"Low Ball" Pricing in Consulting Proposals 2

[PM]

Should consulting engineering firms who engage in so-called "low ball" pricing be discipled? (ie. "low balling" is proposed pricing by a firm or individual that is substantially less than the average of the competing prices, and intended to "buy" the assignment)

Is this a problem in your market area and how do you deal with it?

Regards,

 

[Hush]

PM

What is less ethical, low-balling your competitor or collusion on pricing? As a purchaser if I specify the job correctly it will be done correctly or I won't be paying. In that instance I would consider you to be the less ethical for basing your bid on your competitions pricing rather than your own costs. Hows that for moral certitude.

 

[brad]

I am amused with the assumption which everybody has made that "low-ball" inherently equals poor quality of engineers. My firm was recently engaged in a bid for a particular project. The purchasing company described the project, and we gave our quote for reasonable work. My firm is one of the higher per-hour companies, yet we were accused by the other vendor of "low-balling" our proposal.

It turns that we were smart enough to initially make some very reasonable simplifying assumptions, while the other firm didn't have the talent to realize that their approach was essentially "hunting rabbits with missiles". Their per-hour cost was less than ours, but they needed several times more hours to complete the project (because their approach was all wrong).

I know the firm; the higher bidder in this case was not the more talented.

Brad

 

[MRM]

Excellent point, Brad. I think this "apparent" low balling is often mistaken for actual low balling in many cases, when in reality, the more competent firm simply has a better understanding of the problem needing to be solved.
Mark