Innovation in Financial Modelling for Public Sector Bids
The complexity and precision required in financial modelling for some public (and private) sector bids cannot be overstated. Bid managers, writers, and directors need to present compelling financial narratives that resonate with public sector evaluators and bring the pricing schedules to life.
Numbers speak a 1,000 words
The presentation of your financial or pricing submission can help evaluators picture what you are planning to do over the contract term. This should include highlighting where your strengths lie which might include:
The Total Contract Value (TCV) being within the envelop
Your ability to inject capital immediately to expedite improvements or change
Highlight any efficiencies you are forecasting
Your flat line price with adjustments for your assumptions
Being able to summarise these strengths in numbers takes a lot of skill and requires detailed forecasting methodologies. Imagine an Executive Summary in numbers on one page and what that would mean to an evaluator.
Leveraging Technology
The advent of sophisticated software tools has revolutionised financial modelling. Tools like Microsoft Excel are well used, but the integration of platforms like Python and R for data analysis, along with specialised financial modelling software, has significantly improved outputs. These technologies enable the automation of complex calculations, real-time data updates, and the ability to simulate various financial scenarios. For modellers, this means less time on manual calculations and more focus on strategic decision-making. For less complex situations, more readily available options like ChatGPT should be considered for creating code or formulas that make your spreadsheets more efficient and effective.
Data-Driven Insights
For public sector bids, where transparency and accountability are critical, data-driven insights can substantiate claims and demonstrate a thorough understanding of the project's financial landscape. Harness the power of the data in your organisation in your modelling. Models that are activity driven whether that be units of product or number of outpatient appointments, can be used to generate workforce profiles and costings. These model are extremely useful as once the activity metrics are changed, the workforce and costing projections change automatically. This is particularly useful when entering into negotiated procedures where this can be used to demonstrate resource requirements and strengthen your position.
Scenario Planning and Sensitivity Analysis
One of the most significant innovations in financial modelling is the enhanced capability for scenario planning and sensitivity analysis. By creating multiple scenarios, bid teams can anticipate and prepare for various outcomes, ensuring that the commercial model remains viable under different conditions. Sensitivity analysis helps identify which variables have the most impact on the financial outcome, allowing for targeted risk mitigation strategies. A strong set of assumptions is key to this being useful and should be the priority to ensure the outputs are accurate.
Conclusion
For bid managers, writers, and directors, staying at the forefront of innovation in financial modelling is essential for success in public (and private) sector bids. The integration of advanced technologies, data-driven insights, and scenario planning not only enhances the precision and transparency of financial models but also significantly improves the overall quality and competitiveness of the bid. Embracing these innovations can lead to more efficient bid processes, better risk management, and ultimately, a higher success rate in securing more business.