Scene: Abe and Sol are in conversation, philogagging.
Abe: What has the properties of increasing costs capability, of having 100 people involved and whistling aptitude?
Sol: Sorry, old chap, I can’t think of anything that fits that description.
Abe: Competitive tendering!
Sol: Competitive tendering drives vendors to reduce the other’s profit and thus reduces costs for the client.
Abe: Good try. Not as an essential property, Solly. Couldn’t competitive tendering accidentally increase costs for the client? For example, if the savings through competition are lower than the costs of the process itself.
Sol: But competitive tendering doesn’t involve 100 people! Maybe a handful?
Abe: Think about the entire supply chain. Trust me, it can involve actually into the hundreds if you count all tiers and stakeholders.
Sol: Ok, but how could competitive tendering be whistling, even accidentally?!
Abe: Me’h. So sue me.
[Scene closes]
Aristotle tells us that essential and accidental attributes make things what they are. The essential properties are the ones without which a thing wouldn’t be what it is. Accidental properties determine how a thing is or can be, but not what it is.
Then what are the essential characteristics of competitive tendering?
One of the key characteristic is competition. Without the presence of competition, competitive tendering wouldn’t be… competitive tendering. On the other hand, competitive tendering’s property of ensuring value for money is accidental. It determines how competitive tendering can be, but not what it is.
Let’s have a look at a few of the most popular properties of competitive tendering separated into accidental and essential.
Accidental
Being effective/ensuring VfM
It has been shown that the mandatory use of competitive tendering for operator contracts in the French public transport system lead to a constant increase of unit costs, mainly due to a lack of transparency of the attribution process. An important learning point: competitive tendering can still be effective, if certain conditions are met.
The more appropriate use of negotiations rather than competitive tendering for complex, customised goods is another reliable academic conclusion, enforcing the importance of the context in which competitive tendering is employed for quality results.
Driving innovation
In the construction industry, project strategies that do not lock in solutions too early, that engender and drive collaboration, early contractor involvement, fair distribution of risk and opportunities have been empirically demonstrated to have more merits in driving innovation than competition does.
Essential
Competitive
The negative connotations of this word range from sad to shudder-worthy, upon closer consideration. However, the business application, regardless if it yields or not the expected outcomes, has the intangible advantage of being a comfortable professionally-sounding fall-back to any alternative procurement strategy.
Abe and Sol’s unusual choice of topic to exhibit essentialism is a meagre hint that one of the most used and magic-like strategies employed in procurement deserves rigorous analysis – and demoting as a default position.
