Chapter Name: Calculate costs, revenue and profits of a specific tender
Description:Instructs on financial planning and pricing within a tender.
Purpuse:To ensure bids are competitive yet profitable.
Rational:Accurate costing helps in strategic pricing and financial sustainability.
Chapter Assessment
Expected Supporting Evidence:
Portfolio of Evidence 1: Available costing methods are reviewed in relation to the tender specifications. - Different costing approaches (e.g. activity-based, absorption) are compared and matched to the tender.
Portfolio of Evidence 2: Product/Services costs and prices applicable to the tender are calculated accurately. - Includes raw materials, labour, overheads and determines the total cost for accurate tender pricing.
Portfolio of Evidence 3: The internal factors impacting upon pricing decisions are identified and discussed in relation to the profitability of the tender. - Internal considerations like production efficiency, capacity, and overheads are factored into pricing.
Portfolio of Evidence 4: The external factors impacting upon pricing decisions are identified and explained in relation to the profitability of the tender. - External elements such as competitor pricing, economic trends, and customer needs are discussed.
Portfolio of Evidence 5: Variations in pricing decisions are to be calculated in terms of the impact on the break-even point. - Price changes are analysed to show how they affect the point at which profit starts.
Portfolio of Evidence 6: Break-even point of the tender is determined for own business. - Calculates the minimum sales volume required to cover total tender costs.
Portfolio of Evidence 7: Profit mark-up is calculated and analysed for the tender. - Determines profit percentage added to cost and evaluates if it meets business goals.
Portfolio of Evidence 8: Costing and pricing methods are reviewed to ensure correct application to tender specifications. - Ensures the methods used fit the format and requirements of the tender call.
Portfolio of Evidence 9: Expenses and revenues are classified and categorised for the specific tender. - Income and costs are broken down into direct, indirect, fixed, and variable categories.
Portfolio of Evidence 10: Suppliers and new products are assessed in terms of potential contribution to profit and securing the tender. - Evaluates vendors and products for cost-effectiveness, reliability, and alignment with tender goals.
Portfolio of Evidence 11: Competing products/services are identified and considered in the tendering process. - Reviews rival offerings to inform competitive pricing and value positioning.
Workplace Activities
Activity 1: Review costing methods
Match costing approach to tender demands
Activity 2: Calculate product/service cost
Determine cost inputs for tender pricing
Activity 3: Discuss internal pricing factors
Identify business-specific pricing considerations
Activity 4: Discuss external pricing factors
Consider market or competitor influences on pricing
Activity 5: Assess price variations and break-even
Show how price changes affect profit margin
Activity 6: Calculate break-even point
Identify volume needed to cover all costs
Activity 7: Calculate profit mark-up
Apply appropriate mark-up and justify
Activity 8: Apply correct costing method
Verify costing matches tender specs
Activity 9: Classify expenses/revenue
Break down income and costs by type
Activity 10: Evaluate suppliers/products
Select vendors/products for tender success
Activity 11: Analyse competitor offerings
Benchmark own bid against others