Your Price is TOO LOW!

What do you do when your Customer / Client claims your price is TOO LOW?????♀???♂?

Hi and welcome back to the Theory and Practice of Estimating Electro-Technology projects.

In this LinkedIn Feature I want to share with you my thoughts and experience's when your Customer / Client claims your Price is TOO LOW?????♀???♂??

Ever taken that phone call from your Customer / Client asking you to check your price?????♀???♂?

Not because you're too HIGH - but too LOW?????♀???♂?

Not by just a few % points but double digits!!????♀???♂?

At first you digest doubt, swallow that lump in your throat and quench that dry mouth???♀???♂?

Such a Bitter Sweet moment.????

Something most Estimators experience - If you don't - You're NOT Invested!???????

'PLEASE EXPLAINS' for being too high are all too common, what's new RIGHT???

So what do you do when your Customer / Client claims you're TOO LOW?????♀???♂?

Not that a Construction Company / Developer is ever going to Knock down your door to tell you that!??

As part of my post tender Decision Support System (DSS) I interrogate select criteria, Margin and Market are 2 of many.???????(Refer my Post Tender Review Survey)

About my Post Tender Review Survey

Subject to the results of my DSS survey I then Review the Tender again in its entirety?? adopting the same DSS as I did originally??this may involve another site visit with Sub-Contractors and Suppliers to ensure nothing is omitted.?????????

Is this such a bad thing?????????

Let's face it, how often do you get the opportunity to Re-Tender and validate your price before signing a Contract?????????

This can only benefit your DSS ??it will either re-affirm your price or identify omissions.????????

If your Customer / Client won't extend you sufficient time to complete a review - then maybe it's time to end the conversation.???????

Next, I consider how the Tender was marketed, I.E. Open Tender / Selected Tender????????

In this example I already know it's Open Tender from my Tender Review and DSS.?????????

Suffice to say I would have BINNED the Tender if my DSS criteria indicated I couldn't compete, so I know who my opposition is and consider I have some chance of success!???????

Next, the Tender Information Source - Is it reliable? and can you Trust the Source????????

Open Market Tendering can be BRUTAL, especially when your competing with many Jacks of all Trades.????♀???♂???♂???♀???

An example of this BRUTALITY is from Post Tender Reviews I had with nominated Construction Company's on a particular Tender.??

In this example my Post Tender Reviews revealed that my offer compared favorably with others and it was the BEST PRICE received, my offer complied with all RFQ / RFT requests, my offer did not exceed budget, my offer was within budget and my offer was under serious consideration, or so I thought.???????

When the successful Construction Company was awarded the project I expected an invitation to meet and discuss the works program / schedule and of course the obligatory CONTRACT SCREW, but this never eventuated, so I knew something was ROTTEN IN DENMARK!????♀???♂???♂???♀????

When the successful Construction Company CA finally returned my call, a 10K discount was expected to meet the other offers to even be considered for a meeting.????♀???♂???♂???♀???

WTF - to confirm the CA's claim and call their BLUFF I contacted one of my competitors to validate this, which resulted in a direction to SEX & TRAVEL.?????♀???♂???♂???♀???

I knew then this competitor had My Price and was in Bed with the successful Construction Company.?????♀???♂???♂???♀???

Mindful of this, please ALWAYS consider the ALTERNATIVE; If you can achieve an experienced and reputable status of delivering successful projects consistently in the market, then being nominated as one of a select few for a Tender is by far the Best Market to compete in.

If your Customer Relationship is Sound, Long and Strong then obviously the foundations of Trust, Value and Reputation exist, after all, this is the very reason why you and a select few are invited to Tender in the first instance.???????

Another example I'd like to share with you is when I received a "PLEASE EXPLAIN" for a Gigabit Ethernet and Electrical Upgrade Tender for RAAF Amberley.??

It is RAAF's largest base and employs over 5000 people close to Brisbane.??

Canberra Drive and F-111 Drive are some of the original base roads, Canberra Drive runs parallel with the Main Runway and provides facility access.??

F-111 Drive is at?90° to Canberra Drive and at the end.??

Below and adjacent to these roads are the original utility services such as HV, LV, Telecommunications, Water, Sewerage, Fire, Fuel, Etc, therefore, so are their infrastructures, such as Pits, Pipes, Trenches, Ducts, Etc.??

Original facilities such as Control Towers, Squadrons, Hangars, Fuel Depots, Stores, Etc are serviced by these existing Utilities and I was one of a few nominated Contractors invited by DEFENCE to submit a Tender for new infrastructures to support Gigabit Ethernet Connectivity, Equipment and Electrical upgrades to and within the nominated facilities.????

When you consider the SOW, consisting of new facility SCEC endorsed cabinets, new In-Situ formed SCEC endorsed Pits, Pit link conduits, Multiple 50mm & 100mm Galvanised Lead-In facility entry Pipes from facility cabinets to external facility Pits over the top and adjacent to deteriorated and fragile infrastructures like these, you know straight away that CIVIL works will be SIGNIFICANT, EXPENSIVE, SLOW and HIGH RISK.????

If the NEW infrastructure challenge was not enough, the cable reticulation and cut over of new Voice Back Bone cabling, 8Klm of MM & SM Blown & Loose Tube Fiber Optic backbone cabling, terminating, testing and migration of ~ 800 fiber terminations at one of Australia’s Active Strategic Defence Assets would be another challenge.????

So, NO PRESSURE - but give us your best price.??

Due to the site location and sensitive status the design brief and security integrity were of paramount importance to DEFENCE requiring major logistics planning and coordination to maintain mission critical status, so everything including the Kitchen Sink was thrown into this Contract.??

So more than just a diet of doubt and lump in my throat was experienced here, the Contract Risks were HIGH, the Civil Risks were HIGH, the Environmental Risks were HIGH and maintaining operation of the Nations Strategic Defence Asset was HIGH.????

Everything about this Tender and Project was on the National Radar and HIGH RISK.??

How, What, Where and Why to apply tender RISK Value's was going to be one of the Key's to submitting a competitive Tender. The second Key was a confident and experienced team with BIG BOY PANTS and No Fear. The third Key was an organised and competent site Project Manager with BIGGER BOY PANTS and No Fear.????

With identifying CIVIL works as the greatest tender cost, I decided that all CIVIL work RISK's would be outsourced.??

To achieve this and despite the site distance from Brisbane, many site visits were necessary to ensure all Civil Sub-Contractors accepted the Site Environment Conditions and constraints, Tender SOW and Contractual Risks without any deviation from the SOW Contract and without any VARIATIONS.???????

When Defence claimed I was too LOW, my Decision Support System (DSS) confirmed the following;

1. 3 Nominated Competitors (that I considered reputable)
2. Confidence and trust in Defence Tender Feedback
3. Contract & Operational Risks had been reduced by using Project Managers and Staff with Site knowledge and proven experience
4. CIVIL & Environmental Risks had been eliminated by outsourcing these to competent and Confident Civil Sub - Contractors?
5. Confidence in the proven experience of the successful Civil Sub - Contractor
6. Confidence in the proven experience and site knowledge of our Staff available for the Project
7. Confidence in the proven experience and site knowledge of the Project Manager available for the Project
8. Confidence in our price after 2 Tender Review's and attributed the disparity in our Price to RISK as no omissions were identified.

As a result, we signed a contract with DEFENCE met all project challenges, made budget and delivered a successful Project to DEFENCE that won a Master Electricians Association (MEA) award for "OUTSTANDING PROJECT IN UNIQUE CIRCUMSTANCES UNDER EXTREME ADVERSITY”?

I was indeed a privileged man to have worked with this team.?????

I regarded them then, and I consider them still, the best I could have worked with and this is my tribute to them.???????

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