Adrian – Hi! My name is Adrian Magno and I’m one of the Senior Engineers here at Konnectus. Today, we’re here to talk about Tender Management. So, you put together an AV Design and you’ve received a bunch of responses from the different AV Contractors. How do you evaluate which one is the best for you? So, Dave is it all about price?
David – Well, a lot of people do think that yes, it’s all about price. If I get the best price, then I’m set. I need to get the best deal. You know, drill everybody down until I get the best price. Get that price, and then walk away. Seriously, that’s how most people think. But if you’re doing that, that’s really selling yourself short. You’re probably not going to get a contractor that is the best fit for your project or for your company as a whole. There’s a lot more to it than that and we’ll get into that later. However, it is important to evaluate price Adrian and the way we like to do that is break a quote down into different elements. We evaluate the equipment, the software, and then the labour separately. For the equipment, we’re just trying to look at the particular models, or similar types of equipment from different manufacturers and just check that, first of all, whether the pricing is similar between different offers and also in line with competitive market rates. Then, the same thing with the software really. Its the same kind of process. And then with the labour, you just want to ensure that the allowances are not too light or too heavy. And that’s basically it. And so, once we do that evaluation of price we are left with a comparison, which is a very important step, but definitely not the only step.
Adrian – I understand. Now, if you did get your AV Design completed by an expert such as an AV Consultant, wouldn’t the price for equipment all be the same anyway?
David – I suppose if it was one of our konnectus designs where we hard specify all the equipment, and its a case of just comparing the three of four different AV Contractors for the same bit of equipment, yeah, sure it’s a very easy comparison and it’s quite quick. So, I guess, it’s one of the benefits of doing it that way. It’s very quick and easy to evaluate the price.
Adrian – What if you’ve done the things you were saying, you’ve evaluated the equipment and labour and you’ve done a bit of apples to apples comparison, but you’ve noticed that one of the tenderers is 20% cheaper than everyone else. Does that start to make you feel uneasy?
David – Oh no! It doesn’t make me uneasy. I’ve just got a job to do and that is to evaluate, dig a little deeper, and make sure that we’ve uncovered all the stones and done the proper due diligence. What that is telling me is let’s go on to the next step, which is evaluate that particular contractor for compliance with the design. Let’s say, for example, they’ve missed a system type, or a large piece of equipment somewhere, or a room type, or even a quantity of rooms or systems? These are just clerical errors and they happen all the time. So, that’s something we’re going to check. It’s the first thing actually. The other thing we might be checking, especially if it wasn’t a hard specification design, is design compliance. If it was maybe a performance specification that was given and the design is on the AV Contractor to put together, well, let’s go have a look at that design and evaluate it against the performance specification. We will check to see whether the equipment up to scratch, or in line with the performance specifications. We will check whether the design the contractor is putting forward is actually going to work. We will check whether it is going to deliver the actual user requirements that the customer is looking for. We just want to evaluate and dig a little deeper and, quite often, we’ll uncover quite a bit after completing those two steps. In fact, the contractor’s outlier price will usually change and get a lot closer to the pricing from the other competing contractors.
Adrian – So, I know with my wife, her eyes light up every time she goes to a store and sees something mislabelled with the wrong price. She’ll go right up to the clerk and say “This is the marked price so this is what I’m going to pay”. Is the same principle applicable in the Tender Environment? Can you hold an AV Contractor to any clerical errors?
David – Well for the way we document our designs, absolutely yes. We have it stated in our documentation that we’ve done a clear design and we’ve specified all the equipment. It’s then up to the AV Contractor to make sure that they have included everything to make a fully functioning and working systems as per the design intent. It does depend on the actual contract at the end of the day though. So, if they’re following our contract, then it’s written there and there are no excuses for clerical mistakes.
Adrian – I did want to ask you. If a contractor is still much cheaper, does it send alarm bells, or is there something wrong?
David – Potentially. So, we need to dig a little deeper again. So, we’ve obviously looked at the price, and then we’ve checked for compliance with the design. And now the next thing we need to look at is TEAM. So, there are many great AV Contractor companies out there and they have plenty of experience and they’ve done fantastic projects and they can show you all of those as examples and you can call up for reference and things like that. You should do that step by the way. However, what I’m more interested in is who the actual set of team members are that will work on the project. I want to see their names. I want to see their CVs. I want to see what percentage of each person’s time is allocated to the project. They have to be the right set of people for this particular project and for this particular customer. So, there is quite a bit of work involved to go through and make sure that all lines up. If it’s not the right team. Maybe, they don’t have enough experience. You’ll find that out quickly. At that point we go back to the contractor and we say “Hey, we need you to change the personnel for this reason, or that reason”. And that, therefore, may affect their price, to be honest. They may have to lift it back up again. So, very important.
Adrian – So, I have had a few tender responses in the past that have come in without the CVs of the different people being provided. What do you do in that instance?
David – I just insist and say “I want to see the CVs please”. They might not be used to giving that level of information and that’s fine. But we are quite thorough in that process because it’s very important to get the right team of people on that project for that particular customer. So, we just want to do our homework and make sure. It’s like when you hire someone to work at your organisation. You want to do your background checks and things like that. It’s the same thing when you’re hiring a contractor to do work for you.
Adrian – I understand. There’s one thing that you mentioned previously, the fit. So, you were saying the customer needs to be the right fit for the AV contractor.
David – Yes.
Adrian – Do you mean, personality wise? In other words, you don’t want to match a head strong project manager with a head strong AV contractor because they might bicker. Is that what you mean by that?
David – Look, personality can come into it. I probably don’t go that deep very often. In terms of project manager, you do want someone who’s pretty head strong who can sort of smash heads when required. That’s actually a good trait to have in a project manager because you’re going to be more likely to hit those deadlines. However, what I’m really thinking about is more the long term. Well, maybe there’s two things I should mention. The first is, what’s the approach this company has? We’ve looked at price. We’ve looked at compliance with the design. We’ve looked at the right team of people. What’s their approach, actually, to delivering the project? Quite often, there’s going to be a builder involved, and they will have a construction program. I’d like to go back to the AV Contractor and say “Hey, this is the current construction program. What’s your program to deliver this AV solution and how will it fit in with the overall program?”. This is actually a good test because they’ll come back to you with what they think is right and you can clearly see whether or not they know what they’re doing. Do they have the right approach? Have they done this before? Are they going to work well with a particular builder? So, that’s an important check to see if they’re the right fit to deliver the project. The other big thing, in terms of fit, is kind of long term. So, yes, we’re going to get that project delivered and it’s going to be delivered well but after that, what happens? Does this company have the ability to service and maintain that equipment or that solution for the customer? This is so important, yet so often overlooked. It’s probably one of the things I feel most passionate about. In Month 1, or month 11, or year 3 down the track, if there’s an issue with the equipment or solution, and those poor people are trying to use the systems and just getting frustrated, who is the customer going to call? They need to have a plan in place, and there needs to be a reliable company providing their service.
Adrian – Just before we go, thank you so much for all the information. It’s been very informative. One of the problems I do sometimes run into is when you have three tenderers that are all priced within 1-2% of each other. I’ve called all the different qualifying bodies and made sure that all the teams put forward are all adequately qualified. The labour allowances are relatively even and the equipment pricing is also relatively even. How do you choose between three options that basically look exactly the same?
David – In all my years I’ve been doing this, I’ve never seen that happen. If you go and follow all of those five steps that I just talked about, you’ll find there’s going to be a clear winner. If you only do the first couple of steps, or even the first three, yeah you will have that dead heat sometimes. So then what do you do? Just flip a coin, I suppose, because you can’t go any further. That’s not really the right approach. If you cover all those five steps, you’ll always uncover a clear winner who is the best long-term fit for the customer and the specific project. So, that’s what I recommend.