Picture the scene: You’ve put out a request for proposal (RFP) and 4 companies have responded. You know budget is critical to your business, so when you provided the information about your project you didn’t mention how much you wanted to spend. You simply said your decision would be based on best value for money.
You turn excitedly to the quotes. One supplier has come back with a quote of £3,500, one with £15,000, one with £17,500 and one with a quote of £150,000.
How could this even happen?
How this can happen
If you’ve requested multiple quotes for learning before I daresay this scenario is not unknown to you.
Be clear: The first thing I’d suggest is that the information you sent out was not clear enough. Did you explain how long you expected the learning experience to be, what methods of learning delivery you were looking for, what sort of visuals you wanted to be used, if you wanted video, what quality you were expecting from the visuals and video. The list is long.
At Learning Perspectives we’ve got a questionnaire that we use to get answers to these sorts of questions. Get in touch if you’d like to have a copy.
Did you want the supplier to be creative?: It’s not unknown for a RFP to be sent out without the detail because you’re not really sure what you want and you want the suppliers to use their creativity. This makes a lot of sense – you’re paying a specialist to give you a solution, this is what they ‘do’ so why not make the most of it.
However, with no boundaries a supplier might think that you’ve got a huge budget. This is where they may start thinking about a huge production piece with a professional video crew and multiple shoot locations. This is great if you’ve got a big budget, but can be something of a surprise if you would have been happy with a video shot on a mobile telephone.
This lack of clarity can also be frustrating for the supplier, because if they had been clearer about your budget, they could have pitched a more suitable solution. I’ll move onto that next.
Can you be honest about your budget?: The great thing about training is that it can be flexible. The aim of any training solution is to make sure learners meet the objectives. There are many ways this can be achieved.
If you share budget expectations this is extremely beneficial to the supplier. An experienced supplier will be used to coming up with solutions to meet all budgets. For example, your training could be delivered face-to-face in multiple workshops across many weeks – or instead, you might deliver it as a single virtual classroom with follow up activities. Maybe photographs could be sourced from a professional photo shoot or paid photo library – or instead, maybe you could use your corporate images or images you’ve taken yourself.
Another reason to be open about budget is to make sure you get the best service from suppliers. If one of the suppliers is lucky enough to have many projects already in development, they will happily make room for a new project with a large budget.
This isn’t because they are greedy, it’s logic – a big budget project is likely to extend beyond the length of their current projects. However, if your budget is small and you have a rapid turnaround it may be difficult for them to commit resource and ensure the quality they strive to achieve. In this instance it gives the supplier the opportunity to ‘step aside’ and let another supplier deliver your dream solution.
Given that this whole blog is about budget I’d also like to raise something from the supplier’s perspective. It takes a lot of resource to respond to a RFP. The solution needs to be defined, graphics created, and time needs to be spent working out budgets and draft schedules. Think about this as a daily rate – your proposal may have cost the supplier a lot of budget to prepare. Being as clear as possible about your expectations means they can make sure this budget is spent wisely.
I would just like to finish this section by adding that if you do have an endless budget and can allow suppliers to be as creative as they dare – go for it – that’s the project everybody has been waiting for (and lucky you, I’m jealous).
Some organisations are just more expensive than others
Before I start this section I just want to define ‘larger organisation’. There are some exceptions, but often a large training organisation will have between 35 and 200 employees. This can be difficult to get your head around if you work for a company of 10,000+ and so I thought it was worth just defining ‘large’.
If you have a large training company competing against a two-person company working from their study, costs are going to be different. The larger the organisation the larger the overheads.
But there are benefits and negatives to both sizes of organisation.
Working with a larger organisation: The larger organisation has more employees and as a result has a pool of people who are experienced at working on a broad range of training solutions. If your project has a tight timescale the larger organisation will have more resource that they can put to the project. If somebody is off sick at a critical time, they are more able to find somebody to pick up the project and keep it on track*.
Often a large organisation will struggle with flexibility. They usually have defined ways ‘they’ work and may push back if you want them to do things differently. This doesn’t mean they can’t do things differently, but quotes will have assumed they follow normal processes and procedures. This can cause budget creep.
If you are looking for a ‘click next’ e-learning solution and want it to be built using a development tool (eg. Articulate, Elucidat, Adapt. Gomo etc.) a larger organisation is likely to have a greater breadth of licences and expertise in-house. They may even have their own development tool they can share with you so you can keep the content current. It is however important to recognise that most suppliers of any size will usually work with you to come up with a suitable solution.
*A side note on putting more resource on a project to speed it up: There is a point where resource numbers cease to be beneficial and start causing problems. Keep your project team a workable size.
Working with a smaller organisation: Often smaller organisations will specialise on a specific topic. For example, If you want to offer your learners training on how to build a chair for tattoo artists, your experience will be greatly enhanced by going to that two person training company that specialises in training on how to build chairs for tattoo artists.
It doesn’t mean a larger company couldn’t do the
training, but they’d have to spend time getting familiar with the content.
It also doesn’t mean that a smaller organisation can’t provide you with a great solution on a topic that they don’t specialise in, it just means that like the larger organisation they will spend some time getting familiar with the content.
Because the organisation is smaller, they can be more flexible with their approach, although be aware that as with larger organisations this may cause some budget creep. However, because the smaller organisation has less overheads that budget creep may not feel as significant.
It’s quite possible that your business, no matter how small, will be more important to the smaller company. However, a good larger organisation should also make you feel that you are their only client.
Conclusion: Large or Small Organisation?
I identified above that a large training company is not huge and so the differences between large and small organisations may not be as significant as you might think. Ultimately the decision has to be yours and based on the specific solution offered.
Remember, you are more likely to be offered the right solution at the right price if you are as clear as possible about your expectations and available budget.
Give the supplier an opportunity to ask questions before quoting
I'm adding a section to this blog after doing a post on this on LinkedIn. Carl Crisostomo made the point that being transparent with the supplier will save everybody time. Give the supplier the opportunity to ask questions - otherwise these questions will be in their proposal and you will be even less clear about cost. Ideally you will give suppliers the opportunity to explore your requirement with you. This can be at a meeting or on a call - some people do this individually with suppliers and some do it as a group.
A good supplier will always have some good questions. If you give them the chance to get 'under the skin' of your company and why the solution is important the results should always be beneficial.
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