Generate a competitive environment
To get best value from your suppliers, you have to generate a competitive environment.
That’s not necessarily quite as easy as it sounds. Getting a few potential suppliers to bid against each other is of little or no value, unless you’ve understood the market and know what you want. You need to be able to define what it is you want sufficiently well to ensure that the suppliers are all bidding against exactly the same requirements.
Know what you want
I worked for a consultancy, who when they bid to one particular client, always did so in the knowledge that they would make their profit out of changes in requirements. That client wasn’t very good at defining what they wanted, so we would bid at break even or a small loss in the knowledge that we would make a fat profit on generous additional day rates once the inevitable happened and they changed their minds. It really is important it is to be clear about what you want, before you start a competitive tender.
Tie down the detail
I’ve also witnessed a competitive tender for consultancy work that apparently resulted in a good deal. However the tender failed to say anything about expenses and after awarding the contract, the buyer subsequently found that the prime consultant was going to be flying in from another country and the expenses ended up being huge. Tying down this sort of detail is important.
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Gren Gale is a consultant specialising in Project Management and Procurement and is owner of PM Results