Determining accurately the target price for upcoming Bids is the key to success. There is no alternative to this. Target price helps you to predict your position with respect to competition for an upcoming tender.

The following factors are very important and are explained with examples

i) Past tender details of similar projects in terms of scope and price and Commercial Terms and Conditions

ii) Scope Rationalization in cases where Bidder need to assess the scope and apportion the delta in scope with its corresponding price

iii) Time schedule also is one area where adjustment need to be done since lesser schedule means lesser man-hour and vice versa.

iv) Optimized cost and that cost bought out items should be backed by qualified sub-vendor quote

v) Commercial Terms and Conditions. Impact of Commercial Terms and Conditions also to be adjusted in computing the Target Price

Once the Target price is worked out, one can reasonable be sure to draw the road map and strategy for participation in bid.

Target Price concept and examples given can be conceptualized for EPC projects in various sectors like Power, Petroleum, oil and gas, infrastructure projects, Fertilizer, Transportation etc. Also the concept is applicable for products / packages involving systems / sub systems.