Picking a service partner? The lowest cost is not the best measure

August 26, 2021 8:24 am Published by Gregory Lawes

A Contracting Officer will use ‘the lowest cost’ as a measure to judge the selection of a service partner such as a laser scanning service provider. But be aware!  Choosing a contractor by price alone may result in a final dollar investment much more significant than the original highest bid.  Performance indicators such as project history, client satisfaction, technical knowledge, and industry experience must also be examined.

In considering a service partner, the company should look inward at its own performance, or related experiences, in the subject area.  You cannot judge a partner’s performance or project if objectives and goals for the project or task are not clearly defined. Likewise, you cannot define solid objectives without knowledge of the field.

Defining clear objectives for the service partner begins with a definitive target for the project.  Precise and open communication between all parties helps foster a team effort that will ultimately succeed. Team stakeholders have a vested interest in the project and define the work scope from all divisions (piping, structural, mechanical, civil). Their combined input of data collection requirements is key to the success of the finished project. For example, we have seen where the laser scan needs for an industrial project have been, in some cases, driven by the needs of the first discipline team on-site, typically piping and mechanical.  These needs often differ from other design discipline groups and functional groups such as maintenance and operations.

Once the team has clearly defined all goals and needs, the next step is developing a coherent and comprehensive scope of work document that will eliminate the guesswork for your contractor.  Not just about defining the design team’s needs, the scope of work should include detailed parameters and information about data delivery, format, schedule, and site logistics.  In short, this document shall consist of anything that could impact the performance of the service partner. Keep in mind that this is a living document and will need updating as changes occur to the project and with technology advancements.

How and when the project is going to use the data should also be spelled out. For example, a fast-track project with an aggressive schedule will dictate different field staffing requirements than those with phased information needs.  These differences will translate into higher or lower execution costs.

With project needs and scope addressed, the focus turns to the evaluation of bid responses and potential service partners.  First and foremost, what are their qualifications, and what is their past project history in the industry? What equipment will the team utilize? What is the crew size and composition?  Do they have the resources to meet the objectives and deal with issues that can and will arise? The last thing you want is for both the project and service partner to be stepping into unchartered territory.

Create a bid template so you can easily compare bids side by side. In addition, producing this evaluation document in advance saves time and assures the service provides have addressed all project objectives in their proposals. The evaluation goal should be to have the bids within a specific range.

The first step of review should begin with the stakeholders.  They are the ones with a clear understanding of the project and the client’s ultimate goal. Stakeholders can evaluate if the bid meets the key objectives and the impact of alternate project delivery methods or approaches.  Often it is the seemingly insignificant details that have the most significant impact.

Don’t just look at the bottom line, but ask the question, “Does the contractor understand my project challenges and goals?” They are the ones that will be in the field collecting the data you need. If the contractor understands your project, they will use this knowledge and their past experiences to advise on achieving those goals. We highly recommended that a client representative accompany the contractor in the field to answer any questions and discrepancies encountered.

So, does the lowest bid win the project?  Is the highest bid out in left field?

Someone once said that the lowest bid was the one that missed the most, the highest was the one trying to make up for being the lowest on the last project, while the one in the middle was the one that understood the project needs and knew what it would take to deliver a successful project.

With up-front collaboration, including clear and open communication, all design needs, HSE consideration, quality programs, schedule constraints, client goals/directives can be addressed and accomplished. Good choices and careful planning in advance will ensure success throughout the entire project’s lifecycle. On the other hand, a communication breakdown upfront can ripple through a whole project negatively.

Lastly, and most importantly, if your client chose you because you’re the best at what you do and can deliver a successful project on time and budget, make sure that your service partner, too, is the best at what they do and can contribute to your ultimate success.

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This post was written by Gregory Lawes