awarded and cancelled tenders from public sector organisations, so the firm can see who won the tenders it lost and adjust its view of where it competes well.
Deciding which tenders to chase
The register becomes useful at the bid/no-bid decision. In Achekam, a bid/no-bid decision must give a reason, and a decision to bid on a tender of R5 million or more must name an active partner as approver. That threshold is fixed in code at R5 million whatever the Tender Settings show; the settings display a default of R1,000,000 that the code ignores. Record the expected bid cost in the reason, so the approver sees what the firm is committing.
A caution on the recommended list. The tender "AI Match" score and the Recommended list come from fixed keyword, sector, province and value rules applied to the firm's search profile, not from an AI model. A high match tells you a tender fits the profile; it says nothing about whether it is worth the cost of bidding. The decision process itself is covered in bid/no-bid decisions, and tracking bids under preparation in tracking every tender in preparation.
Your next bid
Before the next bid starts, tell everyone involved to record their time against it. When it is submitted, export the hours, value them at the rate you chose, and start the register with that first entry.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
