Take com­pet­i­tive out of ten­der

The Press and Journal (Inverness) - - ENERGY -

in­no­va­tion? Does this make for a suc­cess­ful re­la­tion­ship; one that ben­e­fits both par­ties?

I would ar­gue that the com­pet­i­tive ten­der process not only doesn’t ben­e­fit both par­ties but that it is not sus­tain­able and even­tu­ally re­sults in ev­ery­one los­ing. In­evitably it drives down qual­ity and lim­its in­no­va­tion as bid­ders strive to sub­mit lower and lower costs in or­der to be in with a chance of win­ning work. In ad­di­tion, long term con­tracts of­ten tie the con­tract­ing com­pany to hold­ing their rates for a sus­tained pe­riod. This ap­proach min­imises profit and re­stricts the com­pany’s in­ward in­vest­ment which can lead to a de­mor­alised work­force with lim­ited ca­reer pro­gres­sion op­por­tu­ni­ties as well as im­pact­ing in­no­va­tion. To me this is a re­stric­tive prac­tice, es­pe­cially when you con­sider that a happy work­force is likely to be a mo­ti­vated one and that any re­sult­ing in­no­va­tion is likely to ben­e­fit the end cus­tomer.

To go back to the orig­i­nal point, with­out doubt the in­dus­try needs to re­con­sider how work is awarded. We could learn lessons from other in­dus­tries. For ex­am­ple, if you were plan­ning to build a house you would be un­likely to ask the builder for a sched­ule of rates, rather you might give a ball­park fig­ure that you are pre­pared to spend and pro­ceed from there.

There is no doubt that col­lab­o­ra­tion does have its place in our in­dus­try but to my mind this isn’t in the pro­cure­ment process. Per­haps, what we ac­tu­ally need to do is to turn the pro­cure­ment process on its head. The client com­pany could is­sue a scope, along with their in­dica­tive bud­get, giv­ing all par­ties the same in­for­ma­tion. Dis­cus­sion dur­ing the bid process would then force con­trac­tors to dif­fer­en­ti­ate them­selves based on value and qual­ity. The most ap­pro­pri­ate tech­ni­cal bid, the one that de­liv­ers best value rather than the cheap­est, could be cho­sen by the client.

We need to de­ter­mine how to de­liver value to both sides of the re­la­tion­ship. As a min­i­mum there should a sus­tain­able mid­dle ground whereby qual­ity and value are de­liv­ered at a price which al­lows the con­tract­ing com­pany to make a rea­son­able profit and also en­ables in­ward in­vest­ment which can, in turn, help to de­liver in­no­va­tion to the ben­e­fit of ev­ery­one.

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