Tendering Transport - Lessons Learnt 4

Tender process with complex data, tender process got stuck

A tender consultancy firm issued a tender for transport of building materials in Europe. Current prices were negotiated per ton, per pallet and per m3. For each product type and loading location the company had different price tables since the transport requirements where also very different.

The consultancy firm advised the client to ignore the old rates and replaced them with one new single rate. Suddenly the carriers had to recalculate all their current rates in the tender with formulas they didnt understand.

The problem was that the new rate was complicated to calculate (a complex formula with miles, kg) and didn’t make sense. As a result of these complex formula, light products like isolation where priced very low (kg rate) and heavy products priced very high.

The result of the tender was disappointing. The difference between the lowest and highest bidder was 1000%.

Lesson Learnt:

Use existing and comparable rates, don’t start new processes whilst issuing a tender.