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Keystone Column 42 – Whole life costing

By 21st October 2016 No Comments
The Keystone Column - No 42. Whole life costing

Welcome to this week’s edition of the Keystone Column containing business stories and public procurement opportunities that drive the commercial strategy of ambitious companies. This week, we look ahead with some macro-economic predictions and consider the importance of whole life costing. Our weekly list of open tenders in the Irish public sector is also included below.


Business Stories

The book future babble by Dan Gardner lances the prediction industry better than we ever could. This is particularly the case with people being properly held to account for their prognostications. This said, the noted and venerable Economist Intelligence Unit issued its Global Outlook for November 2016 (appropriately a few weeks ahead of time) and there are some weighty matters for consideration therein. While it is not likely that all these events will happen, many companies will benefit from adding them to their macro-risk log. We summarise the key forecasts as follows:

  • China is set for a hard landing: the EIU is forecasting a drop of almost half in the real rate of growth in China. This deceleration will look and feel like a hard landing and will be the first time China has experienced an economic event of this kind. Knock-on impacts for key suppliers to China are likely to be severe (Australia, Chile & Mongolia in particular).
  • Central banks are reaching the limits of their capabilities: interest rates remain at record lows and the experiment of quantitative easing has reduced the value of many bonds to junk status. The weaning of financial markets (and economies and governments more generally) off this form of financial doping points to unpredictable outcomes for OECD countries in particular.
  • The US to remain the engine of OECD growth until 2019: the EIU suggests that the fundamentals of the US economy and other factors like Euro area weakness and Brexit will provide it with a growth path over the next couple of years. From 2019 on however, obstacles to free trade deals may start to have a negative effect on growth in the US (which with the China prediction points to some possible difficulties in the next three to five years.
  • The Euro faces significant further challenges: The ECB is likely to face a struggle to maintain a fair Euro value against other currencies (Sterling and the Dollar). It will be challenging for the ECB to drive the euro back towards $1.20 (the ECB only has a inflation target – it has no brief on employment so its structural and systemic design means it is inherently hampered and flawed).


Interesting Trends – The rise of whole life costing

The 2014 EU Procurement Directives place a much greater emphasis on whole life costing. Whole life costing means calculating the price elements of a contract award on the capital and operating costs of a good or service rather than the capital cost alone. Many households intuitively consider whole life costing nowadays when buying white goods for a kitchen as they are explicitly marketed based on their efficiency (which means lower life time costs).

Whole life costing is a topic on which many public buyers are willing to engage with suppliers. We have featured an example of a whole life costing case study in Poland previously where more expensive uniforms were commissioned in a hospital because the associated operational costs of replacement and laundry were lower even though the list price was higher (than comparable items). Companies interested in displacing their competition should commence comparative whole life cost modelling against their competitors and then approach public buyers to discuss the potential difference they can make to their operations (in delivering value for money for them over the medium to long term).


Innovation – Canada sets out its path to innovation & growth

We were reading some of the recommendations for Canada’s innovation path for the next several years recently. The discussion seems to have a remarkably different hue to it than the approach adopted in Ireland. Here, there seems to be a constant row between start-ups jumping up and down with respect to the investment environment, governmental myopia with respect to infrastructural development and the confusing role of a number of state agencies that blur the role of the market with that of the state.

In Canada, things seem to be more clearly delineated. The role of the government is clearly focused on capital infrastructure development (targeted in key areas) on a balanced, regional basis. The State’s role is to facilitate growth in targeted sectors it has deep expertise and competitive advantage in through capital investment that business can then develop industries around. The example of British Columbia and energy is apposite as the state is 98% powered by renewables. The ageing hydro infrastructure requires replacement but this opens up significant opportunities for developing pioneering approaches to what will be a defining feature of public/private innovation cooperation for generations to come (that can be sold across Canada and further afield).

Ireland has an excellent report on entrepreneurship and its association with driving an innovation economy – many of the recommendations have simply not been touched or only engaged with in the most superficial of manners. This was touched upon in part by commentators like the Dublin Commissioner for Start-ups following last week’s budget.


New public procurement tenders this week 

Visit the Keystone website to view our take on the 500+ active public procurement opportunities with more than five days until their deadline. There are a vast range of services, supplies and construction related to public procurement opportunities in the following sectors (there are many more sectors than the sample list below):

  • Construction and related trades, 
  • Professional & Advisory Services, 
  • PR, Media, Advertising and related,
  • ICT supplies and services, 
  • Training,
  • Property & facilities management,
  • Vehicle & automotive,
  • Catering and related services,
  • Cleaning and related services,
  • Waste Management,
  • Maintenance and related services,
  • Horticultural supplies & services,
  • Research & environmental monitoring,
  • Printing, office supplies and related services,
  • Trades,
  • Medical and scientific research, supplies and services,
  • A vast range of other services and supplies.

Businesses interested in any of these public procurement opportunities that are unsure of how they can follow-up on these tenders can contact Keystone at any stage. We would be happy to discuss your needs and where they may fit with your business growth plans. These public procurement opportunities are sources of business growth and innovation for companies across the country.

Keystone E-Tenders Report Open YTD as at 2010 (by date of publication)

Keystone E-Tenders Report Open YTD as at 2010 (by sector)

Please note, e-tenders often has public procurement opportunities incorrectly categorised so people relying on e-tender alerts could easily miss out on opportunities if they are dependent on it. E-tenders is only as reliable as the people inputting tenders and mistakes are made very frequently. The Keystone Column includes all live tenders posted on e-tenders since January 4th 2016 that have five or more days until their deadline as at October 20th 2016.