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How to reduce pricing uncertainty in procurement with proactive communication

Ansarada

Ansarada

How to reduce pricing uncertainty in procurement with proactive communication
Improving transparency and increasing the ease of communication in procurement strengthens collaboration between parties.

In public-private partnerships that can extend over decades, effective collaboration is critical to successful outcomes.

Early communication of risk and development of a collaborative process ahead of tender enables more accurate risk pricing and may lead to lower bids.

Reducing information silos and providing for central communication throughout the length of the relationship improves relationships between public and private sectors.

This means using an intuitive, central project workflow system and building capability in the public sector to work effectively with private partners in the long term.

Simply providing information is not enough — public sector contractors should promote transparency through deliverable communication that matches the technical expertise and competence of private contractors.

Invite competitive dialogue to facilitate innovation

Clear and accessible information, provided early in the process through industry open days or downloadables, can allow owners to benefit from feedback on the requirements and technical details of the project. With collaboration in these early stages, the requirements and commercial aspects of the deal can be refined to suit the needs of the owner.

When contractors understand the objectives and key influences of a tender, with the opportunity to ask questions, there is less uncertainty regarding the rigidity or flexibility of the reference design. Potential bidders have the information they need to recommend innovative solutions that meet the key requirements of the tender.

Share information early to inform bidder input

Sharing information early enables contractors to submit tenders that are informed and actionable.

Types of information that contractors expect with tender documentation include:

  1. Design information
  2. Fully costed owner risk register
  3. Topographical surveys
  4. Ground investigations with sufficient detail to outline design and pricing
  5. Pollution identification
  6. Utilities surveys
  7. Record drawings and structural assessment data
  8. Unexploded ordnance
  9. Environmental statement

Providing this information up front reduces uncertainty for contractors, providing accurate information of the risks inherent in the project. For example, in an area with heavy traffic flow, a contractor may demand a higher premium due to the difficulty of pricing traffic disruption risk.

Public sector clients will likely have accurate information on traffic in the location, and can share this with bidders to enable more accurate risk pricing .

Joint risk registers help bidders understand and manage risk

Rather than relying on a pre-made template, a joint risk register established early in the tender process can help to share risk-related information proactively. This practice is recommended by the International Transport Forum Working Paper reviewing major infrastructure projects in Denmark .

Competitive dialogue during the tender process can form part of risk allocation, provided parties have the necessary skills and the project allows the time this will take. Clear visibility of risks in a central, regularly updated register facilitates risk management and adjustment.

Foster competition with confidential bidder dialogue

Confidential dialogue between potential bidders and the tender owner can enhance market access. A broader range of bidders will be attracted, increasing competition. Encouraging feedback and questions can incentives bidders to share innovative ideas without fear of losing intellectual property to competitors.

Collaboration throughout the tender process allows feedback on draft documentation and reduces the likelihood that documents will discourage innovation.

Flag and organise salient information for accurate risk pricing

Dumping all of the relevant project information into a virtual data room makes rapidly providing accurate bids in a short timeframe difficult for contractors. Owners can improve pricing efficiency and build strong relationships with industry contractors by sorting documents into easy-to-navigate folder structures .

Ensure all procurement documentation is in order with our leading digital procurement platform

Our infrastructure procurement preparation checklist provides a straightforward way to ensure you have everything in place ahead of the tender process. Set up your procurement for long-term success, with proven workflows, AI features that streamline the process, and visibility at every stage of the project lifecycle.

Ansarada

Ansarada

Ansarada is a global B2B Software-as-a-Service (SaaS) company founded in 2005, providing an AI-powered platform for companies, advisors, and governments to manage critical information and processes for major financial events, such as Mergers & Acquisitions (M&A), capital fundraising, and procurement.

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