Bala S DuvvuriProject Manager| ShellBangalore, Karnataka, India
Pankaj,
Other than financial benefit do you have any reason for opting another vendor and may be you can convey the same(it it helps customer also) to customer and negotiate.
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
Pankaj,
The question is not very clear to me so do you mean:
You want to change one of the approved vendors in the AVL with another vendor from outside the list because both are equallly competent but you get financial benefit from the one outside the list because his price is better - Is my understanding correct ? Saving Changes...
Product Operations Program ManagerBarcelona, Cataluña, Spain
Pankaj, could you rephrase your question?
Using a score system helps in selecting among various vendors. It will be rare that two potential vendors have the very same and exact rate.
Also, on-site audits may be considered, specially when selecting critical suppliers. Saving Changes...
PANKAJ KUMAR JOSHIGeneral Manager| Transrail Lighting LimitedNainital, Uttrakhand, India
@ Bala: There is no potential benefit other than financial saving/payment terms which company is receiving. The vendor approval is project specific and customer don't want to change vendor. Saving Changes...
PANKAJ KUMAR JOSHIGeneral Manager| Transrail Lighting LimitedNainital, Uttrakhand, India
@Rami: We want to change an approved vendor with the other one in AVL. But the vendor selection was part of bid and customer don't want to change it after award of contract. It has commercial benefit for our company but we don't have any valid reason to initiate the change. We have submitted the change request letter but customer is asking valid reasons including the price benefit. If we inform him than the benefit may be shared and will have no use for us.
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1 reply by Rami Kaibni
Jan 17, 2016 5:05 PM
Rami Kaibni
...
I ran into such scenarios before and there are only two solutions IMHO:
1- Check the contracts, we usually add a close that tackles this part as follows: If the contractors was able to secure the same material or supplier wkeeping the same level of quality and competency but with a price difference of more than 20% less than the approved supplier then a change request is allowed to be submitted.
If this clause is not in the main contract then the other solution would be to:
2- Share a percentage of the profit with the client which as you mentioned is not favourable.
Hope this helps.
Saving Changes...
PANKAJ KUMAR JOSHIGeneral Manager| Transrail Lighting LimitedNainital, Uttrakhand, India
@ Eduard: Scoring model will not help because both vendors are approved to customer technically as well as commercially. We are getting good commercial situation but customer don't want to change any vendor after award of contract. Saving Changes...
Kevin GovenderConsultant| ADS Projects and ManagementSouth Africa
Hi Pankaj,
If there is no specific benefit to the project or the client, is this cost saving really that important?
If the cost benefit is significant, why not share the savings with the client?
If not, why even consider this option?
I suppose the client could be motivated if there is either or both a cost benefit as well as project benefit. Saving Changes...
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
Jan 17, 2016 2:28 PM
Replying to PANKAJ KUMAR JOSHI
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@Rami: We want to change an approved vendor with the other one in AVL. But the vendor selection was part of bid and customer don't want to change it after award of contract. It has commercial benefit for our company but we don't have any valid reason to initiate the change. We have submitted the change request letter but customer is asking valid reasons including the price benefit. If we inform him than the benefit may be shared and will have no use for us.
I ran into such scenarios before and there are only two solutions IMHO:
1- Check the contracts, we usually add a close that tackles this part as follows: If the contractors was able to secure the same material or supplier wkeeping the same level of quality and competency but with a price difference of more than 20% less than the approved supplier then a change request is allowed to be submitted.
If this clause is not in the main contract then the other solution would be to:
2- Share a percentage of the profit with the client which as you mentioned is not favourable.
Ethically, you SHOULD NOT be able to do that at all. The only possible way is, as mentioned by Rami, through a proper change request if the benefit is considerable and customer is justified by a valid transfer of that benefit.
My take us, avoid this situation and stick by the earlier selection. Saving Changes...
PANKAJ KUMAR JOSHIGeneral Manager| Transrail Lighting LimitedNainital, Uttrakhand, India
Thanks a lot Rami and Suhail for your guidance on this matter. Saving Changes...
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