Bid or no-bid decision tree template
A tender is out. A full bid costs real money to prepare and may be disqualified before anyone reads the price. Partnering with a larger firm is cheaper but shares the profit. Not bidding costs nothing and wins nothing.
The tree
The decision in plain words
The options
Submit a full bid, partner with a larger firm in a consortium, or don't bid.
The uncertainties
For a full bid: passing the compliance gate, then winning on price. For the consortium: whether it wins. The profit if you win is the payoff; the bid cost is spent either way.
The numbers
Profit in rand. Change the win probabilities to what your pipeline history says and see whether the full bid is still worth the preparation cost.
The result
Submit a full bid, with an expected value of 59,500, 6,500 ahead of Partner with a larger firm.
Where it flips. If the chance of win the award under Pass compliance gate falls below 27.9% (it is 30% now), Partner with a larger firm wins instead.
- Chance of a loss
- 79%
- Best case
- 415,000
- Worst case
- −35,000
Change these numbers first
- The chance of win the award under Pass compliance gate: the answer flips at 27.9% (now 30%).
- The chance of lose on price under Pass compliance gate: the answer flips at 72.1% (now 70%).
- The payoff for win the award (Pass compliance gate): the answer flips at 419,048 (now 450,000).
The closer a switch point is to your estimate, the more that estimate deserves a second look.
The tree as text
# Analytical, profit in rand
Bid on the tender?
Submit a full bid (cost 35000) # compliance pack, site visits, pricing
Pass compliance gate (p 0.7)
Win the award (p 0.3): 450000
Lose on price (p 0.7): 0
Disqualified at gate 1 (p 0.3): 0
Partner with a larger firm (cost 10000)
Consortium wins (p 0.35): 180000
Consortium loses (p 0.65): 0
Don't bid: 0Related templates
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Go deeper
- Consultants and analysts — how people in this situation use DecisionBranch
- How to make a simple decision tree
- How to make a decision tree
- Expected value and decision trees
- Analysis calculator: paste this tree and see the working, step by step
Make this decision your own.
Open the template, change the options and numbers, and the best option updates as you type.