Just Say No: When Not To Bid on an Engineering or Software Project

June 2, 2011 · Filed Under Thoughts · Comment 

Here are my points on when to say no to bidding on an outsource project.  There is a larger presentation that should be on the APMP web site soon.

Human Nature: Don’t say No

HBR Article explains this Phenomenon:

  • Problem: Humans seem hardwired to be optimists
  • We routinely exaggerate benefits  and discount costs

Reference: Delusions of Success: How Optimism Undermines Executives’ Decisions (Source: HBR Articles | Dan Lovallo, Daniel Kahneman | Jul 01, 2003)

Optimism from cognitive biases and organizational pressures
–Exaggerate talents and degree of control
–Attribute negative consequences to external factors
  • Anchoring (relying too heavily on one piece of information) magnifies optimism
–Most pronounced for new initiatives
  • Solution: Temper with “outside view”
–Supplements traditional forecasting w/ statistical analysis / parametrics of analogous efforts
–Don’t remove optimism, but balance optimism and realism

•Reasons to Bid with a Low Probability of Win

  • A courtesy bid is a favor to the customer
  • You want to give notice that you are a viable supplier
  • You sincerely believe you have a strategy that can re-engineer the customer’s vision Read more


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