A proposal budget is the cost or resources required to create a proposal. Teams can create accurate budgets by tracking performance over time.


All companies designate a specific budget for bid and proposal (B&P) expenses. A company’s B&P budget defines the amount it will allocate for all B&P expenses annually. After a company establishes an overall B&P budget, it allocates specific proposal budgets to support each B&P effort. A proposal budget may include the entire cost of winning the bid or only the cost of developing the proposal.

The biggest part of any budget is labor, including members of the business development team, the Opportunity/Capture Manager, Bid Manager, Proposal Manager, Proposal Writer(s), Proposal Editor(s), Proposal Graphic Designer(s), Production Specialists, and those reviewing the proposal. Labor can represent more than 90 percent of a proposal budget. In addition, budgets should account for costs related to software and tools, travel and meals, supplies, and production costs.

Best Practices

1. Understand how bid and proposal funds are assigned and tracked.

Company executives in mature organizations allocate an overall budget to fund all B&P activities. Bid Managers may work with company executives to set realistic budgets for each B&P. In other settings, organizational budgets are set and managers are expected to allocate funds appropriately between opportunities to stay within the prescribed budget. Managers estimate the level of effort needed to write and review the proposal and the cost to produce it. The Bid Manager or Proposal Manager monitors proposal expenditure in comparison to the budget and is accountable to company executives.

The amount budgeted for each bid is usually based on the bid’s importance to the company’s growth strategy or its desire to retain an incumbent contract. The more efficiently a company budgets resources, the more money it will have to support a bid or maximize the number of jobs it can bid on.

For this reason, funds should be allocated to projects based on likelihood of return. These allocations should be active, carefully considered decisions, not decisions made without prioritization or consideration of tradeoffs. Development of a capability for tracking and understanding B&P investments is one measure of an organization’s business development maturity.

Executives allocate funds for proposals based on their importance to the company. They consider whether the bid is for a current contract or is of strategic importance, as in the case of winning new business with a current customer, winning new business with a new customer, or entering a new market. They also consider the risk of winning the bid and conducting the work after the bid is won.

2. Collect data to build a budget.

Before building budgets (either annual or project based), collect information to provide the most accurate estimate of how much money it will take to conduct business development activities. Use historical expense records and receipts to determine how you spent money in the past to pursue a bid and write, review, and produce a proposal. Use this information to estimate the level of effort needed to pursue, write, and produce your bid and other direct costs like travel, products, and supplies.

Possible categories of budget items will vary based on accounting conventions, cost recovery strategies, centralization or decentralization, and policy on billing for services. Possible budget tracking areas include:

  • Personnel (including benefits and other loadings)
    • Business Developers
    • Contracts Manager
    • Pricing Analyst
    • Opportunity/Capture Manager
    • Bid Manager
    • Proposal Manager
    • SMEs
    • Writers
    • Reviewers
    • Graphic Artists
    • Production Specialists
    • Executive overhead
  • Automation tools
    • Software
    • Licenses
  • Travel
    • Flight/car
    • Hotel
  • Meals
  • Supplies
    • Normal paper for draft copies
    • Premium paper for final copies
    • Ink, tabs, binders, and CDs
    • Copier rental
  • Facility charge-back

3. Use a consistent, repeatable approach to build and manage budgets.

Use the budget template provided to record your potential B&P expenses. An important part of any proposal budget is risk, because most B&P expenses are variable. For example, a customer might release an amendment to adjust requirements, resulting in increased labor costs to respond to the new requirements. Reserve at least 10 percent of your budget to address unforeseen factors. After creating a budget, develop a plan to define how and when you will spend the budgeted funds.

4. Analyze expenditures to increase budget accuracy over time.

Monitor the level of effort expended and costs incurred in comparison to proposal milestones daily to ensure that the proposal stays on schedule and within budget.

Improve the accuracy of your budgets by maintaining performance metrics and a record of budgeted versus actual expenses. You can use this information to refine the level of effort and other direct costs.

5. Use best practices to reduce expenses and increase ROI.

Use of business development best practices provides a real opportunity to reduce B&P expenses and increase ROI. The following table provides guidance on how application of business development best practices improves your win capabilities and increases your ROI on business development investments.

Pipeline Development Making informed decisions early has the biggest impact on cost savings.
  • Actively manage a balanced portfolio of bid 12–18 months out based on customer/product familiarity, ROI, schedule, resources, and win probability
  • Implement decision gates to qualify opportunities at least monthly
Opportunity/Capture Management Incomplete opportunity/capture management pushes costs into the proposal development phase, resulting in much higher B&P costs.
  • Define your win strategy
  • Develop price-to-win
  • Develop a technical solution
  • Nail down your teaming partners
  • Define key features and benefits
Teaming Partner Identification Costs increase when a teaming partner drops out any time after the solicitation is released.
  • Maintain a process for pre-qualifying partners
  • Maintain a reliable group of partners in your market segment
  • Maintain updated information about your partners, including past performance summaries, to reduce data call costs
Competitive Intelligence Implement the key practices for competitive research, analysis, and action.
  • Base decisions on evidence
  • Identify top competitors for all business lines/major pursuits
  • Perform competitor research beyond website and Google searches, such as top backlinks, event sponsorships, and LinkedIn, Twitter, and keyword searches
  • Develop and continuously reuse/update competitor profiles and SWOT analysis
Knowledge Management Leveraging existing boilerplate, resumes, company factoids, and past performance references is one of the easiest ways to reduce proposal costs.
  • Maintain resume database
  • Maintain past performance database
  • Harvest and maintain customizable reusable content, especially in areas such as management controls, employee skills, transition planning, cost controls, quality, and security
  • Gather and update company awards, certifications, and facts quarterly
Tools and Training Ensure your organization has a budget for tools and training.
  • Develop a business case indicating how tools and training provide a positive ROI
  • Develop an annual training plan for your team tied to individual career development plans
Writing and Editing More than half of B&P costs are spent on writing and editing. Reduce costs by planning before you write.
  • Conduct rigorous content planning and reviewing for approval
  • Before writing, communicate the solution, features, benefits, discriminators, and win themes
  • Identify in advance appropriate customizable reusable content
  • Customize past performance and resumes from a knowledge base
  • Provide writers with clear instructions and a style guide
  • Work with professional editors to edit the copy
Proposal Reviews Conduct reviews as efficiently as possible.
  • Develop a score sheet template based on how evaluators score
  • Assign reviewers a specific role
  • Ensure that reviewers are prepared
  • Perform iterative (Agile) reviews
  • Give specific instructions for assignments and actionable comments
DTP/Graphics/Production Up to 20 percent of the proposal budget is spent on desktop publishing, graphics, and production.
  • Develop a proposal template that is easy to use
  • If necessary, provide a graphic artist to work with writers to translate ideas into graphics that show benefits
  • Develop a library of reusable templates and graphics
  • Develop a production plan soon after the kickoff meeting to leverage scheduling and avoid overtime
Teaming Partner Management Implement a plan to ensure that your partners efficiently deliver the material needed to generate a winning proposal—and hold them to the plan.
  • Set expectations by spelling out requirements and deadlines in a teaming agreement
  • Insist on consistent participants at all meetings to reduce the learning curve
  • Train partners in your collaboration tools and proposal templates
Lessons Learned Avoid repeating the same mistakes and then expecting different results.
  • Complete the lessons learned review immediately after submission
  • Actively pursue customer debriefs
  • Commit to continuous process improvement
  • Define metrics and measure performance
  • Continuously solicit feedback
  • Perform root cause analysis of problems

Application in Diverse Environments

Relationship between seniority level and budgeting responsibility

Budgeting responsibilities vary according to the level of seniority, responsibility, and accountability assigned to a proposal professional. Executives often set B&P budgets for an entire company. Where the roles are distinct and stand-alone, Bid Managers set the budget for the bid and Proposal Managers estimate the level of effort needed to produce a proposal. Where the roles of the Bid Manager and Proposal Manager are merged, the one role will set the budget for the bid and estimate the effort required.

Differences between small and large engagements

The budget’s scope and complexity vary between large and small engagements. Large, complex bid require a work breakdown structure (WBS) that aligns the schedule, resources, and milestones. The WBS will identify critical paths at which milestones must be accomplished within budget. The Bid or Proposal Manager will track progress to verify that tasks are accomplished on schedule and within budget. The Bid or Proposal Manager typically generates a single budget for small or routine engagements and tracks them in aggregate.

All personnel working on the bid must be provided with a B&P charge code to allocate B&P costs against the budget. In most cases, time will be charged against the General and Administrative (G&A) overhead pool. However, it may be charged directly to the customer or the Government if the company has been given prior approval to do so.

Recent Trends

Increasingly demanding requests

Proposal professionals are challenged to do more with less and increase productivity, which is reflected in leaner B&P budgets and requests for increased tracking and reporting.


  • Companies can optimize their resources to win more bid by planning, tracking, and managing budgets
  • Budgets are developed based on a bid’s strategic importance to a company
  • Organizations should set up processes for collecting reliable budget data, plan for unforeseen expenses and known constraints, and use lessons learned, expenditure records, and metrics to increase budget accuracy
  • The qualification phase can have the biggest impact on cost savings; make informed decisions concerning whether to pursue new opportunities
  • Work not completed during the opportunity/capture phase drives costs into the proposal phase. It also has the potential to inflate costs many times over through multiple rewrites.
  • After the RFP drops, obtain executive approval for an outline, dedicate time to communicating your solution to writers, and develop a writing plan
  • Dedicate part of the budget to post-submission activities; capture lessons learned and implement continuous improvement
  • The more you enforce best practices on each bid, the shorter the learning curve will be for the next effort

Terms to Know

Tools and Templates