It’s not just about the money – ask Sir Richard Branson

I was awoken today by the news that the West Coast train franchise deal has now been halted. I think many people looked at the awarding of the contract to First Group was a mistake by all accounts their bid was unrealistic and didn’t offer an improved service. So how did the civil servants get it so very wrong?

Unfortunately we have seen it before over the years and with a little forethought all the cost and time that everyone spends looking at contracts can be minimised when reviewing service contracts. Here are our tips.

1. Have frank and detailed discussions with your service partner throughout the contract

Partners should well – act like partners shouldn’t they? Keep talking throughout the natural ebbs and flows of a dynamic relationship. If Your business genuinely is looking at costs across the board then ask for service and cost proposals not the blunt and frankly rude you are just going to have to cut your cost.

2. Look at the real performance of the service not the ‘fluff’

Over the course of a contract there will be many interventions and incidents. It is easy to look at only what happened in the last three months. Take into account the overall performance.

3. Beware of strangers bearing gifts

Within reason many business models and service delivery strategies are similiar, if someone is offering a markedly differing price ask yourself the question – How can they do this. Of course they might be running their operation in such a lean manner that they can. In truth in services businesses where a major cost is people this doesn’t usually stack up. They are probably trying to buy the business.

4. Compare Apples with Apples

An old adage but still ignored. If you have got used to a regular visit from your Account Director or one of the technical team is that priced in? If you don’t put a value on that be fair and tell your existing supplier that whilst it’s nice to have it’s not essential.

5. Value knowledge

Not everything can be picked up and put in a manual, your suppliers team will have a wealth of knowledge about your business that isn’t easily transferred. If not on paper put a value on that and make sure you take it into account when comparing bids.

Perhaps he last word should go to Richard Branson who said on his blog last night “From the moment we found out that FirstGroup had been made the preferred bidder with a completely unrealistic bid, we questioned the way the offers had been assessed, and asked Government to review and explain how it came to its decision”

Sometimes in our wish to plaese our client we aren’t always as straight talking as we would like to be – maybe there is a lesson to all service suppliers from Richard Branson.