Why Two- Stage Tendering, Now More then Ever, helps Customers
We are all familiar with the challenges faced by our industry, and particularly the impact of ongoing cost inflation and an industry wide skills shortage. This is placing pressure on customers’ ability to deliver their projects within their original cost plans and specifications, many of which were prepared when there was greater capacity in the market and before costs started to rise. Some are voicing concerns about the ability of two-stage tendering to deliver customer’s requirements and this merely being a vehicle for contractors to fatten up their profits through an opaque supply chain. Perhaps, it is being suggested, a return to single-stage tendering is the solution, particularly at a time when there is a perception (real or otherwise) that there is greater capacity in the market and therefore greater competition within the supply chain to drive cost down.
At its core, the principle of two stage tendering encourages an early dialogue between the customer, contractor and the supply chain, but this only works if we are all able to have an honest and open dialogue from the outset about what our commercial realities and imperatives are. We work hard to understand our Customers’ priorities, but what about explaining ours? Where realistic and sustainable terms are agreed from the outset then the platform is set for a fully transparent process. It doesn’t take away the very real issues of increasing inflation and skills shortages, but least our customers may then understand why the contractor simply cannot absorb increased costs and unquantifiable and unmanageable risks as we are often encouraged to now. Where we are not offered the opportunity to be honest about sensible overhead and profit, then we should be brave enough to walk away on good terms before the relationship is soured by a failure to meet unrealistic expectations.
At Osborne, the effective implementation of two-stage tendering is part of our DNA. We believe that this is the best way of truly supporting our Customers and we continue to make it work. And the reason it works? It comes down to trust and honesty; having the courage to tell our customers in a constructive and supportive fashion what is realistic and what isn’t, and working openly with them from the outset to meet their aspirations rather than storing up problems that ultimately and inevitably impact upon both the project and the relationship.