Chris Croft's Personal Blog

April 27, 2010

The problem with tendering

Filed under: Random stuff - uncategorisable — chriscroft @ 7:32 pm

More and more we are asked to tender for work,  in the interest of fairness and professionalism.

The problem is that tendering doesn’t get the best result, it just wastes a lot of money.

The great long documents that we get sent ask for everything (environmental policy, equalities policy, turnover, profit, references etc) except “Is the training any good?” because of course that’s too hard to measure on a form.

So I would suggest that the following are the real results of a tendering process:

  1. Good people get filtered out because some irrelevant box isn’t ticked
  2. The best suppliers, who are busy, often don’t bother to tender
  3. The tendering process costs the purchaser lots of money to do
  4. The suppliers add a cost on for tendering, so the purchasers pay a second time
  5. If you get one in ten then you have to add ten times the cost of tendering, to each tender – so the purchasers pay a lot! (if you want to save money in the public sector, start by looking at the size of the purchasing departments!)
  6. You end up getting the slickest presenters, not the best people
  7. And then you don’t negotiate with them, you just take their price – mad!!

If you are the incumbent provider, with an excellent track record, it’s harder for you to win the repeat tender than it is for the new people, because the purchaser is vulnerable to accusations of being in your pocket if they pick you, so it’s safer for them to pick someone new.  Also they look good – “making changes”.

Some of my customers are putting requests to tender on websites and, in the interetes of fairness, they arne’t even allowed to tell me that the RTT is on a website somewhere on the net.  So even though they know me and want me they aren’t going to get me.  How mad is that?

Suggested alternative – meet people, talk to them, pick the best one, and negotiate with them over price.  Common sense!

Don’t get me wrong though, although I think this process is stupid and wasteful I’m not bitter about it.  I am discovering how to play the game and getting quite good at it, so I’m probably getting more work that I should.  But still, the world is going a bit mad…


1 Comment »

  1. For a service such as yours, I agree – completely mad. For a specifiable commodity with many offerers differing only in price, it’s the best way. The challenge is distinguishing whether the commodity is differentiable or not. Clever buyers and sellers identify differences that outweigh the difference in price. Buyers who think they are REALLY clever then pretend they do not recognise the difference in service and continue to behave as if price were the only difference. This alienates sellers of superior services who defect to even smarter buyers.

    Comment by Martin Herrington — April 28, 2010 @ 12:59 am

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