Take competitive out of tender
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.