Cross charging your Facilities Management outsourcing

Cross charging your Facilities Management outsourcing

I know I have banged on before about a simple and clear pricing pro-forma for tender returns but this blog should also help if you need to recharge your FM costs to various internal departments.  This can be tricky, if the specification has changed, some departments may need more 'wooden dollars' that they were not expecting, or the way in which your pro-forma is designed can allow bidders to profile a price you were not expecting.  Usually during a tender re-charging is the last thing on your mind.  Therefore, here are my top tips for a successful tender and simple recharge afterwards.

1.       A clear and visible winner

Key is a pricing model that creates a clear winner. You need to be sure that you know who the winner is.  This avoids challenges from losing bidders and makes your internal approval process less stressful.

2.       Tailor your service to meet your budget

Sometimes you may not be sure what level of service you can afford.  Use your tender to ensure you maximise the quality of service for your budget. There are different options for input or output specifications so doing this could be the key to fewer disagreements when recharging departments.

3.       A transparent elemental build-up of costs

If you are recharging this is necessary – but it is also necessary if you have a changing estate or workforce.  Granularity is important to consider, you need enough detail to recharge and analyse prices but too much can be like trying to see the wood through the trees.

4.       Consistent parameters for all bidders

It is essential that parameters such as building data and inflation assumptions are the same for all bidders to allow an ‘apples for apples’ comparison.  However, things change, so it is also essential that if the parameter changes you know the impact on your costs. 

5.       Audit, audit, audit

Building in some audit tools is good practice so you know that your pricing model is crunching numbers correctly.  You do not need a degree in financial analysis to do this, some basic arithmetic tests and checks are usually sufficient.

Bravo Richard!

There is one thing I really admire about Sir Richard Branson it is his determination.  He was determined the West Coast Main Line (WCML) bid evaluation was wrong so he publically pursued it and with it, publically embarrassed the very people who would be awarding him a £6bn contract.  Madness you may say?  The golden rule of sales is don’t upset the customer.  I think it’s brilliant to stand up and say no, this isn’t right.

Where does this leave the DfT?  They will have to re-run the WCML bid and endure extra scrutiny from bidders, government and the public on future franchises.  It may change the entire procurement method for rail operators.

Why has this happened?  Branson said FirstGroup’s “numbers didn’t add up”.  The DfT have said “there are mistakes in the way the process has been managed”.  This can mean two things – the financial evaluation was very complicated and it could lead to judgements being made about a price that affect the financial scoring but are not based on the price. 

I too have been involved in complex tenders where you look at the evaluation model and think it could be read in different ways or you find formulae errors.  Did I or the other bidders challenge? No.  It rarely happens. Why?  The golden rule – don’t upset the customer.  You just dust yourself off and go on to the next one.

Bravo Richard.  But has he won a battle only to lose a war?

Only time will tell if Branson’s decision will help or hinder Virgin/Stagecoach in future franchises.  Stagecoach has more to lose in this market – they have 2 existing franchises and are actively pursuing others – Virgin don’t and aren’t.

My advice to organisations running tender processes is to keep the financial evaluation simple, clear and concise.  Don’t over complicate it.  This will help your bidders know where they stand and leave you and them in no doubt who the winner is.