The Challenges of Cross-Border Tendering

Puzzle-EarthAs an independent consultant (and previously both a client and a service provider) active in the FM sector for may years, I’ve been lucky enough to develop something of a niche position with regard to outsourcing and tender management. Much of my work has spanned EMEA as well as tending to be at the larger end of the scale, and as a consequence I’ve become a little sceptical when I listen to others suggesting what can and cant be achieved in these (admittedly complex) areas of practice.

With that in mind, I thought it might be useful to explore a few of the issues that tend to cause concern, and to offer some guidance that will serve to maximise the chances of success for anyone embarking on a cross-border tender exercise.

Communication Management

Effective communication is probably the most underestimated component of tender management, particularly with regard to projects that span a multitude of international borders. It’s therefore vitally important to establish an effective communications matrix at the outset, and to ensure that both central and local requirements are addressed. There are three primary areas that need to be considered:

In any client organisation, there will be a specific process for decision-making, and that will usually entail seeking periodic sign-off from a panel/board of senior managers. Identifying that group, and ensuring that there are clear lines of communication both individually and collectively, will save a lot of headaches as the project progresses through its various phases. Agreement as to the number and type of decision gateways and other process requirements also impacts on the programme, so this needs to be clearly established from the outset.

Local management
As one spans international borders, there can be issues (be they cultural or operational) that cause concern to local management teams and – if unaddressed – can have an adverse impact on the level of cooperation and “buy-in” achieved. I favour an approach where a specific point of contact is appointed in each country, with that contact then becoming the in-country representative for all things project related. Aside from demonstrating respect and concern for their views and perceived requirements, it also makes certain parts of the process (for example, data collection and site visits) far more manageable than they would otherwise be.

Any large-scale project will inevitably impact stakeholders and managers who are not directly involved in the process itself. Whilst governance issues may have been addressed, it’s therefore also important to understand the nature and extent of the wider stakeholder group and to ensure that they’re aware of the nature, scale and objectives of the exercise. This applies not just at the outset, but also as key milestones are achieved and well before any new solution is due to be implemented.

Programme and Logistics

Allowing enough time for the integrity of the tender process to be maintained is fundamentally important. Whilst it’s always possible to “squeeze” certain process activities if absolutely necessary, lack of time will put pressure on both client and bidder teams and can result in errors being made, requirements being misinterpreted and excessive risk being costed into the bids. Key elements to consider are:

Data collection
This can be the most painful part of any tender process, and in my experience the quality, extent and accessibility of data is overestimated in almost every project. With a multi-geography tender each data set has to be replicated in every country, and whilst this is a difficult and time-consuming process it’s also one that is inevitable. Understanding when and for what purpose data is required means that some of the work can be deferred and carried out when the tender is underway; for example, there will be requirements for the business case, the tender pack, pricing analysis and mobilisation, so some of the data is actually needed in final form many months down the line. It also pays to be pragmatic about what’s actually available; the classic 80/20 rule can be applied here.

Scale and location of portfolio
This has a fundamental impact on the time that needs to be allowed for (in particular) familiarisation, site visits and pricing, and effectively means that the timing for the development of bid submissions needs to be longer than might be considered normal for a single-geography tender process. I’m generally quite happy to set aside a couple of months within the overall tender programme in order to allow solutions to be properly developed, and to give bidders an opportunity to remove as much risk as possible from their pricing methodology.

Recognition of key geographies
Whilst a portfolio might span any number of countries, it’s often the case that the bulk of space, expenditure and key/critical locations exist within a far smaller geography. Recognising this is important, because it can lead to a far more manageable approach in terms of site visits, pricing and mobilisation. It also allows for critical areas of risk to be addressed in a more effective way, and this alone tends to provide a level of comfort to senior stakeholders that can preclude unnecessary obstacles arising with regard to sign-off and approvals.

Supplier Selection

No room for dogma
Many clients I meet have a predetermined idea as to the type of delivery model they favour, i.e. either self delivered through a “prime contractor” or a more traditional managing agent approach utilising a third party supply chain; however, when I ask them why I rarely get an answer that justifies a dogmatic stance in this respect. I believe that it’s far more important to think in terms of the deliverables and the outputs than on the delivery model itself, because if service requirements are properly specified it should then follow that one can focus on best value without worrying unnecessarily about issues that shouldn’t impact objectives being achieved.

Encourage variety
It then follows that – at the initial RFI stage – one can include suppliers from both the FM and property sectors; suppliers with perceived specialism in either hard or soft services; and suppliers who tend to favour both self-delivery and a third party supply chain. The benefit of this is that, when bids are received, there should be a variety of solutions and models that each present a different option and a different approach to value engineering. Very often, the solution that seems to offer the best fit is not the one that might have been predetermined at the outset through a more blinkered approach to supply chain strategy.

General Approach

Aside from the key issues above, there are a number of more general points that, if taken into account, can make the process of cross-border tendering more manageable and more likely to deliver the required results.

Whilst much focus will be on the tender process itself, ensure that you allow enough time to properly address the initial business case and the activity required to support and develop it. This includes the data collection element, might incorporate the RFI and certainly requires early and effective communication/socialisation.

Don’t be afraid to engage fully with the various bidding organisations; on the contrary, I believe such engagement should be encouraged and maximised as there’s no better way to understand an organisations culture, approach and values than to get o know its people. This can be in the form of bidder briefings, site visits, Q&A sessions etc.

Large-scale tenders are always resource-hungry, and cross-border projects tend to be even more so. Client side resources can rarely afford to devote as much time as necessary to the development and management of the process so it’s usually the case that external specialism is required in a consultative/advisory role. Whoever might be engaged in this capacity, they should demonstrate not only a bulletproof process but also the knowledge and experience necessary in order to manage the issues and obstacles that will always arise.

And that, of course, is where I come in…

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