Cost vs Quality

Cost vs Quality

At SCF we believe that key to our ongoing success is advocating a high quality-to-cost scoring ratio, testing the skills and knowledge of the contractors rather than promoting a ‘race-to-the-bottom’ mentality.

We have successfully procured and managed many major frameworks and supported a whole range of public sector clients over many years now, with the same mantra: Best value project delivery. Over this time we have seen overheads in the industry shrink as suppliers compete to deliver more efficiently. Competition to partner with SCF’s major projects framework is fierce, and, due to its high workload, can offer some of the most competitive rates in the industry.

The framework competition was scored on a ratio of 80% Quality and 20% commercial, because we believe the real value in SCF’s integrated team approach is from the processes and controls put in place to de-risk the project and complete the design with the expertise in the supply chain, and skills like this cannot be tested via lowest-price-wins.

The real value that main contractors can bring to an SCF project can only be tested by engaging with the industry to identify the real challenges and opportunities of each particular project, to explore the ways to best overcome them.

The most successful projects are where clients engage with the framework before the mini-competition, benefiting from the collective knowledge within the framework’s class-leading contractors, and tailoring the mini-competition process, to ensure the best possible project outcomes.

To understand why we recommend this method, it best to consider each element separately.

Cost

It is worth noting that the main contractor’s fees tested at mini-competition are typically only around 10-15% of the overall project cost, and there’s very little cost variation between contractors here, as the main contractor’s duties and outputs for every SCF project are very comprehensively defined by SCF, so you get the same high-quality service regardless of which supplier you engage.

SCF contractors operate on some of the most competitive rates in the industry and can do so because of the high level of turnover and efficiency the framework provides. These ‘ceiling’ rates were set at framework ITT, and there is little need to test them further at mini-competition unless the project is exceptionally straightforward or has reduced requirements or duties.

Quality

The bulk of the project cost made up of sub-contract and supply packages and is dealt with during the pre-construction period after the main contractor is allocated. The quality section allows you to select the most appropriate and best-placed contractor for your specific project and allows them to demonstrate how they will maximise your return on investment for the remaining 85-90% of the project cost.

An efficiently run pre-construction process can return savings in excess of the main contractor’s fees, and in fact, we track their performance at adding value, improving specialist designs, and driving programme efficiencies, typically this equates to around 10% of the contract value, or round £13 of savings for every £1 spent in pre-construction.

For the reasons detailed above, we feel that the quality element of the mini-competition is where value can be best achieved. This is the contractor’s opportunity to demonstrate their skill and experience specific to your needs. Asking compelling questions or including real-life challenges from your particular project, allows you to gain insight from not only the winning bidder but from the other bidders too. This means you can build a greater picture of the solutions available to you, to help make more intelligent and informed decisions at an early enough stage in the project to make a difference. Market pre-engagement lets you test your ideas and your challenges with the leaders in the industry, outside of a traditional tendering environment and will inform the best narrative to tease out the best methodology in delivering your projects.

This is how we achieve unrivalled success in cost and time predictability and can demonstrate a solid track record in added value, unique to SCF across the whole industry, not to mention our industry-leading customer satisfaction levels.

If you’d like to discuss any upcoming projects or engage with the market, please get in touch with your region’s framework manager and we’ll be happy to help.