Project budgets
Organisations that commission work by competitive tender often worry about whether they should disclose the available budget in the specification. Our answer is YES! Well we would say that wouldn’t we? Well, maybe but there are some good reasons for doing so, and in our experience they all benefit the buyer.
Firstly, if you have the job of comparing tenders, putting in a budget means the tenders will be easier to compare – you won’t be trying to compare something that costs £10,000 with something that costs several times more.
Secondly, all the tenders are more likely to meet your needs. If you only have £10,000 you will have to rule out all those that are over budget and this may mean you have few tenders left to choose between.
Thirdly, you won’t be wasting tenderers time. You may not think this matters to you, but it does. If an organisation’s reading of the specification leads them to submit a tender greatly over (or indeed under) budget, you pay for this in the long run because time spent writing tenders has to be covered by charge out rates for work actually done. Low strike rates increase charge out rates for you and other organisations buying the same products and services.
Lastly, and most importantly, you will benefit in terms of what you are offered. In our experience of working for and with a number of different companies, yes they will submit a tender close to the budget. But they (including PSP) often offer you a package within your budget that would have been offered at a higher price if the specification had not included the budget. So you get much better value for money.