LIKE A LAMB TO THE SLAUGHTER - Get the right Price, not the bottom one!
After the euphoria of that all important project win, do you ever suffer from that sinking feeling or feeling of nausea as you contemplate that all important question “what did we miss?”
Tendering for a contract or programme of works is not an easy task and it certainly is not for the faint hearted. Because of the unique nature of Construction and Engineering projects, every price or estimate is unique, it’s always for the next building prototype. Yes, parts of the building, structure or facility may be the same as one we priced just yesterday, but regardless, each project will have some uniqueness, even if it is just simply the location of the site or the soil and substructure conditions.
Partly due to this complexity and no doubt necessity, get a tender right though and you you are the hero of the hour, the single hour only minds you, you’ll still have the mounting deadlines of those other twelve or so other tenders to submit by dawn! Get in wrong on the other hand and you may circum to the plethora of sprouting politicians, postulating knife wielding understudies and not to forget those manoeuvring opportunists and victims, who quite frankly in this day and age have an unlimited arsenal to pick from. Each group of which is all too eager to pounce individually or as a pack, moving in to pick the remains from the fallen carcass of the battle weary project team.
Sometimes projects go wrong for many reasons however, what we are considering here are the ones that go wrong from tender errors or omissions. Put yourself in the hot seat of the tendering team during those early inception and tender stages of a project. Have you ever been up against the clock, chose not to visit and walk the site, shrugged off or forgot to read the small print (and not just the legaleses!), forgotten to change your standard MS Word template, relied on quantum physics, listened optimistically to Meg or quite simply assumed far too much - and we all know where that leads us to, don’t we?
People under pressure, even professionals, do some crazy things and assuming the rest of the management team are mind readers or that our trades are contortionists and superhero’s able to freeze time, are two that we seem to come across far too regularly.
These decisions that can so effortlessly culminate into a wrong tender price, programme or strategy, can be both catastrophic professionally for an individual, and business alike. They will also potentially have an impact on those lurking wolves - even they can break their teeth trying to get the proverbial blood from the stone!
To keep the Wolves from the door and you become the main course at the dinner table, as always our advice on this is very simple...in any tender submission or contract negotiations and formation be proactive! Control the timing, control the outcome and if like us you do not want to place all of your faith in philosophy, and you are of course the Offeror in this scenario, please consider the following few points.
(1) Never, Ever, Never, Assume Anything!
Try to always get clarity from the Employer about what and how they want the works to be completed. If you have no option but to make some assumptions, don’t use a magic wand, make them relevant and practical to your surrounding and information available, then make it very clear and explicit in any offer that you have made what the assumptions are.
Questions, Questions, Questions = Clarifications = NO ASSUMPTIONS
(2) Have a Method and plan of working – Sky Hooks don’t really exist
There are normally a number of ways that a project can be approached and completed. Some will be quicker and involve off site fabrication or modern construction approaches, others may be more traditional, slower in approach and more resource hungry. Set the method and price and plan for it. If the chosen method calls for a crane then price and programme for the all-important logistics of road closure (if small site, etc.), paperwork and lifting plans, mobilisation, hook time, resources. Also don’t forget that cranes do not magically appear they have to travel to site, which all costs time and money.
3) Coordinate the Tender Price and the Tender Programme
I’s always great fun explaining to a senior executive/ business owner that the contract programme is 52 weeks and the preliminaries run out at around week 26. It never bodes well when the lambs are not fed!
I also goes without saying that the method working and the plan should also be coordinated with the price and programme.
(4) Read the Tender Pack – or even better get it translated for you
Many tender packs provided by Employers and Principal Contractors can be complicated. We know we write some of them. These can be made up of multiple parts, referencing standard contract documents, amendments to those standard documents, legalese, technical and performance requirements, wish lists and an unprecedented number of promises that will all need to be kept, even when it rains.
Remember the contract that you will hopefully end up signing, is more than just the legalese. Many companies go out to get a translation from the neighbourhood shepherd (lawyer) on only part of the tender document, the legalese. They inevitably forget to coordinate the legalese, those warranties and indemnities, with the pricing, the programme and the methodology selected. Fail to coordinate these and you could end up with big risks and even bigger bills! Lamb chops are not cheap in this day and age you know.
(5) Know the Environment and Site – Sky Hooks don’t really exist!
The site and environment will make a vast difference to the way that a project is approached. This in turn will have an impact on how the project is priced and planned. If a crane will not fit on the site, it really will not fit!
A great example of this are two of the mega projects that are looming in the shadows, such as the Hinkley Point redevelopment and the new HS2 rail network. Each of these projects demonstrate that environment is key. Both will not only bring challenges from regulation and industry standards and methods of working, but they will also bring an all too different logistical and security necessity.
(6) Know and Understand Your Customer/ Employer
Each customer or Employer is different. Select and tread very careful. Many businesses do not share the same healthy bank balance and morale attitude to business and paying you than those reputable ones. Do your homework and avoid those that can’t and won’t pay what you are due (must stress what is due not what is demanded there is a subtle difference).
In addition to the more tangible and objective commercial tells, there are also more subjective issues that you will no doubt wish to consider when choosing your customers wisely. Some customers will expect and demand a greater level of involvement by them and or their appointed representatives/ consultants than others. They may also have different expectations around quality of the works, how the work should be approached, sequenced and of course how much they expect to be given the opportunity to comment upon and influence submissions and paperwork. All this takes time, resource…. Even if only to check that their expectations are actually in line with what they asked for in the first place!
(7) Read your Suppliers and Subcontractors Small Print
If you are relying on Subcontractors and Suppliers pricing, align their strategy and expectations with your plans and expectations of the environment and customer. If the customer expects you to attend training course by the university auditorium full, then make sure the Subcontractor has provided for them. Likewise, if deliveries can only happen at midnight then make sure the overtime for the shepherd is covered.
Don’t assume they will read the small print – they more than likely won’t have!
(8) Identify and risks and allow for them
Again risks and how to deal with them is subjective. Many of us rely on experience rather than statistics or historical data. What is clear however, is that the more detail we know, the easier it is to identify risks and assign a plan for dealing with them. REMOVING THEM or MANGING THEM or PRICING FOR THEM are just a few approaches that can be adopted.
Whatever option that is chosen, make it clear, explicitly how you plan to deal with the risk and who ultimately is responsible for them! If you are not comfortable or you consider that you are not the most appropriate party to manage an identified risk – be firm and say that it is someone else’s responsibility.
(9) Involve the Operations Team (Specialists)
Going it alone is not the best idea for any estimating or bidding team! Approaching this as a lonely lamb may mean that the mint sauce is prepared for more than one course. Let’s be honest (I will apologise in advance to the PM brethren) operational teams never like to be dictated to (influenced and guided maybe). Tell them they have to work in a particular way and they will be the first to argue distress and will almost certainly point fingers.
Whilst this is not good for the lamb now drizzled in the mint condiment, it certainly does not bode well for the business as a whole. In these situations, whilst the individual has been thrown to the jaws and served up, the business, when things have gone wrong, still have a massive problem to overcome. Involving operations (or a greater team) at the outside not only mitigates the risk of getting things wrong in the first place, it creates a greater ownership and in some circumstances it has been seen, to assist in the problem solving approach when complex situations do arise. The focus can move away from tearing each other apart and move toward collaborative working to overcome the issues more cohesively.
(10) Sleep on it!
With any big decisions it's always good to take a breath and think. Is the Employers Requirements, the legalese, what you really have priced for, planned for, have you captured all the assumptions, all the clarifications, all those exclusions, coordinated all the documents, the terms of the agreement generally?
As always, you know it’s OK to change your mind -don't you?
Finally, a salute and hats off, to all of the Estimators who have chosen this roller coaster ride as their profession. Stay brazen in the face of adversity and risk - tenders must be won!
If you have stayed interested enough to get to the end... you may be interested in the further ramblings of "...contracts man in the trenches....". Please FOLLOW ME by clicking the button on the top... bottom... right... somewhere on this page? Or what about at least sharing the article? Thanks! Feel free to reach out anytime.