Problem

Block 5 was engaged to secure fabrication and repair services for the rectification of various safety issues at a large number of locations throughout regional Queensland. The complexity involved in the sparse sites combined with an inherent safety risk meant that securing the right skills was critical to achieving value for money. Five separate packages were released to market, allowing suppliers to submit proposals for some or all packages.

Block 5 Actions

Block 5 was responsible for the end to end procurement activities for fabrication and repair services, including:
• Design and development of a personalised sourcing strategy;
• Assistance in specification and contract development;
• End to end management of the procurement process;
• Negotiation of scope, price & commercial terms;
• Ensuring a fair and equitable process throughout the project;
• Managing a high-profile project with discretion, respect and flexibility.

Block 5 designed the process to bundle the work into regional packages rather than individual sites to present an opportunity for suppliers to tender for larger packages of work, encouraging market participation. This approach also allowed Block 5 to identify if better value for money could be achieved by awarding different components to different suppliers.

The supply market was extensive with a high number of responses received. Responses were received from suppliers offering to deliver individual packages as well as suppliers offering all packages as a whole. Block 5 worked with the client to ascertain the most appropriate solution and ensure that the most capable supplier was selected.

Evaluations were conducted for all suppliers, regardless of the quantity of work tendered for with an extensive pricing breakdown and analysis to ensure like for like evaluation. This affirmed the greatest value for money outcome as awarding all packages to a single supplier.

The preferred supplier’s pricing was significantly higher than the client had budgeted for. Block 5 conducted extensive market research to uncover pricing anomalies within the proposals and entered negotiations with the preferred supplier to reach the best commercial outcome for the client. Block 5 collaborated with the client and preferred supplier to ascertain any viable product substitutions to further decrease the tendered pricing.

Outcome

By designing a tailored negotiation strategy and using a win-win negotiation approach, Block 5 was able to reduce the package price by $360,000, a 32% saving on the tendered price, without reducing the scope of what was offered by the supplier.