The bottom line (or as they say now TL;DR version) is that the more you help the process of pricing the bid, the more you benefit. This is best done by easy work, that is well-organised and thought through clearly.
Firstly to the cynics - who ask : "How can helping bidders price their bid lead to benefits - surely I want to drive their price down ?"This is simply wrong - though the selection process is a competition that you run, the result must be a collaboration.
So, if you accept that anyone pricing a performance contract has to price something they do not completely understand (because they will not win all tenders they bid for - and the costs of preparing bids is not zero), it is a small step to the reasonable assumption, that they will include a risk premium in their pricing. You want to minimize any pricing premium.
|English: The Three Musketeers by Alexandre Dumas (illustration of the Appleton edition). (Photo credit: Wikipedia)|
"All for one - and one for all"
is a summary of a good bidding process
One of their biggest cost variables is risk premium - therefore if you can reduce risk not for one, but for all (if it sounds like The Three Musketeers my apologies I have been a fan since I read Dumas under the bed-covers as a kid), all can offer their services at lower prices. In effect by informing them you assist competitiveness (amongst themselves to collaborate with you).
The same applies to any known problems - anything that is (or may be) an investment opportunity constitutes potentially reduced risk - The enhanced potential up-side makes the bidder more attracted to winning the bid - so they price more keenly.
Secondly, "Who do you want to win?"
Given a level playing field (and I hope we are all in that business) - you want to "let the best 'man' win" and she may be far better than he is - (in engineering women face an uphill struggle - so the better survive).
This requires you run a fair game - each should have access to the same information, and the better it is constructed, the more accessible, and the easier to process, the better are your chances of securing good value.
Thirdly, "Is money the best judge of value ?"
Yes and No - Obviously if you have briefed all contenders equally and if they have similar capabilities, since the prize is fixed (working with your properties) - then if the best price is the best value - it should be no surprise (it is the basis of capitalism). But that is a whole bunch of "if"s...
The real world...In the real world, competences and motivations and resources all vary. The easiest way to test these (the only way) is during the bidding process.
So, given your knowledge you need to evaluate their proposals.
It stands to reason that the better your knowledge, the better your evaluation - and this is the biggest thing you can influence !
If they price low - is it desperation to win business (unattractive), or is it a consequence of a well-resourced "bidding machine" (attractive) ?
To assess this you need to evaluate HOW they will make money and if it their plans are realistic.
Since we at kWIQly help to build these "bidding machines" (that is we help in analysis for EPC bid preparation), a simple check-list is the culmination of this blog post.
These are a few of the things you want to have in place (and want to share):
- Good energy data, at a minimum half-hourly automated reading of main meters (Gas, Electricity Water etc) for as long a history as possible is the best resource available - this can be interpreted. (Its what we do)
- An idea of plant conditions (tidying your asset register is a huge bonus)
- An idea of perceived comfort / discomfort (keep a log book for each property) - this will help you rule out silly proposals and value better ones.
- Simple meta-data - meter numbers, floor areas, meals served, rooms booked etc
- Access to sites (keys to locked plant rooms !!!) , site contact data, good directions.
- Critically - Ask yourself - "WWID" - What would I do? - If you have the best knoweldge of the properties you run (you should) - you opinion (even if not expert) about priorities, risks, limitations, etc, etc is invaluable.
If you have the courage to be open and honest, and you are prepared to work to get these things together - then best value is a few steps away.
Competence, commitment and organisation all reduce perceived (and actual) risk for the organisations bidding so prices are better - and the results should be too !
If you want help in the small part of this whole that we deliver - do get in contact, or feel free to ask your ESCOs to give us a call ! We want to help them to help you (because that's how we add value).