Estimation in the tendering process
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Transcript of Estimation in the tendering process
Estimation in the tendering processHow good are metrics embedded in your DNA
Frank VogelezangManager Pricing Office
Tender
Convertible
6-cylinder engine
> 300 horsepower
0-100 km/h < 6 seconds
Top speed > 250 km/h
Light cast-alloy wheels
Traction control
Vacuum-assisted ventilated disc brakes
Metrics : for a car, it’s simple
About 2,000 parts to assemble
Some time at the assembly line
Shipping
Tax
Margin
Selling price
Simple arithmatic?
Parts from over 100 suppliers
Assembly cost are different if you build more
Shipping cost are different when you ship more
Tax
Margin depends on the brand value
More experience per euro?
And now, IT
No standard parts list
No simple assembly plan
Human labour determines cost
Conditions are unique
Customer is involved
Requirements will change
Uncertainty margin
Selling price
IT only works well when it is in your DNA
Volume estimate
Volume estimate
So
lutio
n
Co
nfro
nt
&
Co
mp
are
Co
st
Calc
ula
tion
Staffing / Partnering
Market standards (FPA, Service catalogs)
Comparable customers and contracts
Estimation tooling / Calculation models
= State your goals, not your specs
= Find an expert to do the job
= That’s what makes the expert an expert
= Use decisive metrics
= Don’t control the expert, minimize risk
Best Value Approach
Minimize the need for decision making
Understand why things happen
Be able to predict future conditions
Minimize the need for data
Optimize results
How to identify an expert
You don’t need all the information to come up with the right answer
W L K T V R K P N Z
N D V N T ?
M R K
R K
W E L K A U T O V E R K O P E N Z E
A A N D E O V N T ?
M E R K
E R K A
What does that mean for your metrics
Effort-related metrics are only a small part of the story
Metrics based on the value of IT solutions rather than the cost
− Reduced purchase cost for supplies
− Increased number of unique visitors to online presence
− Higher conversion rate for online retail
− Increased usage of data portals