Derek Mynott is the Managing Director of a firm of Quantity Surveyors based in Bedford. He kindly agreed to write this blog post for us while working for his old firm, GF Partnership.
Honest Tendering
A short while ago John sent out a tweet (Twitter message) that gave me inspiration to write a blog about cut throat tender pricing, and that led to me getting my blog featured on ’Building’ magazines website.
And now John has asked me to do a guest blog spot for him on the theme of honest tendering.
So what does that mean?
Well my take on it is putting in a fully compliant bid for the work at the correct net price for the project plus additions for preliminaries, overheads and profit. The question being at what level do you put your overheads and profit at?
So simple right? Well far from it really……
The thing is it gets complicated doesn’t it?
For a start there’s the pressure to secure the project to keep the team busy, otherwise they are being sent home or worse still down the road! Then there’s the pressure to do 2 or 3 jobs at the same time. Then there’s the requirement to submit further information on that tender from a month or so ago. And so it mounts up…….
Then when you look at your specific bid document there’s the issue of sorting out the myriad of information you’ve received electronically. You either sift out what’s necessary or just send it on down the line to the supply chain for your quotes.
The trouble is what if anything do you get back?
The supply chain is equally rushed off its feet too and if you don’t give them something clean and easy to price chances are (even with what appears to be good opportunities around) it will go in the bin!
Put all that aside, let’s assume you get everything back you need in time.
You sit down and study the documents to put your bid together.
And what do you see?
All the errors and mistakes in the tender documents, the loopholes and all the opportunities to make some money for your business as a result.
What do you do?
Well you make dam sure you take every opportunity to put in a bid that makes the most of those opportunities don’t you.
As after all the cheapest price wins the job – not the best compiled fully compliant bid –that’s usually reserved for 2nd or 3rd spot – not the winner.
Honest it’s only a tender!
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Links
John’s tweet http://twitter.com/#!/ConstructionMM/status/28097742517571584
John,
Derek’s depicting a very real scenario that is probably happening up and down the country. It shows a crazy waste of the huge potential of the UK construction industry – one that can invent a the tent that turns into concrete in less than 24 hours! How incredibly is this … http://bbc.in/kPR8Dz.
I’m interesting to know how we change this situation; with all the talk about sub-economic bidding and another contractor going into receivership today – this time on the olympics there has to be a better way. And we must have the capability to devise it!
I’m aware that clients want lowest cost, but the argument should be made by their advisers that lowest cost is not the same as getting what you want. And this reminds me of John Ruskin’s quote about paying too little, which is now almost 150 years:
“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better”