Bidding Dilemma at Transmission Solution Company
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Case Code: PROM014 Case Length: 14 pages Period: 2013 Pub Date: 2013 Teaching Note: Available |
Price: Rs.400 Organization: Valor India Industry: Energy Countries: India Themes: Project Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
Valor India Limited (VIL), the Indian subsidiary of Valor AG, one of the finest transmission solution providers in the world, found itself faced with a difficult decision. VIL's market research team had come across Notice Inviting Tenders (NIT) from two companies in the Project Tracker Magazine , - HVPNL (Haryana Vidyut Prasaran Nigam Limited) and PGCIL (Power Grid Corporation of India Limited). VIL, which had earlier provided transmission solutions to both these companies, now had to decide whether to bid for both the projects or to go for any one of them.
As was the practice at VIL, a meeting was called to discuss the decision to be taken on the tenders. While Mr. Avnish Sharma (from the Market Research team) made a presentation on the details of HVPNL after having gone through the tender document, Mr. Dinesh Mishra (another Market Research employee), made a presentation on the PGCIL project based on its tender document.
VIL's market research team was divided into three sub-teams, each responsible for one of its market segments - central government, state government, and private customers. The market research team went through the tender document , and the document was then analyzed by technical and commercial bid managers to work out the bidding price that could be quoted for the project. For the bid manager, the major concern was to quote the minimum price to ensure their success. In India, the companies give top preference to price while evaluating bids. The various costs that the bid manager focuses on while deciding the bid price are Equipment Cost, Service Cost, Freight, Project Management Cost, Insurance, Finance Cost, Bank Charges, Taxes, and Inflation. All these costs are analyzed to calculate the final bid price.
The costs and the price were decided by VIL after its vendors of VIL were informed about their Request for Proposal (RFP) to get the price quotes for the raw materials to be used for construction of the project. Also, the company could shortlist the vendors for procuring raw material for the project.
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