Cost & Resource Plan Optimization is the financial engineering engine of a tender.

Winning a bid is not just about the lowest price; it is about the smartest price. If you bid too high, you lose. If you bid too low, you win the "Winner's Curse"—a project that loses money every day.

Optimization involves scrubbing the resource plan to remove "fat" (inefficiency) without cutting "muscle" (capability), and strategically shifting costs to align with the client's scoring formula.

Here is the breakdown of the Price-to-Win strategy, Resource Leveling techniques, and the optimization workflow, followed by the downloadable Word file.

1. The Strategy: Price-to-Win (PTW)

Before you open Excel, you must determine the target number.

• Cost-to-Win: The bare minimum it costs you to deliver the project (Zero Profit).
• Price-to-Win: The number the client is willing to pay and the competitors are likely to bid.
• The Gap: Optimization is the process of squeezing your internal Cost-to-Win down until it fits inside the market's Price-to-Win while leaving room for profit.

2. Resource Optimization Techniques

Labor is usually 70% of the cost. Optimizing the "Headcount" is critical.

• Resource Leveling (Smoothing):
• The Problem: A project schedule often has "Peaks and Valleys." (e.g., Week 1 needs 10 engineers, Week 2 needs 2, Week 3 needs 10). This forces you to hire 10 people and pay them to sit idle in Week 2.
• The Fix: Shift non-critical tasks to fill the valleys. Result: You hire 6 engineers and keep them busy 100% of the time.
• Offshore/Nearshore Mix:
• The Strategy: Shifting "Back Office" tasks (e.g., Testing, Documentation) to lower-cost regions while keeping "Client Facing" roles (e.g., Project Manager) onsite.
• The Impact: Reduces blended hourly rate by 30-40% without sacrificing quality perception.

3. Risk Contingency Management

A major source of bloated bids is "Padding."

• The Trap: Every department adds a 10% "Safety Buffer." The Hardware lead adds 10%, then the PM adds 10% on top, then the Director adds 10%. The final bid is 33% overpriced.
• The Fix: Centralized Contingency.
• Strip all buffers from individual line items.
• Hold a single "Risk Pot" (e.g., 5% of total) managed by the Project Director.
• Result: A leaner, more competitive price.

4. Cost Estimation Models

Model	Description	Best For
Bottom-Up	Calculating the cost of every single screw and hour. Most accurate but time-consuming.	Detailed implementation tenders (Construction, Software Dev).
Parametric	Using historical data (e.g., "$1,000 per sq ft" or "$50 per line of code"). Fast but generic.	Early-stage rough order of magnitude (ROM) estimates.
Target Costing	Starting with the Selling Price (e.g., $1M) and working backward to figure out how to build it for $800k.	Highly competitive commodity tenders.