Showing posts with label Contractors. Show all posts
Showing posts with label Contractors. Show all posts

Friday, 4 September 2026

Cheap Sunglases

If you do the X / Bluesky thing, follow me at @HousingITguy or LinkedIn here https://uk.linkedin.com/in/tonysmiththathousingitguy

Following comments received from a blog a few weeks back, thoughts on housing IT solution procurement: Why Should the Cheapest Tender Get the Most Marks?

There are better ways to evaluate price. And yes, they're legal.

One of the strangest habits in public sector IT procurement is our continuing love affair with awarding maximum price marks to whoever submits the cheapest tender. 

Supplier A offers a Housing Management System for £900,000, Supplier B wants £1 million, and Supplier C quotes £1.1 million. Under the familiar MEAT 'lowest price divided by tender price' formula, Supplier A gets full marks, while the others are immediately penalised. Never mind that Supplier A might have underestimated data migration, left half the integrations out or assumed that training consists of sending everyone a PDF and wishing them luck. 

This stuff happens more often than you would reasonibly imagine. 

Apparently, being cheap is a virtue all by itself. Of course, we talk endlessly about value for money, but our scoring models sometimes suggest that we've confused value with a bargain-bin sticker. While this is software, in real life we fully understand the adage that if we buy cheap there is risk baked in, we might need to buy twice. I mean this is not £800 for a solar pergola for your patio, this might be a multi-million pound contract for 7+ years.

Here's something that might surprise a few procurement teams: UK public procurement legislation doesn't generally require us to award the highest price score to the cheapest compliant tender. In Scotland, Regulation 67 of the Public Contracts (Scotland) Regulations 2015 requires the best price-quality ratio, permits lifecycle costing and even expressly allows a fixed price with competition based on quality. For procurements governed by the Procurement Act 2023, principally in England, Wales and Northern Ireland, the emphasis is on the Most Advantageous Economic Tender, with flexibility over appropriate award criteria and assessment methodologies. Different legislation, broadly similar message: cheapest doesn't automatically mean best. Naturally, the procurement methodology must be objective, transparent, proportionate and published in advance. Making up a clever new formula after opening the envelopes isn't quite the innovation we're looking for.

There are several sensible alternatives. Whole-life costing evaluates implementation, licences, hosting, support, integrations, migration, upgrades and eventual exit costs over, say, seven or ten years, rather than rewarding an artificially attractive starting figure. Fixed-price, quality-led competition can establish an affordable budget and ask suppliers to demonstrate the strongest deliverable solution within it, subject to the applicable rules. 

Awarding the bidder closest to the average of all costs tendered can be a great option. This rewards more realistic bidders and penalises ones way above or  under-cutting the average.

Price-band or capped scoring can reduce the advantage gained from shaving a small amount off an already competitive price, allowing properly evidenced quality differences to matter more. Another approach uses a carefully designed graduated pricing model to reduce the incentive for aggressive underbidding. Scotland has already published official guidance on a Graduated Pricing Mechanism, admittedly for construction procurement, demonstrating that government itself recognises the problems created by conventional price scoring. These approaches aren't interchangeable legal templates, but they provide useful alternatives worth examining.

Whatever model we choose, housing IT buyers should also challenge the numbers behind the quotation. Does the price include every required interface? How many data migration iterations are provided and are they all costed? What happens when the supplier's implementation-day allowance runs out? Are support, additional users, annual increases, testing environments and exit assistance included? A cheap initial tender can become remarkably expensive once the change requests start breeding. I'd rather evaluate a realistic £1 million proposal than congratulate myself on buying a £750,000 fantasy that eventually costs £1.4 million needing multiple additional trips to SMT meetings. Price certainty, clearly documented assumptions and contractual protection are worth considerably more than a few attractive decimal places on an evaluation spreadsheet.

There's a governance responsibility here too. Buyers should involve finance, procurement, ICT and operational SMEs in designing the commercial assessment before the ITT goes anywhere near the market. Test proposed scoring methodologies using hypothetical bids, check for perverse incentives and understand how different prices would actually affect the overall result. Set clear minimum quality requirements, assess affordability properly and investigate potentially abnormally low bids through the appropriate legal procedure. The objective isn't to engineer the scoring so our favourite supplier wins. It's to stop the scoring accidentally rewarding the supplier most willing to gamble on an unrealistic price. That's rather an important distinction, particularly when spending tenants' rents or public money.

Ultimately, suppliers are commercial organisations. If we create an evaluation model that rewards rock-bottom prices, we shouldn't look astonished when they respond with rock-bottom bids and a creative interpretation of what's included. They're simply playing the game we've designed. Perhaps it's time housing providers stopped treating the cheapest tender as the cleverest purchase. Procurement regulations offer considerably more flexibility than some traditional scoring spreadsheets would have us believe. We just need the confidence, commercial understanding and proper procurement advice to use it. Because nobody ever thanked a housing IT project team for saving £100,000 on the tender price before spending another £400,000 putting the resulting mess right.

In fact so many clients have told me that our engagement costs have been a small fraction of estimated savings made, its clear that bringing external experience can provide significant benefits.

Trying to replace a system on a tight budget ? 
Give me a call, I will drop in for a coffee & bring the Macaroons ☕

       Related Post: Before rushing to market, research it and warm it up

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I would be pleased to connect with you on LinkedIn - http://uk.linkedin.com/in/tonysmiththathousingitguy Message me with any issues or queries, you would like to be explored in this blog. We generally receive a couple of suggestions each month.

ZZ Top - Cheap SunglassesZZ Top - Cheap Sunglasses

(c) Tony Smith, Acutance Consulting 
www.acutanceconsulting.co.uk 07854-655009


Access a quick list of our Social Housing ICT blog posts here , what projects do we get involved in? Access them here


Could we help you or your organisation? Our contact details are here , get in touch we will be pleased to chat about your problems and help with your organisation issues.

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. . . . . . . . . . . . ES | FR | DE | IT | UK

 

 

Saturday, 11 February 2017

Taxman

If you do the Twitter thing, follow me at @HousingITguy or LinkedIn here https://uk.linkedin.com/in/tonysmiththathousingitguy



No one could have missed the change in employment landscape over the last ten years. So many people now no longer fit into the full, temporary, part-time employee business model, that all of parents would have recognised. In those structures, your tax and NI would be faithfully deducted for Her Excellent Majesties Revenue and Customs.

The rise of the gig economy and a lot of us now working independently for ourselves, as resulted in more flexible working patterns, where we invoice as companies and sort our own tax and NI out, via an (expensive) accountant. This can be evidenced by the latter, sprouting up on many high streets, in what used to be the video rental shop.

Within SocialHousing, the 1% rent cut and other factors has meant that many experienced staff took voluntary redundancy and went to being self-employed. In a few cases, I have been at someone’s leaving do one week, to be back working with them as they are back on similar pay, for just three (not five) days  work. Why wouldn’t you do that? For the organisation themselves, it’s probably a win-win, as from one budget a person’s salary has been saved (yay!), and consultancy payments probably come out of a completely different budget (yay!).

There have been past cases where individuals have worked ‘under contract’ so to speak, but to all intents and purposes, were really employees, in the eyes of HMRC. The perception that some interim managers and contractors, were not paying their fair whack of tax has been reinforced by “bad press”.  For example in the case of Ed Lester and the Students Loans  Company in 2012,  where he was Chief Executive but paid through a Personal Service Company.

Since 2000, a regulation called IR35 has been in place to determine if contractors, are in fact that or employees. If a contractor works too much in a particular place or does not work with a changing set of clients, there are a number of tests to determine your IR35 status.

From April 6th 2017, new Public Sector regulations are expected, which means that the client you are working for, is responsible for determining the IR35 status of the work that you do. Many might take the path of least resistance and revert to paying the contractor or interim, directly with NI & tax deducted. This might have tax implications for many. Transport For London, has already acted in this area.

If you are a contractor / consultant / interim, doing long term contracts, it may be worth your while boning up on these changes - Here.


Catch the blog monthly archive at
https://archive.org/details/@housingitguy 


Related Post: How cartoons can really aid communication 


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I would be pleased to connect with you on LinkedIn - http://uk.linkedin.com/in/tonysmiththathousingitguy Message me with any issues or queries, you would like to be explored in this blog. We generally receive a couple of suggestions each month.

The Beatles – TaxmanThe Beatles – Taxman.
(c) Tony Smith, Acutance Consulting www.acutanceconsulting.co.uk 07854-655009


Access a quick list of our Social Housing ICT blog posts here

Could we help you or your organisation? Our contact details are here , get in touch we will be pleased to chat about your problems and help with your organisation issues.

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