6 questions to drive the LPTA debate
In a procurement world where lowest price seems to carry the day, contractors might be tempted to focus on nothing but cost, to the detriment of everything else.
That might win you contracts, but what happens afterward? How do you stay competitive and profitable, and still deliver good solutions?
That’s going to be the heart of a roundtable I’m leading on Monday on “Surviving Lowest Price Technically Acceptable IT Projects: Maximize Your Returns and Customer Satisfaction Ratings.”
That is a mouthful of a title, but the point is clear – you have to focus on the customer and profits. Oh, and by the way, you have to have a lower price than your competitors.
The two speakers I’ll be hosting are Shamun Mahmud from DLT Solutions, and Paul McCloskey of SolarWinds. Each will make a presentation, and then I’ll jump in with questions.
So, here are some of the questions I’ve been thinking of, and I encourage you to send me suggestions, or tell me where I'm off base.
Is there a difference in how LPTA is applied by contract type – fixed price, time and material, cost plus?
I don’t think I’ve heard anyone talk about contract type with LPTA. Maybe this isn’t an issue, but I’d like to find out.
How is LPTA affecting partnerships between primes and subs?
This could be interesting because I’ve heard some good and bad things; on the bad side, the pressure on the prime gets passed to the subs, so the pricing squeeze is on. Primes also are getting stingier with the work they share with subs.
On the good side, LPTA is pushing the need for innovation, which can drive a closer relationship between the prime and its teammates, especially for teammates that have a unique solution or process that can save money.
Should more companies offer to put some skin in the game, and pay more upfront costs?
I wonder if this is even possible in the LPTA world, and if it is, can enough contractors afford to do it?
How is LPTA affecting customer expectations? More demanding, less demanding, more flexible?
My thought here is whether customers are more willing to try new approaches, or are they more risk adverse than ever before?
How can companies differentiate themselves in an LPTA world?
I think this might be the toughest thing to do in the current market. The technology playing field is pretty level, so it’s your strategy, your processes, and the stuff in your head that’s going to set you apart. Articulating and even quantifying that is very difficult in a market driven by price.
Have you started to see issues from the customer, i.e., not getting what they want from a project, because it was procured as an LPTA?
It might be too soon to answer this, but I keep waiting for the audit reports that criticize agencies for failed projects that can be tied back to LPTA.
It’s not that I think the more expensive the project, the better it is, but it’s the emphasis on price as the deciding factor that worries me. Where’s the cost-benefit or risk analysis? Where’s the focus on outcomes?
My fear is that LPTA does nothing to solve the long-standing problem of IT projects that don’t deliver.
Posted by Nick Wakeman on Mar 21, 2013 at 7:24 PM