CaseStudy: The Tendering Process-Ray Gunn
Aneffective tendering process should result in the identification of anefficient contractor who will offer the best price for the client. Inthe case study analyzed in this paper, Gunn is a project managementconsultant who was hired to find a contractor for a client namedGerry Hatrick. The use of the open tendering process provided theconsultant with an opportunity to attract a pool of many applicantsfrom which the most qualified one could be selected. The main issueaffecting the tendering process is the strict deadline that mightforce the consultant to leave out some of the qualified contractorswho will give a reasonable price to the client. This issue can beaddressed through several ways, including the use of online tenderingand an increase in flexibility of the entire process. The tworecommendations will allow Hatrick to hire the contractor offeringthe cheapest price ($ 1,695,000) compared to the estimated cost of $1,900,000.
Keywords: Tendering process, contractor, and project managementconsultant.
CaseStudy: The Tendering Process-Ray Gunn
Thecase study is based on issues that affect the tendering processes.Ray Gunn has been hired by Gerry Hatrick as a project managementconsultant to obtain tenders from constructors. Ray recommends thatan open tendering process should not be used, but Gerry holds thatall potential constructors should be given an opportunity to maketheir application. This paper will provide the analysis of the RayGunn’s case study.
Statementof Problem: Overview and Dimensions of the Problem/Opportunity
Thetendering strategy is among the key factor influencing the dimensionsof the underlying opportunity or problem. The client and theconsultant initiated the discussion by considering the significanceof the open tendering process. Ray also disagrees with an assumptionthat the process of privately asking some contractors to apply wouldgive value for money. The tight deadline is another factor affectedthe dimensions of the prevailing problem and the opportunity. Therole of deadline in influencing these dimensions is confirmed by thefact that Ray is struggling with the issue of one tender (SlipShod’s) that was late by eight minutes and one (De Fektif’s) thatrequire adjustments.
Diagnosisof the Issue: Possible Causes
Fromthe case study, it is evident that Gunn has opportunities andproblems. The possibility of attracting contractors who offer a widerange of prices for the tender is one of the most significantopportunities at Gunn’s disposal. The consultant has received aboutsix tenders by 12 noon, where their prices ranged from $ 1,666,000 to$ 2,166,665. The use of the open tender strategy is the primary causeof the opportunity to have a wide range of prices from which theconsultant can select the cheapest.
However,the consultant is facing the problem of a fixed deadline that doesnot allow him to accept tenders or adjustments past the deadline.This issue is considered as a problem because it will deny theclient, Hatrick, the opportunity to allocate tenders to contractorswho are likely to offer a better price. The main cause of thisproblem is the lack of provisions that could facilitate flexibilityafter the deadline. For example, De Fektif, which is a company thatoffered the cheapest price, wishes to make some adjustments to theinitial value, but Ray informs the firm’s representative that itwould be unfair to adjust the price after the deadline. Therefore,the lack of flexibility could cost the client an opportunity to enjoythe cheapest price.
OutcomesThat the Stakeholders Would Most Hope For the Project
Thereare many outcomes that organizations are interested in whendeveloping projects. For example, the stakeholders would wish to seethat Hatrick’s project is undertaken by a contractor who will givethe cheapest price in order to help the client get value for themoney invested. This outcome would motivate Gunn to look for thecontractor with the lowest tender. In addition, the stakeholderswould wish that the project be undertaken by a company that willrespect the client’s deadlines. The outcome would motivate Gunn toavoid contractors (such as Speedy & Co.) who have a reputation offinishing projects past the pre-determined timelines. The thirdoutcome is convenience during the implementation of the project. Theoutcome would motivate the project consultant to avoid contractors(including the Empire Builders) who are likely to make unnecessaryclaims during the implementation of the project since they will causeinconvenience to the client. A combination of these outcomes willresult in the timely completion of the project and at the cheapestcost.
Thereare three key solutions that can address the issues that Gunn isfacing in the case study. The first solution is to maintain thestatus quo by carrying out the tendering process using the currentterms and conditions. This alternative will save on time since Gunnwill only consider tenders that were received on time. It will alsohelp Gunn avoid the risk of dealing with contractors (such as DeFektif) who wish to change the details of their initial applications.This solution is intended to address a problem that has alreadyoccurred since Gunn is forced by circumstances to wait for Hatrick toreturn from overseas in to determine whether changes in the initialtenders can be made after the deadline.
Secondly,having a clause in the tender advert that would empower theconsultant to consider certain issues (such as errors in the initialapplication) could increase flexibility in the entire tenderingprocess. This solution is designed to salvage the current situation,where Gunn feels that he does not have the powers to allow De Fektifto change the initial value of the tender from $ 1,666,000 to1,695,000. This action was left to Hatrick, who is overseas and outof reach, thus delaying the tendering process. An increase inflexibility would have allowed Gunn to consider the reasons forchanges and use his discretion to permit or deny De Fektif theopportunity to adjust the value.
Third,online tendering process is a solution that can address the issue oflate submission. This solution is intended to address the occurrenceof similar problems in the future. For example, Slip Shod offered thesecond cheapest price ($ 1,700,000), but was late by eight minutesdue to traffic congestion. This problem could be avoided by givingcontractors an opportunity to submit their applications online, whichhas been associated with an increase in efficiency and conveniencesince they do not need to travel outside their own offices to submittheir applications (Chilipunde, 2013).
Descriptionof Solutions, Their Implementation Plans, and Impediments
Gunncan implement the first alternative solution by following the currentterms and conditions and ignoring the complaints launched by thecompanies that submitted late tenders or wish to make changes afterthe deadline. One of the key impediments to this solution is theinsistence by the contractors that they might raise the issuesdirectly with the client. For example, Paul, the representative of DeFektif insisted that he will send his amendments to Hatrick directlywhen he was informed that he could not make any changes past thedeadline under the current terms and conditions.
Thesecond solution, formulation of a clause that empowers the consultantto analyze late applications on the basis of case-by-case, should beimplemented before the tenders are advertised. The consultant shouldhold a discussion with the client, formulate the clause, and includeit in the list of terms and conditions for the tendering process. Thekey impediment to implementation of this solution is the fact thatcontractors who meet the deadline might feel treated unfairly. Anycomplaint or litigation made by those who feel short-changed coulddelay the tendering process.
Thethird solution, the online tendering process, should be implementedby developing a website and creating a portal where contractors canread about the tender and upload their applications. Key impedimentsto the implementation include the lack of resources to develop thewebsite and the fact that some contractors may not have access to theinternet.
AList of Information That is Not Available
Whether Hatrick accepted De Fektif’s amendment or not
Whether Gunn had the website through which tender applications could be made
PersonsInvolved in the Dilemma and Concerns That They are Likely to Face
GerryHatrick, the client
The need to have the contractor with the least price
A competent and reliable contractor
RayGunn, project management consultant
Being considerate of the late applicants
Desire of the applicants to amend their initial tenders
The need to operate on the basis of initial terms and conditions
The need to make applications as per the terms and conditions
The need to avoid rising complains that will delay the tendering process
Impactof the Situation
Thecurrent situation has positive and negative impacts on differentstakeholders. The client will be affected in two ways. First, thesituation will delay the implementation of the project since theconsultant must wait for the Hatrick to return from the overseas inorder to decide whether initial tenders can be amended past thedeadline. Secondly, the client will have a chance to consider whetherthe contractor (De Fektif) with the cheapest price should be allowedto change initial price, which will reduce the cost of implementingthe project.
Thesituation will waste Gunn’s time since he will not close thetendering process within the expected time. However, he will have achance to consider more factors (such as price) and find the bestcontractor for the client.
Contractorswill be affected in different ways. Gunn might leave out Slip Shop’stender due to the tight deadline. An agreement that the contractorscould contact Hatrick directly will give De Fektif a chance to beheard by the client regarding the need to change the initial offerafter the stipulated deadline. Speedy & Co and Empire Buildersmight miss the tender due to the availability of information aboutthe late completion of projects and the tendency to make contractualclaims for more payments.
Potentialconsumers of the project, who are not mentioned in the case study,will have to wait longer as the consultants and Hatrick addressclaims raised by contractors. In addition, investors of the Speedy &Co and Empire Builders will lose money due the negative reputation oftheir companies.
Fromthe case study, it is evident that the major issues that Gunn isfacing can be attributed to strict deadlines and inefficiencies inthe tendering process. The three solutions discussed in the presentpaper can address this issue in one way or another. However, thepaper recommends the idea of increasing flexibility in the tenderingprocess in order to allow contractors to make critical adjustments totheir early applications. This solution will address the presentchallenge where the contractor with the lowest price ($ 1,666,000) isleft with the option of canceling the tender if not allowed to makechanges. Secondly, the paper recommends that future tenderingprocesses should be carried out online in order to give contractorsan opportunity to avoid traffic challenges. A combination of the tworecommendations will address the present and the future problemsaffecting the tendering process.
Chilipunde,R. (2013). Electronic tendering in the Malawian constructionindustry: The dilemmas and benefits. Journalof Modern Education Review,3 (10), 791-800.