Saturday, 10 February 2024
by Berkeley Lovelace
As we look ahead to 2024, the global contracting landscape continues to evolve at a rapid pace, shaped by technological advancements, environmental concerns, and socio-political shifts. Here are some key trends that commercial bid teams need to prepare for to ensure project success.
Rapid digitisation continues to transform the procurement industry, and subsequently, the bidding process, making it more efficient and transparent. As we move into 2024, expect digital bid management systems to become the norm, not the exception. Bid teams will need to embrace technology to streamline operations, enhance collaboration and improve bid outcomes. The ability to adapt to digital platforms will be critical to staying competitive in the global contracting space.
Digital transformation in bid management, however, is more than just the adoption of new technologies. It requries a shift in how organisations approach and manage their bidding processes. This includes redefining traditional work methods, instilling systematic and repeatable work-winning behaviours across the enterprise, and fostering a culture of continuous learning and innovation. With advancements in data analysis, bids will become even more personalised and targeted. Companies will leverage data to better understand their clients’ needs and tailor their proposals accordingly. One of the most important aspects of digital transformation is understanding the needs and challenges of the system’s end-users, and involving them in the design and development process, as well as providing support and training to ensure uptake and adoption of new ways of working.
The trend towards increased regulatory requirements for ESG (environmental, social and governance) disclosures is expected to continue. This includes the transition to the International Sustainability Standards Board (ISSB) sustainability reporting standards. There will be greater pressure for companies to enhance transparency and provide detailed reporting on their ESG performance, and there will be an expectation of companies to pay greater attention to their supply chains, to assess and address vulnerabilities to ensure they align with ESG principles. This could include data on climate risks, greenhouse gas emissions, and material sustainability risks.
There will also likely be an increased emphasis on the ‘S’ in ESG, with global contracting companies expected to demonstrate fair treatment and conditions for their employees and those within their supply chains. This includes ensuring equitable labour practices and promoting diversity and inclusion. But be warned – consequences of greenwashing, or making misleading or unsubstantiated environmental claims – are expected to rise. This includes potential reputational damage, regulatory scrutiny, and the risk of fines and litigation. As industries transition towards a net-zero economy, there will be a greater focus on upskilling workforces and creating new jobs within the green economy.
As we approach 2024, Artificial Intelligence (AI) is anticipated to have an even greater transformative effect on various sectors. AI is increasingly being used for automating mundane tasks and enhancing decision-making processes through data-driven insights. However, as the capabilities of AI broaden, the need for formal governance grows in parallel. Policymakers and industry leaders are now focusing on the establishment of stringent regulations, industry frameworks, and corporate policies to manage potential risks associated with AI and ensure its ethical and safe utilisation. This formalisation of AI governance will undoubtedly influence the direction of AI development and its integration into business operations.
With the increased digital interconnectedness of systems, this creates its own set of challenges. For businesses, particularly those engaging in contracts with the public sector, cybersecurity has become a primary concern. There are now baseline security requirements that businesses must adhere to in order to safeguard sensitive data. In addition, businesses are also responsible for securing their supply chains as the interconnected nature of current business operations has increased their vulnerability to cyber threats. Consequently, it’s becoming increasingly vital for businesses to strengthen their cybersecurity measures, not just within their own operations, but also throughout their supply chains. While the focus on cybersecurity is a testament to the evolving digital landscape, it also emphasises the need for businesses to remain vigilant and continually innovate their digital defenses.
Based on the procurement trends and market conditions, contract opportunities in 2024 are likely to be varied across several sectors. It’s probable that the IT and digital sectors will continue to see a significant rise in opportunities as digital transformation accelerates. Businesses providing digital solutions, artificial intelligence, data analytics, and cybersecurity services are likely to benefit the most.
With sustainability and environmental concerns gaining prominence, industries providing sustainable solutions, renewable energy, and green technologies are expected to see an upsurge in contract opportunities. The healthcare and education sectors will see a surge in federal spending (as would be expected given they are pillars of economic development) and the construction industry could also see significant opportunities, especially for those focusing on sustainable building practices. Globally, these trends are likely to be reflected across regions with some local nuances however overall, the trends suggest a shift towards more sustainable, digital, and inclusive procurement practices. Businesses competing in the global contracting space that can adapt to these trends and align their offerings with these emerging priorities stand to benefit the most.
The aim to make SMEs (small to medium enterprises) more successful in the procurement process is predicted to intensify. Although procurement targets for SMEs exist across many regions, there has been a lack of effective measures to ensure that public officials responsible for procurement decisions are aware of whether they are interacting with an SME when inviting a firm to bid or awarding a government contract.
Many smaller businesses rely on acquiring government projects through a larger entity until they expand sufficiently to secure work independently. There has been a trend of larger corporations structuring their operations to win contracts and then subcontract parts of the project to smaller entities. Similarly, there is a noticeable trend of large firms establishing SME branches and majority Indigenous-owned subsidiaries to qualify for procurement opportunities aimed at SMEs and Indigenous-owned businesses.
In response to these challenges, reforms continue to be implemented around the world to ensure a more equitable distribution of contracts. These include measures such as setting minimum quotas of expenditure for small and local businesses, offering opportunities for direct engagement or closed tenders to SMEs, and promoting transparency in the subcontracting process. The UK, whch is generally a first-mover in procurement reform, has implemented the Procurement Act 2023, providing procurers with more flexibility to negotiate prices and innovative solutions with SMEs. The reforms strive to achieve better value for money, decrease bureaucracy, foster innovation, and simplify the process for suppliers of all sizes to conduct business with the public sector. They also allow for the exclusion of suppliers from bidding for contracts based on previous poor performance, involvement in modern slavery, or professional misconduct. This reform is anticipated to serve as a blueprint for other nations.
As we transition into 2024, the global contracting landscape will be significantly influenced by several predominant trends. The ongoing process of digital transformation will necessitate bid teams to adapt and innovate, utilising technological advancements to enhance their efficiency and competitiveness in the tendering process. Sustainability, ESG factors, and rigorous cybersecurity protocols will take precedence in the evaluation of bids, impacting decision-making and dictating the operations of businesses. There will be a diversification of contract opportunities across various sectors, offering potential avenues of growth for businesses. And finally, there will be a heightened emphasis on supporting small and medium-sized enterprises, with policies aimed at fostering inclusivity and equity in the tendering process. By aligning corporate strategies with these trends, commercial bid teams can strategically position themselves for success in the ever-evolving global tendering landscape.
The post Key Trends Shaping the Global Bidding Landscape in 2024 appeared first on Bidhive.