Going for best cost or best value

The market seems to be polarising into those clients wanting lowest cost and those still recognising the importance of value. We have heard about BAA’s decision to move away from partnering to competitive tender. Let’s hope they retain enough expertise to recognise when the cheapest price is not the best value – if not the FA can probably give them some advice.

So for your company to compete it needs to be either the lowest cost or offer the best value – there is no middle ground. Cheap is easy and if that is your choice go after the clients who have made that their main criteria, although how long you will remain in business is another matter.

I want to concentrate on delivering best value. Value is typically a combination of offering benefits which mean something to your client and removing costs of disruption. In this way you can save your client money without necessarily reducing your price.

Knowing your client’s needs

To deliver value you need to understand what matters to your client. For example, if they are in healthcare what are the issues around the people they are serving? Patients need to be in a sensitive environment and a programme which recognises and copes with this should be an advantage. Similarly in education, how will you minimise disruption to the learning environment?

Client organisations will also want to address issues such as sustainability, waste management, equal opportunities, health and safety. In many cases this will not be just a ‘tick in the box’ exercise but a real concern. Make sure you recognise all of these concerns and demonstrate that you will be responding in an effective manner.

To understand you client you need to be talking to their organisation at all levels. Identifying issues, helping to develop solutions and presenting your organisation as one they can rely on to deliver a building which will meet their needs for years to come.

Do your research

In the public sector there are volumes of published information. Read the website and reports so that you are fully informed. Customer surveys are also an effective way of gaining an insight into their issues. But having your team meet and get to know the client’s team and becoming involved with their stakeholders is by far the most effective approach.

Then when it does come to negotiating the price you will have a good understanding of what really matters to the client and where a compromise is acceptable. Gain an advantage by proposing solutions which lead to a win-win outcome.

Finally, remember that winning the project is only the start of the relationship building process. This needs to continue throughout the life of the project concluding by ensuring they were completely satisfied.

Then you might get paid on time as well!

Chris Ashworth, founder of Competitive Advantage Consultancy, provides market research and training services to the construction industry. He is a member of the CIMCIG organising committee, for further details visit www.cimcig.org

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