AI ROI: Balancing costs and benefits

AI tools are quickly becoming essential for government contractors, particularly in business development and proposal writing. While the potential benefits are clear, many contractors struggle with measuring the success of the AI tools they adopt, evaluating the quality of outputs, and ensuring they maximize their return on investment (ROI). 

 In this post, we’ll explore how government contractors can effectively measure the use of AI tools, evaluate their quality, and maximize the benefits to achieve a strong return on investment. 

Measuring AI usage and success 

Before companies can evaluate the success of an AI tool, they need to define what success looks like. Too often, companies adopt AI without clear objectives, which makes it challenging to assess whether the tool is performing well. To overcome this, contractors should set measurable goals for their AI implementations, focusing on both quantitative and qualitative metrics. 

Key metrics to measure AI success 

Time savings 

One of the most straightforward metrics for evaluating AI success is time saved. AI tools can automate repetitive tasks such as generating proposal drafts, formatting documents, or performing compliance checks, significantly reducing the amount of time your team spends on these activities. 

To measure this, track the average time spent on these tasks before and after implementing the AI tool. If your AI platform is reducing the time it takes to create a proposal draft from 40 hours to 20, that’s a tangible improvement. 

Proposal win rate 

A key success metric for any business development effort is the proposal win rate. AI tools can help improve the quality of proposals by generating tailored content, ensuring compliance, and analyzing past performance data. 

Compare your win rates before and after adopting AI, and track whether AI-generated proposals perform better than those created without it. Remember, AI does not replace the need for customer intimacy and good capture. 

Error reduction and compliance 

In government contracting, compliance is critical. Errors in proposals, whether factual or formatting, can result in disqualification. AI tools can help reduce these errors by automatically cross-referencing solicitation requirements or checking for inconsistencies. 

Track the number of errors or compliance issues before and after using the AI tool. Fewer errors should indicate that the tool is helping your team meet government requirements more efficiently. 

Resource utilization 

AI can allow your team to focus on higher-value tasks rather than spending time on manual, repetitive processes. By automating tasks like data gathering and document formatting, AI frees up your business development professionals to focus on strategy and relationship-building. 

Monitor how much time your team is able to spend on strategic tasks compared to before AI implementation. 

Evaluating the quality of AI outputs 

One challenge that contractors face is evaluating the quality of the AI-generated outputs. Since many AI tools rely on machine learning and natural language processing, it’s important to regularly assess whether the content generated meets your organization’s standards and government requirements. 

Establish a baseline for quality 

The first step in evaluating AI quality is to establish a clear baseline. Your team should create a set of criteria against which AI outputs can be evaluated. These criteria might include: 

• Accuracy: Does the AI-generated content accurately reflect your past performance, technical capabilities, and the requirements of the RFP? 

• Readability: Is the content easy to understand, and does it flow logically? AI-generated content should not be filled with jargon or unnatural phrasing that requires extensive human editing. 

• Compliance: Does the content adhere to all compliance requirements, including formatting, document structure, and specific solicitation criteria? 

• Consistency: Are the outputs consistent with your brand voice and messaging across multiple proposals? 

By regularly reviewing AI outputs against these criteria, you can ensure that the tool is producing content that aligns with your organization’s standards. 

Human review is still essential 

Even with the best AI tools, human review remains essential. AI is excellent at generating drafts, but it may not fully understand the nuances of your specific business or the subtleties required for federal proposals. Proposal managers, capture managers, and subject matter experts should review AI outputs to ensure they meet the company’s needs and are fully compliant with government requirements. 

A good practice is to use AI tools as a starting point, letting them handle the heavy lifting of drafting and formatting. Your team can then focus on refining and personalizing the content, ensuring it aligns with the strategic goals of the proposal. 

Maximizing ROI from AI tools 

To truly maximize the ROI from AI tools, contractors need to go beyond just implementing the tool and hoping for the best. Active management and continuous improvement are key to extracting maximum value from your AI investments. 

Identify the right use cases 

One common pitfall is trying to use AI for every aspect of the business development process, rather than focusing on areas where it can deliver the most value. Contractors should identify specific tasks where AI can make the greatest impact. 

For example: 

• Proposal generation: AI is particularly useful for generating initial drafts of proposals, ensuring compliance, and creating executive summaries. 

• Data analysis: AI can sift through vast amounts of past performance data to help identify win themes, value propositions, and strategies for a specific contract opportunity. 

• Compliance checking: AI tools can automatically cross-reference solicitation requirements to ensure that your proposal meets every criterion, reducing the risk of non-compliance. 

By focusing on these high-impact use cases, you can ensure that your AI tool is being used efficiently and that it’s driving real business value. 

Train your team 

Maximizing AI ROI requires that your team fully understands how to use the tool effectively. Contractors should invest in training and ongoing education to ensure that employees are comfortable with the AI tool and know how to get the best results from it. 

This might involve training proposal managers on how to structure prompts for generative AI tools, teaching business development professionals how to use predictive analytics to assess opportunity viability, or educating capture managers on how to use AI for competitive analysis. 

Training should be an ongoing process, particularly as AI tools evolve and new features are added. By ensuring that your team stays up-to-date, you can maximize the value of your AI tool and avoid underutilization. 

Continuously improve your AI tool 

AI tools are not static. They require continuous updates and refinements to stay effective, especially in the fast-paced world of government contracting. Contractors should regularly review AI performance and provide feedback to the vendor to ensure the tool remains aligned with your evolving needs. 

For example, if the AI tool is generating inaccurate or irrelevant content, work with the vendor to adjust the tool’s settings or retrain the model with more accurate data. Regular updates will ensure that the AI tool continues to deliver high-quality results, improving your overall ROI. 

Balancing costs and benefits 

Like any technology investment, AI tools come with upfront costs that include licensing fees, implementation costs, and ongoing support. However, when used correctly, AI can deliver significant benefits that outweigh these costs. 

Calculate the total cost of ownership 

To understand your AI tool’s ROI, you need to calculate the total cost of ownership (TCO). This includes: 

• Initial setup costs: How much did it cost to implement the AI tool, including licensing and training? 

• Ongoing costs: What are the costs of maintaining and updating the tool, including any subscription or usage fees? 

• Hidden costs: Are there any hidden costs, such as additional training, software upgrades, or consulting fees? 

By calculating the TCO, you can determine whether the benefits, such as time savings, improved win rates, and reduced errors, are worth the investment. 

Track long-term benefits 

While the costs of AI implementation may be clear upfront, the benefits often accumulate over time. Track the long-term benefits of AI in terms of proposal quality, reduced errors, and improved efficiency. If the AI tool is consistently helping you win more contracts or streamline operations, then it’s delivering a positive ROI. 

Unanet ProposalAI is the leading solution for government contractors, offering a streamlined, secure platform that improves proposal quality and boosts win rates. For more on how it can help, schedule a consultation with one of our experts today.