Where are you on an opportunity? Probability of Win.

Different approaches to calculating and using Pwin

All of our Federal Government Contractor customers use Pwin (Probability of Win) in their opportunity capture processes.  Pwin is the probability that they will win a particular opportunity. It is a tool to help you assess where you on on your opportunities at a given point in time. It is used for 2 different purposes: a) by financially-oriented people in order to weight the financial value of a portfolio by the probability and b) by capture-oriented people to assess where you are on the opportunity.

Many people downplay the accuracy of their Pwin; but they all use it. In this article, I’ll drill down into multiple different ways for you to calculate your Pwin. And, I’ll discuss different approaches for using Pwin to manage your pursuits based upon some customer portfolio work that we have done. In my conclusion, I’ll be recommending a different approach from the norm. The key is to note that regarding Pwin there are two different topics to consider: 1) calculating Pwin and 2) using Pwin.

Calculating Pwin

Here I’ll list 5 different ways that you can go about calculating a Pwin. This is about getting to a number. Getting a number is different than what the number means or what you do about it. I’ll cover that afterwards.

1. Manual

In many cases a BD representative just enters a % in a Pwin field in a spreadsheet or system.  This is the most subjective approach. It does not necessarily mean that it is any less accurate.  People should know their business. And, their view of the situation is meaningful.

2. Phase/Stage Based

In most CRM systems, the probability of winning an opportunity (or Pwin) is tied to the Stage of the opportunity.  Theoretically, this removes the individual’s subjectivity and instead bases the calculation on the stage of the opportunity.  This is the most common approach, particularly in commercial business using CRMs. However, in truth it is really the most arbitrary approach. It is almost as likely that the Pwin of an opportunity will go down as you advance in phases. But, most people use this approach or manual.

3. KPI-Driven Pursuit Assessment

In this model, the organization maintains a standard set of KPI’s (Key Performance Indicators – such as Blue, Green, Yellow, Red) for key elements of pursuit success that they use to evaluate all opportunities.  In R3 WinCenter  (our capture and proposal management software for GovCon) we use a standard set of 9 KPI’s (what we call Pursuit Progress Assessment KPI’s). You then weight the KPI’s and use an algorithm to determine the Pwin.  In a KPI driven model your Pwin is more grounded as it is driven based upon pre-set organizational standards. But, people still have to determine the KPI’s. The difference is that you are using a standardized set of criteria across opportunities.

4. Pwin Question Based Calculator

Another approach is the use of a customized Pwin Calculator based upon questions.  Basically, this is a set of questions with options.  The options and the questions are weighted using an algorithm to come up with a Pwin %.  We’ve implemented this approach in WinCenter for customers based upon their standard criteria. Typically, the questions reflect some distinct aspects of their particular business. This is the most intricate approach to calculating a Pwin. And note, that you are still relying on people to make correct answers to the questions.

5. Combo

You could also use any, some, or all of the above in a weighted combination to derive a “perfect” methodology.   As you’ll see below, the quest for accuracy is not necessarily achievable and may not even be the most valuable use of Pwin.

Using Pwin

In general, the Pwin calculation is used for projecting revenue. It is used to drive a % weighting of an opportunity for financial projection purposes.  So, you want to look at reports that show the full value of opportunities and the weighted value based upon the Pwin.  For this purpose, you could use any of the above ways of determining the Pwin.

To see an example of such a report, click here to pop-up the Reporting & Analytics page of WinCenter. You’ll see a screenshot of a Tabular Report (grid style half way down the page). It has Pwin and weightings. Note that in this report we also track PGo which is the probably that the RFP will actually be released. This is a key part of Government Contracting. We use a combined weighting factor of Pgo and Pwin to drive the weighted value of each opportunity. This is the kind of report that you would expect for financial projection purposes.

However, take another moment and look at the other screenshots of types of reports on that same page. They are quite different and surface useful ways of evaluating where you are on your opportunities. In fact, you might feel that they are actually giving you a better sense of what would be going on in your portfolio and in each opportunity. This is an important insight.

Portfolios and Pwin

Over the last year, I’ve worked with customers to do some analysis of their portfolios.  I applied multiple approaches to the same portfolio.  Most customers have a Manual approach so we captured that %.  In addition, I would capture a calculation of Pwin based upon stage and also apply the KPI or question based approach above.  So, I captured 3 ways of calculating Pwin for the same portfolio. What was the result?

On a portfolio basis (averaging 200 opportunities) the delta between the Manual approach and any of the other approaches is close to 0%.  What this tells us is that on a portfolio basis no approach is really any more accurate.  Financial projections are typically on a portfolio basis so for this purpose any of the above can be used.

When you look at particular opportunities in the portfolio you see that there is very little variation between the manual Pwin and a not manual calculation. However, you will find a few opportunities that have wide variations. Effectively, these variances tend to even out across the portfolio.  The interesting part is that by doing the comparison of Pwin’s you are able to see which opportunities have variances.  This is useful for BD, Capture and Proposal management during the pursuit. When you see the opportunities with variances, you now know to ask “Why?”. This adds value to your pursuit.

For financial purposes, it will largely even out on a portfolio basis.

To try out the portfolio test above just do the following:

  • Put your opportunities in a spreadsheet to include name and value.
  • Have your BD personnel enter the Pwin for each opportunity.
  • Create a standard % probability for each Phase/Stage that you use. Then, use a calculation in your spreadsheet to add that % for each opportunity based upon Phase/Stage.
  • Have two columns that provide the weighted Pwin for each methodology above for each opportunity.
  • Total up the values of the two columns. These are your two weighted portfolio values based upon 2 different Pwin approaches.

You should find that a) on a portfolio basis they both even out and b) that there are opportunities with a wide variance. Note that if this test does not work out on a portfolio basis, then, your Phase/Stage %’s are most likely not correct. It is actually a way that you can adjust system %’s to reality.

Our Recommendation – Comparative Pwin

So, you could decide on the following:

  • For financial reporting we are going to use an analytical approach the Phase/Stage-Based, the KPI-based, or the Question-based. This will make your managers/executives feel more comfortable.
  • However, you are also going to capture the manual approach where the BD reps wings it.

In doing so, you now have two Pwin numbers that you can use to immediately see the deltas.  This is what you will use to assess the variations between your analytical system approach and the BD rep’s opinion. Do not be surprised when the BD rep’s Pwin calculation is on the low side. It happens more often than you imagine. They usually have a good reason why they feel this way.

In summary, with Pwin we can actually serve two objectives: Financial Projections and Pursuit Management.  Financial Projections are what is required, Pursuit Management is what makes the difference between winning and losing.

Driving More Wins

At the end of the day all of this work is about driving more Federal Contract wins. R3 WinCenter, our software for GovCon capture & proposal management certainly allows you to calculate and compare Pwins. However, it also enables you to do something about it. As a software system is tracks the ongoing capture and proposal work. And, it automates and streamlines the work. It also guides and drives people to do the right things at the right time. Often, a Pwin at a point may point out the need to take action. WinCenter will help you see the need and do something about it.

Click here to learn more about R3 WinCenter and see an on demand video of WinCenter in action.

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