Pregnant Snake Armpits

1 03 2011

Although I don’t appreciate talking about it, we have a black list of companies and organizations for which we will not again partner with, work with, or bid their request for proposals.  What type of activities land somebody on this list?

Companies or organizations that take our business development efforts and give it to someone else.

We are working on retro-commissioning for a major player in the Midwest grocery market.  As with most of our investment-grade studies for energy retrofit or retro-commissioning, we like to use contractors to provide us with pricing because we expect they will get the work and therefore, the pricing is going to be more accurate in addition to having accountability for the prices at implementation time.  The contractor was very reluctant to help because he was afraid he would help develop pricing and concepts and then somebody else would get the work.  I laughed out of familiarity with such shenanigans.

Unfortunately, while working on the grocer project, we were victims of just what the contractor was talking about, on a different project.  We had completed an energy study for a quasi non-profit, quasi-government outfit (Jeff, how many times do you have to get burned before you learn?) and we were moving into developing the design and provided a proposal.  We had already pretty well nailed down the scope of the project.

Inject another righteous government agency to “help” this end user.  Well, they took our developed scope of work and put out a competitive request for proposals with OUR work on it.  So now we’re faced with throwing away all the development we had already done just to be competitive with the other bidders who were handed this on a silver platter.  As I wrote last week, it’s a rainy day in hell when a government outfit takes anything but the low bid, otherwise known as the cheapest, crappiest system imaginable; one that meets only the major recognizable features, like equipment efficiency.    There are plenty of places to cut cost on the design and on the project itself.

That agency is blacklisted.

Companies that use our credentials to win a job and then dump us like a cheap date.

Last year we had “teamed” with a local architect on a LEED project for a new nearby federal facility.  I must digress for a moment.  This project was in progress when the “stimulus” was passed – you know the one that was supposed to break loose the shovel-ready projects.  If this wasn’t shovel-ready, I don’t know what was.  The plans and specifications had been lying about for year or two waiting for approval to proceed.  It drug on for months once the stimulus passed.

Come to think of it, this one too was in our hip pocket and they bid the work out again.  I’m not sure why because the design was 90% completed but I suppose some milestone had passed and federal statutes required a rebid or something.

So now that it’s competitive, once again after doing a bunch of development and front end work, we have to cut cost to beneath the cheap and crappy level.  So our client, the architect asked us to chop our down our price.  We provided a counter offer and waited.   And waited, and waited.

We already had 20 or so LEED projects under our belt compared to near zilch for the architect.  Finally, we get a hold of the scumbag, er, I mean client, and he says, oh yeah, “The good news is, we won the project.  The bad news is, you aren’t on the team.”  This is lower than a pregnant snake’s armpit.  (stolen from the aussies and modified by me).

Blacklisted.

Companies or organizations that use our proposal in attempt to beat “their” firm down in price.

This one is more difficult to nail down but let’s just say if it walks like a duck and quacks like a duck…  A large organization pursued by a bunch of consultants / contractors has been working with a provider for years and maybe they want a new or modified service, or maybe it’s just the same stuff they’ve been provided with many times.  Now they suddenly want a proposal from us.  This is either a Sarbanes Oxley corporate requirement (ok), process to actually evaluate invited bidders (ok), charade to fake a bureaucrat into thinking the chosen one was competitively selected (not ok), or a hammer to beat down the firm they know they are going to hire (not ok).  Essentially, we are wasting a bunch of our time to benefit only the buyer.  The other bidder(s) gets screwed too.

Blacklisted after a few of these – typically takes a few rounds of abuse to have this scam come into clear focus.

Wolves in sheep clothing.

Over the years we’ve been pursued by numerous companies that would like to partner with us.  It would be a marriage made in heaven.  Next step: an initial public offering on the NASDAQ!  Uh huh.  Sure.  These dirt bags just want access to our clients and for some reason, controls companies and performance contractors make up a substantial portion of this bunch.

Show me the money before I lift a finger or you are blacklisted.

A better way.

Recently a business partner stated it well, “What do we have in business and life but our reputations?”  And I always say to our company’s people, you best treat well everyone you work with in the company, our clients, and even the competition.  You never know who will one day be your client or supervisor, employee, or maybe someone you want to partner with, or get help from.

Everyone involved in business transactions should benefit – consultant, owner, utility, shareholders, and contractor.  Clearly and unfortunately, some entities think they can get ahead while screwing others and thinking they are getting a good deal or making extra profit.  Sooner or later these outfits run out of victims to exploit.  It shouldn’t be a fixed pie that everyone fights over.  It should be a pie from which everyone’s slice grows.

Tidbits

It appears Sacramento is contemplating the same fateful robbery of EE program dollars by hocking the stream of energy efficiency money.   In WI, this grab actually happened and crippled programs.  Ironically, or maybe not so, they would be both carried out under Democrat governors.

Outrage of the Week

Maybe I should start an outrage of the week?  Well here is the inaugural.  The DOE is calling it “Market-Driven Solutions” to work with behemoths like Target and Wal-Mart to develop new efficient rooftop heating and cooling units.  Is this the same Wal-Mart with $420 billion worldwide sales and $14.4 billion in annual earnings?  Chu, you have got to be kidding me.

Like General Electric, why doesn’t Wal-Mart get back to what they used to do well; innovate, rather than going to Washington with its hand out.  Time to put a “strong sell” on Wal-Mart stock.  They’re washed up.

This is a free market solution: an RFP for manufacturers of rooftop units to develop units that meet Wal-Mart’s specifications, reliably, and supply them with heating and cooling equipment for the next 100 stores.  After 100 stores, the incumbent has a huge advantage for (hopefully) proven success.

A portion of the $1.6 trillion, or as I like to say $1.6 million million, deficit is funding this kind of crap.  This wouldn’t be funny even if it weren’t true.

Oxymoron of the week: “DOE facilitates market-driven solutions”.

written by Jeffrey L. Ihnen, P.E., LEED AP





Of Car Dealers and Bathroom Tissue

17 08 2010

Is there anything as mysterious as the price of a car, especially a new one?  I’ve heard the various prices so much, long ago, that I’ve pretty much blocked them out of my mind.  There is the sticker price, dealer cost, factory invoice cost, blah, blah…blah, blah, blah.

Sooner or later the dreaded haggling begins.  I’ve heard that the buyer should always have the seller make the first offer.  I don’t think it matters.  I think the last time I bought a car I scrounged about on Kelly Blue Book’s web site, which has dealer suggested retail, private party (for used) and trade in values or something like that.  I figured if I could get the private party price from the dealer I’m doing well.  I set a price in my head and once the dealer gets to that point I’m ready to go.  You do have to be willing to walk away.  Actually, I don’t think I’ve ever given a “bid”, now that I think of it.

At Michaels, we’ve had several proposals for engineering services in the past year where prospective clients have asked for “discounts” if we were to get all parts of a multi-part request for proposals.  Or maybe they want a discount if the contract is extended from three to five years.  For one we even had to provide the salaries we pay our people and overhead factor so they can essentially negotiate a profit – not negotiate the price but the profit!  Personally, I don’t really care how much profit the seller makes.  I don’t care if he’s losing money.  I don’t care if he’s making 50% profit.  What am I getting for my money from dude #1 versus dude #2, is the question.

When I bought the Acura seven years ago, the price was practically the same as a Chevy Monte Carlo, depending on options.  Are you kidding me, I thought?  Chevrolet was probably making less profit margin (if any at all) than Acura/Honda but am I going to buy the kludge because they have a 1% margin, or my car for probably 10% margin?  It took two or three offers and Zimbrick Acura met my strike price and I was off and driving.  Like my previous car, a Mazda I bought in 1990 and drove for 14 years, the Acura has never seen the dealer again.

We have a modest profit built into our hourly rates.  We are not car dealers with a manufacturer’s suggested retail billing rate that that would be 10% more than the price it takes to make a decent profit.  Or, it isn’t like summer apparel come August and we can clear it out by chopping prices in half to make room for fall/winter stuff.

Here’s the problem with the “discount” – it isn’t equitable.  (I hate “fair” because it’s too often used by whiners).  You may remember 20-30 years ago, there was no such thing as the double or quadruple roll of bathroom tissue or paper towels.  Don’t you find it interesting that the new double roll is the same as the ONLY roll there was 25 years ago?  Today’s regular roll is about 1/3 the size of the rolls back in the day.  See what I’m sayin?  If we’re going to play this game, we’ll build bargaining slop into our rates.  The inequity comes when the client who just wants a great project for a decent price doesn’t ask for the “discount”.  What are we going to do?  “Oh, we didn’t really mean that fee.  Here is a 5% discount because we love you so much.”  Then they think what kind of scam artists are these guys?  Or we leave the rates stand and they get ripped off.

We are not a sleazy car dealer, not that every last one of them is.  We are not going to artificially increase our rates by 10% so we can tell our clients we are giving them a 10% discount.  We also don’t slash our rates by 25% because we’re desperate, because we are not.

written by Jeffrey L. Ihnen, P.E., LEED AP