Standardizing RFPs with a Bid Grid: Ensuring Fair and Proactive Negotiations for CROs
Biotech companies should use bid grids to obtain comprehensive, comparable, and transparent budgets from CROs. When we asked CRO peers about the percentage of RFPs they received from sponsors without a bid grid, it turned out to our surprise that more than 50% of RFPs did not use a bid grid. We assume that even a large percentage of those using a bid grid are not utilizing the correct format or asking for the full information to be effective. Therefore, it is essential to discuss the importance of using a standardized bid grid in the request for proposal process.
Without a bid grid, the RFP process and CRO budget negotiations become difficult when it comes to comparing budgets. This has a negative impact on the overall selection process as well as a negative impact on the project budget. Using a bid grid can help ensure that CROs experience a fair and efficient RFP process.
Comparing Proposals Made Easy: Utilizing Bid Grids for Accurate Budget Comparison
Using Bid Grids for Accurate Budget Comparison A bid grid is a well-developed Excel spreadsheet. First, it contains key assumptions and parameters of the project itself, such as the number of patients, countries, sites, CRF pages, and data management parameters, to name a few of the most important ones. This information provides a good overview of the study’s key parameters.
In addition to those key assumptions, the bid grid contains a detailed list of tasks expected to be completed by the CRO, broken down into an extensive list of line items. For each line item, the CRO is asked to provide not only the full cost to complete each task, but also detailed information on how these costs are broken down by rate, hours, units, and associated functions within the CRO organization. In short, with this information, sponsors are capable of understanding each dollar amount spent and hours allocated in the planned budget.
For us, this is the only way to properly compare multiple proposals. Only with this detailed information can sponsors really compare apples to apples. A detailed analysis very quickly reveals where proposals might be overbudgeted or (which is even worse) underbudgeted for various reasons. Finally, a bid grid also provides a column where the CRO can comment on the respective line item costs to further explain what services or details are factored into this task.
By using a bid grid of this format and with this level of detail, sponsors ensure that they save time in analyzing and comparing the different budgets and ensure that the hours and line items used for each task are clearly understood and accurately compared.
Understanding the Structure of a Bid Grid for Accurate Budget Negotiation
If sponsors do not provide a standardized bid grid within their RFP, CROs use their own company formats to represent their costs. This is not bad in a general way, but the task of mapping costs and comparing like-for-like becomes impossible for sponsors. In addition, some CROs do not provide details about hours spent per task or unit or even the rates the budget is based on.
This again is not necessarily bad, but it makes discussions nearly impossible to base on facts when it comes to change orders. We have discussed this particular problem when it comes to change order negotiations in the following article here. A well-developed bid grid helps to simplify the process, as it is subdivided by categories of tasks and activities, allowing the sponsor to compare the big categories between multiple budgets and even task-by-task.
Agreeing on a Budget Format for the Contract: CRO vs. Sponsor Grid
After the RFP process, the budget used for finalizing the contract may remain in the same format as the bid grid or the CRO may propose to use their company format. Both ways are fine and it merely comes down to practicality. The parties should consider both approaches and agree on the solution that best fits their needs. The bid grid format used during the RFP process is generally preferred, as it allows for a clear comparison of the different budgets and allows for a smooth transition into the contract phase.
However, if the CRO proposes to use their own company format, it is important for the sponsor to carefully review the budget and ensure that it is comprehensive and transparent. It is also important to establish clear communication with the CRO to ensure that any questions or concerns regarding the budget can be addressed.
Sponsors should use bid grids in order to collect comprehensive, comparable, and transparent budgets from CROs (contract research organizations). The use of bid grids allows for a standardized, transparent and comprehensive approach to RFPs (requests for proposals), ensuring fair and transparent negotiations between CROs and biotech companies. With the included key assumptions and a detailed task list, CROs can provide a standard format budget that can be easily compared by the sponsor. This helps the customer understand and discuss in a fair way with the CRO for what they are paying for.
Contact us if you are interested to learn how our standardized bid grid looks like an how we use it to improve our budgeting and RFP processes.