Optimation Blog

The Best Thing You Can Do Before Going Out to Bid

Posted by Wendy Smith on Jun 24, 2019 10:07:06 AM

Requirements_Definition_Engineering

One of the most important factors for a successful project is being able to specify the requirements up front. Many times, the customer doesn’t know exactly what he needs. More preliminary engineering is required to get the project requirements specific enough for suppliers to offer a fixed price bid for the project. But often, clients don’t realize they need to budget for this and therefore don’t want to pay for this service.

Good documentation is essential for a successful project.  If there are not good requirements, assumptions must be made that could either drive the price too high, or cause it to be erroneously low, requiring project change notices (PCNs) to be executed to get what the customer really intended in the first place, but did not specify.  This also creates issues in the competitive bidding process.  If there are not good requirements, the bidders may each make different assumptions, thus making it difficult to compare the bids from each supplier. 

One of the struggles engineering firms have is trying to help customers find a solution when they have not articulated their specific requirements. You know you need a solution to a problem in your plant, but there are many details behind that solution. It can be difficult to identify that line between what’s part of the project (the deliverables), and what’s the definition of the project (the requirements).

If there are not good requirements, the bidders may each make different assumptions, thus making it difficult to compare the bids from each supplier. 

What do we mean by requirements? There could be size limitations, capacity requirements, flow rates, temperature ranges, line speed, performance specifications, defect rates, contamination concerns, material preferences and much more… it runs the gamut.

Preliminary Engineering

“Preliminary engineering” helps to further define those requirements, including concept layouts, general arrangement drawings, some type of process flow, and more. This feels like it’s an additional cost, but it really isn’t.  Taking the time up front to do the preliminary engineering and requirements definition can save time and money later in the project when it will be harder to make changes.

Sometimes it can be hard to swallow the up-front money to pay for the preliminary engineering required for requirements definition and documentation, but it certainly pays off in the end.

Hold the budget

The requirements will drive the budget. If you want a lot of bells and whistles, it drives the price up. When you go through the process and determine what your requirements are, you know what you’re getting and can choose what to eliminate to bring the price into your range.

There can also be huge variation in the type of equipment, depending on requirements. In the end, you’ll find that it’s more efficient to take the time to define these requirements up front, rather than going back and forth after a project is quoted, dealing with the approval process for PCNs and potential delays.  

If you aren’t confident that you can define the requirements on your own, you should reach out to a firm you trust to help you by asking the right questions and shaping your ideas and desires into a well-defined set of requirements. 

The cost and disappointment that result from not defining project requirements can take a toll on the relationship between the client and a supplier, and far outweigh the cost and time to properly define what your solution really looks like. With proper requirements definition, and following your project plan, you will be in the best position to deliver a successful project on time and on budget.

Topics: Purchasing, Project Management

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The goal of this blog is to be helpful to readers by providing useful information about applications in industrial engineering, design and skilled trades, as well as industry knowledge. We're passionate about manufacturing in the United States. We have a little fun with it too.  

 

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