The bid proposal is the most important document you will get from a vendor. There are many different kinds of bid proposals, some invented by clients, other invented by vendors. Generally speaking, a proposal is usually composed of the following elements;
1. Audience AnalysisAudience Analysis: Your vendor should demonstrate a concern and knowledge of the audience you are trying to reach. He isn't making the production to win an Academy Award. He's making the production to improve your bottom line. Knowing who your audience is is the first step to improving your bottom line. It's getting to know your business, your way.
2. Media Assessment
3. Creative Elements
4. Credentials
5. Schedule
6. Budget
7. Contract Terms
Media Assessment: In the same way you were urged to consider the available media in previous pages of this website, so your vendor should make an assessment of the media he is selling you. Is it the right media for your message, for your audience, for your goals? Is it the most effective media for the cost - because the cost of your media versus the gains produced by the media - are what this is all about.
Creative Elements: These are the meat of the proposal. Here is where your vendor describes his unique creative solutions to the challenge. What media will be employed? Will there be professional actors, animation or interactive elements? The Creative Elements section might have a sample excerpt script or a storyboard (a cartoon-like rendition of the script with text and hand-drawn pictures to show what the finished product will look like). Here is where you would expect the brilliance of your vendor to shine as he describes his vision on your behalf.
Credentials: This is where the vendor proves he can do your job because he's done that job, or something pretty close to it at least once - perhaps many times - before. The Credentials allow the vendor to explain his understanding of the project and explain how he would address the challenge. This is usually done in a point-by-point manner using past project examples to demonstrate the vendor's experience in each phase of the client's project execution.
Schedule: The Schedule is the vendor's best effort to describe a day-by-day list of tasks and their estimated completion times. It is critical for this section to also have estimates of the client's time required to review, comment and/or approve the work of the vendor. Often, this schedule becomes a binding element of the agreement between the vendor and the client. The term, "date certain" may be used to denote the vendors willingness to meet the deadline with a contractual degree of assurance.
Budget: The budget details all of the tasks and cost elements of the project, what contractors refer to as, "the scope" of the project. Here, you should expect a "line item" style of presentation, with each task listed beside columns that denote the unit cost, unit, amount and subtotal for each line. For instance, if a graphic artist and video editor are listed as being needed, the line item budget will have:
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Line item budgets allow you to see exactly what the tasks are, who's doing them, what supplies and services you are purchasing and how much each item is costing you. Beyond this, vendors have many different ways of presenting the costs to you. In order to make a profit, vendors have to charge for their direct and indirect expenses and then a bit more, which is their profit.
Costs that are directly attributed to your production, are called "Direct Costs." These might include the crew, the camera rental, the supplies, the printing paper, etc. In addition to the Direct Costs, the vendor has indirect costs, such as rent, telephones, sales commissions, etc. which are often called, "Overhead."
Somewhere, somehow, a budget must include direct costs and overhead and then a percentage of those costs, called, "Mark-Up," which represents the vendor's profit - the reason she is in business. Some vendors total up a budget so that all direct costs are listed and then appropriate percentages for overhead and profit are added on at the end. Other vendors prefer to include their overhead and profit in each line. Each style is valid and represents the vendor's sincere efforts at communicating to you, the vendor, what you will be expected to pay in a method that is easy to understand and somewhat flexible, should changes be required before, during or after a production is completed.
Two terms that often arise in production, "Fixed Price" and "Cost-Plus." Fixed price budgets are budgets where the vendor is guaranteeing that the price will not change unless you make significant and unanticipated changes in the scope of the project. Fixed price budgets are common when the task to be done is predictable, routine and familiar. On a fixed price budget, you know what your project will cost, not a penny more or less and you pay it, usually in thirds (one third on contract, one third at the halfway milestone and the final third on completion and release of copyright to the client).
Cost-Plus budgets are used on projects where either the vendor or the client are not sure what the final scope of the project will be. Usually, cost-plus budgets are for longer projects where many changes, unpredictability and experimental procedures are being employed. A cost-plus budget may result in a final bill which is more or less than that originally stated. If the work is less than anticipated, the vendor will be obliged to reduce the cost of the total project. Conversely, if the scope escalates during production, the vendor will be due a higher fee, based on proportional multiples of each element in the scope. Obviously, cost-plus projects require more bookkeeping, an audit procedure, frequent milestone payments and a lot more client-vendor negotiating. Consequently, cost-plus projects are usually higher budget productions than fixed-price and are rarely seen on projects totalling less than $100,000.
Contract Terms: Contractual Elements are often included in a proposal so that the document itself may become a binding agreement. This is more convenient and accurate than a two step procedure where the contract is drawn up after the submission of the bid proposal. In order for a proposal to become a contract, the contractual elements should:
1. Identify all parties who are contracting. If an agency or third party is included, they should also be noted here.
2. A notation that the bid proposal denotes both the service(s) to be performed, the fees to be paid and the schedule of both services and payments.
3. Provisions to cover such issues as cancellation, unsatisfactory performance, copyright ownership, insurance, liability, non-payment, etc.
4. The geographical jurisdiction within which the contract is being made (your state or the vendors?).
For the purpose of moving to production without unecessary delay, the contractual elements of a bid proposal should be as simple yet as adequate as possible. Efficient legal counsel should be consulted by both parties in preparation and execution of the proposal if it is to be used as a contract.