Can Estimation & Analytics Improve Vendor Client Relations?
It happens time and time again. Clients look to their vendors to provide software development or configuration services and both sides are often left with big questions. Is the price fair? Can we really get the project done within our duration and resource goals? How can we negotiate for a successful outcome?
There are estimation solutions available that can help. The good ones will leverage empirically-based models, historical data, and industry analytics to uncover which proposals are feasible and which ones are risky.
In the first view below, there are two columns: the “Desired Outcome,” which is one vendor’s proposal and the second column, which is the data-driven “Recommended Estimate.” The vendor is promising to complete the work in 3 months with a $750,000 price tag. You can see that this proposal is “Risky” and that the vendor will probably finish late and will either have to ask for more money or lose money in the long run. The charts in the view provide a graphical representation.
In the second view for the same project, you see a second vendor’s proposal compared to the “Recommended Estimate.” The vendor’s bid is for 8 months with a $1,000,000 price tag and there is a “Moderately Conservative” rating. In other words, this vendor has a much better chance of achieving what they are promising.
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Managing vendors has become increasingly important in recent years. In my account management role at QSM, I see both sides of the vendor management relationship. The client wants a proven vendor that will partner with them in achieving their IT goals; and the vendor wants to win that business, employ their workers, and hopefully earn more work. Unfortunately, that state of client/vendor Zen is not often achieved, usually due to legitimate (and sometimes not) misunderstandings on both sides.
On the client side, they are concerned with selecting a vendor with whom they are confident their tasks and deliverables will be achieved on time, within budget, and of the best possible quality. After a round of RFI’s, then RFQ’s, then a final down select process, the vendor is chosen and work begins. Often, at least in my experience, the overriding decision criteria comes down to cost, which makes sense, to a degree. But in many cases, cheapest, I mean, least expensive bids often rule the day. This kind of decision-making comes with its own set of risks; the most obvious is you get what you pay for and it’s often an ill-prepared vendor.