Comments on: CMS Selection: Reveal budget in the RFP?

By: philippe bodart

philippe bodart — Mon, 14 Sep 2009 12:18:18 +0000

Nice post.I agree that the vendors would like to know the financials of an organisation they do business with.It is a custom that needs to be included in the budget that is ent to the vendor and is followed in every organisation.As RFP carry a lot of significance especially when cms management is involved

By: David

David — Wed, 26 Aug 2009 14:26:06 +0000

This is a great discussion, and one that I agree with 100% and have advised many clients to follow. Being the owner of the RFP Database (http://www.rfpdb.com), I see more than my fair share of RFPs, and it’s amazing how many issue projects that are clearly pie in the sky, and they’ve got to be, because there is no way they have the budget to pay for what they’re asking. And it’s not just corporate, but government and non-profit as well. Everyone who starts defining a project goes overboard with their wants, well beyond their needs, without any sort of idea of what they’re actually asking for will cost. By providing their budget in the RFP it saves companies from wasting time on a project that is asking for a Bentley with the budget of a KIA. And when they don’t get any bids back but receive comments along the lines of “you were asking for too much with too small a budget” they often revise the RFP and re-issue it.

The more information you can provide in a RFP the better. Think of it less as trying to get a bargain and more as trying to find the right vendor for the job.

By: Contented Management » Why do projects cost so much?

Contented Management » Why do projects cost so much? — Thu, 20 Aug 2009 15:38:43 +0000

[...] also Peter Sejersen’s article on whether you should reveal your budget when inviting [...]

By: Philippe Parker

Philippe Parker — Tue, 18 Aug 2009 09:04:32 +0000

The project you’re trying to deliver needs to meet a business case. That business case is based on a budget. If you go over that budget, the project isn’t viable. If you’re under that budget, so much the better, but the point is to deliver the project, not to save money.

The RFP needs to articulate the business case so that vendors can propose a solution to meet it. That should include the budget, though I’d recommend retaining 15% contingency.

The budget doesn’t come from market knowledge. It comes from business benefit. If no one responds, then you know your business case isn’t viable. If everyone responds with the same price, you get to pick the solution that best meets your requirements without worrying about bargains. If you give too large a price range (I was recently quoted between £5,000 and £100,000) then suppliers will think you’re an idiot.

Clients need to be certain about what they’re willing to spend and be honest and open about it. This will lead to better relationship with your eventual supplier.

By: Jon Marks

Jon Marks — Mon, 17 Aug 2009 20:49:29 +0000

Just to add to the above. I’ve seen 2 RFPs in the last few months in which client didn’t specify a range and got something like this (I’m paraphrasing, of course):

2000 Ford Taurus SES – $2,482
1993 Toyota Camry LE – $3,582
2008 Lexus LS 600h L – $99,995
2002 Hyundai Sonata GLS – $4,300

They wanted to buy the Lexus, but their procurement was having none of it. They had to extend the RFP to attract more responses that allowed a “like for like” comparison. If think they’ve even had to go back to the Ford, Toyota and Hyundia salesman and ask them what they could do for more money … If the RFP had given a range (say $75,000 – $150,000) they’d have saved themselves a load of time and effort.

By: Rob Stocks

Rob Stocks — Mon, 17 Aug 2009 20:12:51 +0000

When you are working on your requirements list, you should develop enough market knowledge to understand what sort of ballpark you are playing in. I agree with Jon when he suggests posting a range.

In the sales process we refer to it as “feeling the purse” and try to aim a solid solution at the customer. The RFP process is time consuming on both sides and giving a budget range will help eliminate people who fall well above the top. If we see a range, we can frequently present a prospect with solutions at either end of the range that meet different requirements or meet requirements in different ways.

Selecting a CMS vendor is not a one shot deal. It is the start of a relationship and relationships start with a conversation. A budget range sets the framework for that conversation. We all know that you don’t want to spend the top limit, and that the bottom limit is likely wishful thinking. Somewhere in the middle is a solution we can all live with.

By: Jon Marks

Jon Marks — Mon, 17 Aug 2009 16:23:13 +0000

I think you should give a fairly big range as I discussed with Janus in the comments to this post: http://www.jboye.com/blogpost/why-do-you-act-against-expert-advice/

You can still get a bargain – the vendors that pitch at the top of the range are always scared other people will go lower. And I thin k it is a good thing for you if the vendors that cannot do anything in your budget disqualify you.

Regarding your “Project scope and setting expectations” comment. I think that if you don’t reveal your budget, you get lots of sizzle (additional ideas and visions). If you reveal it, you get more steak (concrete prices and plans).

Finally, I guess it might be different when you’re talking about procuring a product like a CMS which has a price. Maybe then you don’t need to reveal the budget. Howerver, when acquiring services (such as the implementation) the price depends entirely on the effort and I think giving a budget range here is good for everyone.

Jon