Ask the Expert

Commercial Sign-Off Process

Question by: Ellen Lavender

Hi Peter,

We are a customer service outsourcer, bidding to provide customer service (contact centre), debt collection and proprietary water billing software solutions. One of our ‘gaps’ in the bidding process is a robust commercial sign off process – for the legal and financial side.

We usually have our Group Legal Manager review the contract and provide a RAG report, which is then reviewed by our MD and Head of Commercial and some of the clauses reviewed and signed off, or where possible alternatives provided to the client within our response.

For the financials, usually a finance business partner produces the initial pricing model (with input from operational teams), which is then reviewed by the Head of Commercial and presented to the MD.

However, we have found that human error is creeping in and we don’t have a robust procedure for reverse engineering and double checking the financials in particular – and my MD has tasked me with implementing this review process.

Are there are templates / guidance out there that I could use to develop a robust but not too time / resource consuming cross check and sign off process?

Hi Ellen

Thanks for getting in touch. To answer the question directly – yes there are. “Shipley” is the general rule-set for managing a bid procedure (including financials / cost modelling / pricing) which consists of a decision point (DP) process. You can tailor each DP as you wish. If you google “Shipley” and “bid management” then you could start there. It may be a little bewildering, however.

In simple terms DPs could be DP1: do we bid or not after a 5 minute think? DP2: once we have qualified the bid and who is competing can we deliver, win, and make money? (if yes then proceed to DP3). DP3 will tend to be how to deliver at an operational and risk-mitigation level, along with the costings to accompany the solution. DP4 will then be what the price is (if absorption costing then adding a gross margin to the cost base) and liaising with sales to make the price competitive.

If you adopted a DP1 to DP4 style process then you could compartmentalise the pricing quality assurance which is generally driven by (a) not reflecting or missing the operational details / costs, and / or (b) mathematical error where, simply, the sums are wrong, and / or (c) the model inputs / variables of overhead recovery, salaries (or general cost drivers), net margins, etc. are wrong.

At DP3 you can cover (a) on a team-basis: allowing operations to scrutinise the cost content and check that their plans are all included – with nothing missing. Once DP3 is approved and operations are content that costs are covered then you can proceed to DP4, starting with sorting (b) by tasking a colleague to error-check / audit the model and work with the person who built the model: you can have this “has the model been checked?” as a prerequisite for DP4 such that DP4 cannot happen until there is a “Yes” in the box.

At DP4 the financial leaders can then scrutinise and tackle (c).

I hope that helps.

All the best