Type I: One-of-a-Kind Project with Little or No Follow-On Business: There are different steps that need to be followed in this strategy they are given below:-

• In this first project manager needs to develop a cost model and estimating guidelines then design a proposed project baseline for minimum cost, to minimum customer requirements.
• After that project team needs to estimate cost realistically for minimum requirements.
• Then project team squeezes out unnecessary costs.
• Then project manager determines realistic minimum cost an obtain commitment from performing organizations.
• Adjust cost estimate for risks.
• Add desired margins. Determine the price.
• Compare price to customer budget and competitive cost information.
• Lastly bid only if price is within competitive range.

Type II: New Project with Potential for Large Follow-On Business or Representing a Desired Penetration into New Markets: There are different steps that need to be followed in this strategy they are given below:-

• First design proposed project baseline compliant with customer requirements, with innovative features but minimum risks.

• Estimate cost realistically.

• Then squeeze out unnecessary costs.

• Determine realistic minimum cost. Obtain commitment from performing organizations.

• Determine “should-cost” including risk adjustments.

• Compare your final cost estimate to customer budget and the “most likely” winning price.

• Determine the gross profit margin necessary for your winning proposal. This margin could be negative!

• Decide whether the gross margin is acceptable according to the must-win desire.

• Depending on the strength of your desire to win, bid the “most likely” winning price or lower.

• If the bid price is below cost, it is often necessary to provide a detailed explanation to the customer of where the additional funding is coming from. The source could be company profits or sharing of related activities. In any case, a clear resource picture should be given to the customer to ensure cost credibility.