Sales & Marketing Committee: August Committee Challenge
August 13, 2014
Robert Hoertsch, Vice Chairman of the Sales and Marketing Committee, has posed a challenge to the PSA Network to leverage the vast sales experience of our organization.
We encourage you to respond to the situation and help your fellow integrators achieve success. Please provide us with your feedback in the comments section.
The Situation:
Project “A” has come out and is a highly lucrative project. The client is one that has used your company before directly but has also used a few of your competitors. You have worked with the client’s selected design engineer for over a year helping do the design for this project and you have provided information on products, installation techniques and even some budgetary pricing for portions of the project. If this project was going to be proposed directly to the client, you feel that you had the best chance of securing this work.
Conditions are as follows:
1. The client has been instructed by the purchasing department to take his project out to bid through a general contractor.
2. The general contractor will take your portion of work out to bid by electrical contractors and the electric contractor will decide who they will hire for that work.
3. The three electrical contractors that are chosen to bid this work are relatively unknown to you. You have done only one small project with one of them and nothing with the other two.
4. The general contractor has stated to you and the other integrators that are “bidding” this project that he will not play a part in the final decision.
5. The client has stated that due to the large size of this project, pricing is an issue but that the final decision is up to the general contractor not the client.
6. Your competition knows that you have a relationship with the client, which is a major corporation. It would be a great win for them to add this client to their customer list so they will probably go after this project aggressively.
7. No discounts are available from the manufacturers.
8. Due to the amount of work you have done for this client, you know already know that the cabling scheme this client requires is not typical and there are aspects of the project that will affect which type of equipment needs to be used. This information was not easily discernible in the specification, so your competition does not know these details. No change orders will be accepted.
The Question:
How do you ensure success on securing this project?
Answers:
8/13/2014, 1:25:37 PM
If the cabling type/scheme is not typical and others do not know this, now is the perfect time to have the client advise the GC, so it can be known by all parties during the tendering period that will increase everyone’s cost.
Typically when a spec is written by a procurement dept. the specs include that no change orders will be accepted, but if the client wants it- they will find a way to forgo this clause that procurement has placed in their documents.
If you didn’t write it, bid to spec- and disclose this during your shop drawing submittal in line diagrams and SOW that it will not work as designed. This still gives you the opportunity to keep the customer, it would be your option to lower your costs or margins based on the equipment that you know will not work- just be aware that they may want your team to install it as specified to prove that it doesn’t work.
I have personally worked with the procurement team dozens of times, after the job closing and before award. Based on a cost, the customer may want to check that your pricing is still in line, or if you’re working for the government they need to show the taxpayers that the department is transparent and doing the best with tax payer’s money. If the customer (behind the procurement dept.) is a friendly- they will try to work with you in any way that they can.
Ramon Carrion
8/13/2014, 1:29:53 PM
Same dilemma happened early this year at our Company… same scenario. Here is the history and the final result.
We had a subcontract with an EC named “B” for the communication and security site for a Federal school in a military area in Puerto Rico. The EC was subcontracted by the GC named “A”. The facility manager (end user) of the military area in Puerto Rico, has had a very good experience with Bonneville in the past. We had a very good relationship. He was happy that we were using the subcontractor for the security and communication part of the Federal School.
• A new construction of a federal building in the military area was bid.
• Good news Contractor “A” was awarded the project.
• Contractor “A”, had a favorite electrical contractor and he wanted to give him the electrical part, which included our part. We did not sent our price to this EC.
• GC requested to his preferable EC to use our price, due to the strong relation with the facility manager and to the good job that we were doing at the Federal school.
• The electrical contractor requested our price and we gave him our number.
• EC had a lower number from another subcontractor, for the same portion of our work.
• Bonneville could not reach the subcontractor’s number.
• GC verified if he could subcontract our part directly.
• Top management of the GC did not approve to subcontract our part.
• End user requested the EC and GC to use Bonneville.
• Bonneville met with the EC, to find a way to enter in his contract with the GC.
• Bonneville again revised our price and gave it to the EC as final and firm.
We lost the battle. EC did not subcontract Bonneville.
My experience with the GC and EL – PRICE always WINS, no matter how strong relations are, good past performance, etc.
Cliff Ziegler
8/13/2014, 1:30:43 PM
If it’s going to drive your cost up, make all parties know of this fact- so it equals the playing field and your price is more in line with other responses. If it’s going to drive your cost down, keep it a secret.
Given the scenario, I also doubt that every response will have a technical proposal that will outline the cable scheme, and the GC will simply look at the cost at the end of the bid sheet. I would also hazard a guess that most GC’s don’t have any idea what we do and what it takes to get it done.
Denise Niles
8/17/2014, 10:40:54 AM
Something similar also happened to me this year with a few considerations:
1) The initial site review showed very little challenging areas (which we knew may be an issue during installation).
2) There was no bid leveling meeting.
3) The final decision was purely price driven.
4) There was no best and final and no opportunity to provide alternate solutions or discuss challenges.
Unfortunately, we lost the bid but gained a valuable lesson. Based on our experience, I suggest initiating a meeting with the g/c and the three electricians to evaluate the challenging cable portion. If possible, recommend a site visit for all parties (include the other bidders) to review the cabling and any other costly portion of the work (that may not be reflected in the spec). If your relationship with the client is strong, they will appreciate your extra steps to ensure a clean process without any scope creep later on. If there is no site visit or meeting, bid to spec, qualify as needed and offer an alternate which spells out your original engineering design.
Good luck!
Cliff Ziegler