When it comes to price comparison, it is a good practice to collate all returned quotations into a single spreadsheet and put the respective items side by side.
Once the alignment is done, you are able to compare the final price no matter what discount rate the vendor provides. Do an apple to apple comparison.
Compare the quotation line by line – item by item with the following criteria,
- Same exchange rate,
- Category,
- Discount structure,
- Logistics charges,
- Professional Services etc.
In Asia, pricing is an interesting and unique item.
There are many different countries in this region. Countries such as Thailand, Singapore, Hong Kong, Malaysia, Korea, Japan , Taiwan and so others. There are many taxation, currencies exchange rate issues that not many locations have.
In a project cost budgeting, a proper cost comparison is required.
Ultimately, how much the project needs to invest is crucial. Which vendor is offering the best deal and can offer highest cost reduction is important. However, low price quotations may come in with low quality. Thus project manager got to balance the constraints.
There are certain amount of margins that the vendor has to make.
However, the margin should be justifiable and should not be letting the vendor had the lion’s share.
Once the project kick-starts, project managers needs to track the project expenditure. Ensure there is no over spent on the project budget once it is approved.
There are many explanations, justifications if the spending is higher than the budget. Project Manager will have to answer to the Business Sponsor for the additional investment.
Discussion and effective negotiations are VERY important to get the deal win with low cost at the very initial stage.
It is easier for Business Sponsor to invest after you had made the necessary price comparison and valid justification.
