Over the past several months my company has been inundated with a higher than average amount of request for proposals. While we’re used to being solicited for several proposals every day, the last few months we’ve witnessed more than triple!
Every week we take the time to determine which ones we will bid on by using our typical approach. At the beginning of each day we sit down and prioritize, consider the types of projects along with the quality and detail within each. Finally, we assess the feasibility of any budgets identified.
I’ve noticed a trend that is evidently growing. A whole lot of request for proposals start out with wording that reveals an issue with the contract awarding processes of many companies. While the wording slightly varies, it typically starts with “We previously hired a development team that could not deliver….”
This brings up several important questions and considerations that need to be made. Why is this happening? Why is this trend growing? Is it the fault of the customers or suppliers? Could it have been prevented?
While, undoubtedly, the precise issues will vary and fault will inevitably fall on different sides on a case-by-case basis, I thought it would be interesting to take a different approach this time. Here was my game plan… I was going to call each of these companies and identify that I would not be able to submit a proposal for their project unless I could review their original requirements documentation and the original developer’s proposal. I was honest and straightforward about my reasoning; I wanted to determine where the issues occurred so that I can ensure that they are prevented when I submit a proposal. To my surprise, dozens of companies obliged and shared this information with me. Unfortunately, it revealed a much bigger issue!
Many companies are awarding projects of significant importance to their organizations based primarily on price and giving very little consideration to what they are actually receiving. A charitable organization in Ottawa in particular awarded a project to the lowest bidder of $7,500.00 when all other bids were $30,000.00 to $50,000.00. When I asked her why, she said “I called them up and asked them if everything in my request for proposal was handled they said yes”. What they said and what was in the written contractual agreement were two entirely different things. Her organization’s request for proposal detailed some 35 required ecommerce functionalities detailing complex rules surrounding shipping integration, taxation calculation, gift certificates and the list goes on. The proposal that her organization selected however had a single line item that said “eCommerce functionality with checkout – $3,000.00”. There was no contractual commitment to taxation, no details related to shipping cost calculations, no details at all… this is a red flag!
If you care about the success of your company and your career, when you review proposals, you must compare apples to apples. Make sure all details are outlined and that all the bases are covered.
If the proposal doesn’t provide the functionalities required to fulfill all of your requirements, it’s not going to meet your needs. If the vendor is unwilling to add those details to the contract, you’ve got an issue on your hands. Assuming you wanted a house with 13 rooms, 2 bathrooms and an attached double garage; would you sign a purchase contract that doesn’t explicitly identify these inclusions? Of course not… then why are so many companies selecting vendors based solely on price and not on what‘s being delivered?
One of the main issues is that in the majority of these cases the purchaser doesn’t have the experience to select the best vendor. If you want your company to succeed in this highly competitive world, do not empower the wrong purchasers to buy something for your company. Purchases are investments in your business. If you choose a vendor that cannot deliver, you will introduce a risk of failure. Even worse, if your competitor chooses a vendor that not only delivers, but excels, your risks begin to escalate even higher and potentially expose you to a risk of unsustainability.
Getting a little nervous about choosing the wrong vendor the next time? Don’t be… you shouldn’t be driven by fear; just ensure that you remain aware and unbiased. Chalk up the above lessons, formalize your selection criteria, perform your due diligence and then pull the trigger. If you maintain a commitment to improve your vendor selection process, your company will reap the rewards. You’re busy… I know… so am I. But at the same time I also know that a company’s rank in their respective industry can be impacted by the very suppliers that they choose to do business with. Discount this and you’re not just giving up potential customers to your competitors, you’re potentially risking your company’s image. Remember that old saying, “caveat emptor“?
CEO, N-VisionIT Interactive