Estimation in the tendering processHow good are metrics embedded in your DNA

Frank VogelezangManager Pricing Office

Storyline

Tender metrics

Best Value Approach

Organisational

Tender metricsThe fastest and shiniest convertible for the lowest price

Tender

Convertible

6-cylinder engine

> 300 horsepower

0-100 km/h < 6 seconds

Top speed > 250 km/h

Light cast-alloy wheels

Traction control

Vacuum-assisted ventilated disc brakes

Metrics

Metrics

Metrics : for a car, it’s simple

About 2,000 parts to assemble

Some time at the assembly line

Shipping

Tax

Margin

Selling price

Simple arithmatic?

Parts from over 100 suppliers

Assembly cost are different if you build more

Shipping cost are different when you ship more

Tax

Margin depends on the brand value

More experience per euro?

And now, IT

No standard parts list

No simple assembly plan

Human labour determines cost

Conditions are unique

Customer is involved

Requirements will change

Uncertainty margin

Selling price

IT only works well when it is in your DNA

Volume estimate

Volume estimate

So

lutio

n

Co

nfro

nt

&

Co

mp

are

Co

st

Calc

ula

tion

Staffing / Partnering

Market standards (FPA, Service catalogs)

Comparable customers and contracts

Estimation tooling / Calculation models

But still

Best Value ApproachOffering solutions instead of piles of paperwork

= State your goals, not your specs

= Find an expert to do the job

= That’s what makes the expert an expert

= Use decisive metrics

= Don’t control the expert, minimize risk

Best Value Approach

Minimize the need for decision making

Understand why things happen

Be able to predict future conditions

Minimize the need for data

Optimize results

Best value tender

When it’s good weather

Ride in the open air

Dutch weather

Dutch roads

Best value tender

When it’s good weather

Ride in the open air

Dutch weather

Dutch roads

How to identify an expert

You don’t need all the information to come up with the right answer

How to identify an expert

You don’t need all the information to come up with the right answer

W L K T V R K P N Z

N D V N T ?

M R K

R K

How to identify an expert

You don’t need all the information to come up with the right answer

W L K T V R K P N Z

N D V N T ?

M R K

R K

W E L K A U T O V E R K O P E N Z E

A A N D E O V N T ?

M E R K

E R K A

Organisational DNAWhat does Best Value do to your metrics

What does that mean for your metrics

Effort-related metrics are only a small part of the story

Metrics based on the value of IT solutions rather than the cost

− Reduced purchase cost for supplies

− Increased number of unique visitors to online presence

− Higher conversion rate for online retail

− Increased usage of data portals

Performance metrics out of the window

You allways need core metrics

Amount of Work

Productivity

Effort

Time

Quality

You allways need core metrics

Amount of Work

Productivity

Effort

Time

Quality

That’s only possible if they are in your DNA