Weekly insights on how to perform when it matters | High-stakes decisions. Real situations. No BS. | 👇JOIN +2k readers 👇
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You know those “premium” sofas in New Zealand? The ones that are so premium that are also suddenly 50% off? Wonderful news. Until you wonder what the original price was doing. Was I about to pay for a sofa? Or fund the retailer’s retirement? Or their kids going to Harvard? Now imagine that feeling in a procurement room. Well… I found a case that it’s the perfect example. 1976 General Electric was bidding to build part of PAVE PAWS, a US missile warning radar system. Its original price for the buildings housing the radars was $16.5 million. Then came the Best and Final Offer, alias BAFO… or optimization phase, in countries where it’s illegal to call it BAFO. New design. New subcontractors. New price: $10.7 million. A $5.8 million reduction. 35% off… GE may have expected the client to open champagne. But… being on the other side of the table… I imagine the first reaction could just as easily have been: “Hang on. What was in the first $5.8 million?” Followed closely by: “What’s missing from this version?” The official record tells us what the Air Force actually questioned. GE had changed the building design substantially. And of course, the supporting material included only a short description. A sketch. And cost information to fill 1b of information (Note: I reckon, this joke is only for ages 40 or older) So, the evaluators could not establish whether the new design would do the job. They wanted answers about things like electrical loads, air conditioning, construction materials and fire protection. You know… Minor details… almost irrelevant… If you happen to be building a facility for a missile warning radar. GE argued that the new design was adequate, of course. The Air Force remained unconvinced, of course. Raytheon, a GE’s competitor, won the contract… of course. Why GE lost is, as usual, more complex, but that discount illustrates a mistake I still see in final offers: A bidder announces a dramatic improvement and expects the room to applaud. The reality is an allergic reaction… together with lots of questions about what changed. If your BAFO includes a big price reduction, a new delivery method or a different team, take the buyer through it. You know… usual stuff. What changed? Why is it credible? What risk has disappeared? What risk has moved? Who is standing behind the new offer? You know… Small antihistamines for allergic reactions… Look. “Good news” without a convincing explanation can sound a lot like “we haven’t told you the whole story.” That is exactly the kind of mistake I cover in THE ROOM: 5 Stupid Mistakes That Kill Your Chances Of Winning A BAFO. If you are heading into the final round, watch it before you walk into the room. Especially if someone on your team is planning to open with: “Great news! We found $5.8 million!” PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. |
Weekly insights on how to perform when it matters | High-stakes decisions. Real situations. No BS. | 👇JOIN +2k readers 👇
A train fails its final test. Normally, you fix the train. In Ottawa, they found another option. They changed the test. Just as Margaret Thatcher when she didn’t like her unemployment numbers… The context. In 2019, the city’s new light rail system was approaching opening day. The final trial was supposed to show it could run reliably before passengers got on board. The first three days exposed serious problems. Testing was paused. This is the point where a sensible person says: “Perhaps we...
The meeting had everything. An agenda. A board pack. Senior people. Weather conversations. Possibly biscuits. Coffee and tea. Potable sandwiches during the break. But… What it didn’t have… For years… … was the person appointed to protect the public interest. A chair. Welcome to one of my favourite PPP horror movies. Metronet. The company responsible for upgrading and maintaining large parts of the London Underground under a PPP. The issue is that Transport for London appointed a Partnership...
There you are in front of the guys from the government. Ten projects. Billions in investment. A slide deck so polished it should have its own LinkedIn account. Across the table, an experience contractor smiles. “Very exciting.” And then… back to his mobile phone… He checks the calendar. The team needed to bid your PPP is also wanted on a data centre, an energy project and a private industrial development. Tight schedule. Limited resources. All four projects will have problems. That is one of...
