A powerful lesson: Selecting a consultant based on price alone is a risky decision
February 13, 2018
Building on past client-consultant relationships optimizes project budget and schedule, and promotes innovation in the power industry
Power is a highly competitive market where budgets and schedules are critical factors to success. Frequently, this encourages clients to select consultants based on pricing alone. This method of selection may benefit their budgets in the short term but often results in added costs in the long run.?
In my 15 years in the transmission and distribution industry, I¡¯ve seen this scenario play out too often. Time after time, I hear about projects that have cost and schedule overruns due to extra change requests, project delays, and even disputes. Clients have more to gain from building on existing relationships with past consultants, who often have extensive knowledge of the client¡¯s needs and preferences¡ªand sometimes valuable insights from lessons learned of past project
The downside to choosing the lowest bidder
The common scenario of choosing the lowest bidder isn¡¯t always the most cost-efficient solution. Why? Because in many instances, the winning bidder has simply provided the cheapest proposal to win the work instead of including all the important tasks required to ensure a?successful project from start to completion. Consequently, the client¨Dwho has not considered all the bidder¡¯s exclusions¨Dhas an end project that doesn¡¯t meet all its needs, which will require adjustments¨Dand added fees¨Dto result in a successful project.
We¨Dclients and consultants¨Dhave so much more to gain by focusing our efforts and energy on creating bonds with fewer partners.
Moreover, habitually choosing the lowest bidder can lead to increases in the number of new consultants clients work with. The lack of consistency can impact a project¡¯s overall costs. Each time a client works with a new consultant or vendor there is a minimum amount of time required for both parties to adapt to one another. Each must learn one another¡¯s design standards and project philosophies. We have all been through the initial learning curve with a new client, where time and resources are invested to get to understand each other. We mutually exert substantial effort in understanding each other¡¯s preferences and expectations, and establish optimal communications. We eventually get to a reasonable level of comfort where we can focus on building trust and advance the project. When the client decides to undertake a new relationship, the client will not benefit from past lessons learned, often resulting in a delayed schedule, and having to absorb extra costs.
Clients who choose to work with consultants with whom they have a project history can take advantage of past investment spent on training and support to build the relationship. That investment pays off on future projects.
The benefits of growing and nurturing partnerships
When clients opt to work with an existing partner, they can leverage past investment spent on learning and gear it toward more successful and cost-effective projects. Time saved can be used toward building strong cooperation, a relationship built on trust and commitment, and working together in everyone¡¯s best interest.?This allows the project team to find common ground, continuously learn from past projects, and find better and more effective ways to approach each project. This approach leads to continuous improvements, such as creating typical standard designs and documents, and applying state-of-the-art software that further enhances project schedules and cost. For example, when building or refurbishing a substation, the client and consultant can discuss a past substation or line design and use it as a reference with the goal to continuously evolve toward further successes.
I remember one of my clients mentioning how much time and costs he was saving by working with the same consultants for many years and how he considered these consultants as an extension of his team. Though he admitted it had taken some time to get to this level of confidence, he proudly acknowledged the fact that for several years now, he could trust his partners to work in his best interest and design cost-effective stations using experience¨Dand lessons learned¨Dwith minimal support from his team and all in the most consistent way.?
Cases like this show me that the most cost-effective bidder is the long-term trusted consultant and not the lowest bidder. We¨Dclients and consultants¨Dhave so much more to gain by focusing our efforts and energy on creating bonds with fewer partners. Then, we can then work together in everyone¡¯s best interests and with common goals to continuously improve, innovate, and find new ways to achieve greatness.
Our commitment to each project shows our clients that we¡¯re invested in their success, even long after the ribbon is cut.
