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Keystone Column 75 – Risk Averse Buyers

By 15th June 2017 No Comments
Keystone Column 75 - Risk Adverse Buyers.

Welcome to the Keystone Column. This week how to sell to risk averse buyers i.e most public buyers. More evidence of increasing costs in Ireland. As usual, we conclude with our weekly list of current Irish public tenders.

Business news

Increasing costs

The Irish Times has details of a new Eurostat survey that suggests Ireland is second most expensive EU state for goods and services. Prices across a range of products were 125% the EU average. The findings come on the back of a string of indicators pointing to a loss of competitiveness here on foot of strong employment growth and a pick-up in wage demands.

The Irish Small and Medium Enterprises Association (ISME) said it was not surprised by the findings as they reflect the inflated cost base that businesses here are subjected to. Chief executive Neil McDonnell said when the Consumer Price Index is broken out into its relevant components, “the things that are going up most are health, education and insurance”. The Government has the ability to bring down costs in these areas through legislation or taxation but appears disinclined to do this, he said.

Identifying Risk Averse Buyers

Public Spend Form has an interesting piece on the different faces of risk aversion in Public Sector procurement. It identifies three key reasons or types of people who demonstrate risk aversion:

  1. The naturally risk averse: There are many individuals who are naturally inclined to risk averse behaviour: some people don’t like risks.
  2. Risk aversion from the top: If this direction comes down from the top, then more junior staff will respond to that. If leaders reward staff for following the rules, for staying out of trouble, rather than for creative and commercial problem solving, then a certain type of behaviour will follow.
  3. Risk aversion through lack of capability: There are many who simply do not have the knowledge, experience or skills to understand how or why to move to an alternative approach.  They may not know the procurement regulations well enough to identify opportunities, so they revert to caution as the default setting. Unfortunately, training for public procurement is lacking right across Europe.


Interesting Trends

How to sell to Risk Averse Buyers

We often encounter businesses frustrated by rejection from public buyers.  Some complain that public buyers are unwilling to take a chance on small businesses.  In our experience, public buyers are willing to buy from small businesses and SMEs – but they are risk averse. This is hardly surprising. Public procurement decisions more often than not only make the news when they go wrong! The incentives to make innovative, bold choices often do not exist. The risk of drawing unwelcome attention through a “bad” decision is very real. Is it any wonder then, that often the focus is on “safe” choices – suppliers with a proven record and a reputation for quality? What those selling in to the public sector must consider is how to make dealing with them less risky i.e. how can you convince buyers of the quality of your goods or services?

Obviously having good references is a key part of establishing your reputation for quality. So too is is being able to demonstrate that you operate in a structured, methodological way by being able to describe your processes for service delivery. However there are three more elements that savvy suppliers will focus on to establish their reputation for quality with public buyers and differentiate themselves from their rivals:

  1. Quality Assurance: How do you ensure the quality of the products you supply or the services you provide? Do products carry the CE mark or carry any certifications? What standards do your services comply with?  Having a Quality Management System (QMS) in place means you can describe the checks and balances you have in place to ensure quality. If your QMS itself is certified as meeting quality standards such as ISO 9001, so much the better.  Putting in place a certified QMS does require investment, but at the very least you should be able to describe how customer accounts will be managed, how work will be overseen, and how complaints and issues will be identified and resolved.
  2. Health & Safety: Demonstrating that you take seriously the health and safety of your employees, your clients and the wider public not only improves your credibility with buyers, but it’s also a legal requirement. Employers are obliged to have a written commitment to managing health and safety known as a Safety Statement. Public buyers are increasingly asking to see proof of the existence (and day-to-day use) of a Safety Statement. In sectors with a high risk of injury, they will also seek proof that the Safety Statement is externally audited. The Health and Safety Authority (HSA) sets out the requirements and oversees Safety Statements. They have a free online tool that can be used to create a tailored Safety Statement and associated risk assessments called
  3. Environmental Policy / Sustainability: Increasing buyers are asking suppliers to demonstrate they follow environmentally sustainable practices. Having an environmental policy is therefore a good idea. Backing this up with processes and procedures around recycling, waste management and energy use demonstrates that you take your responsibilities to the environment seriously and that you demand high standards of yourself. This translates into your reputation for quality.

Quality, safety and sustainability are important considerations for public buyers. All businesses can enhance their reputation for quality by putting in place effective procedures and processes. Even if you do not have the budget to invest in certified, audited systems, you can increase your chances of success by investing some time and thought into describing how you manage these areas.


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 strategic 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.

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 that have five or more days until their deadline as at June 15th 2017.