Rethinking the RFP

Pivotal Leaders Column

Whether the owner is public or private, traditional procurement methods are very often just that: traditional. The building design, construction, and engineering request for proposal (RFP) is typically written in a way that limits owners' choices. This is because typical RFPs don't ask responders to offer up the most current innovation and cutting edge technology. Just think: when it comes time to buy a new computer, you don't go into a store looking for the same type of computer you bought ten years ago. You know new computers do things they didn't used to, so you talk to computer experts to figure out what you could get before you actually make a purchase. You also know your budget in advance and either purchase with cash or pay back the cost of the purchase over time. You may ask what the best solution is to meet your needs within your budget, or what kind of financing plan makes sense for your budget.

This idea seems obvious when buying something like a computer, yet building owners and procurement professionals continue to ask for the buildings of five, ten, or even 50 years ago when they release RFPs to the public. These owners are often several steps removed from the construction and engineering industries and don't know about the latest innovations that can make buildings more efficient, more sustainable, and less expensive to operate and maintain. In the case of RFPs, what you ask for is what you get - and the majority of RFPs aren't asking for the right things.

Just like computers, technology and design in the built environment is changing at a rapid pace. Heating and cooling systems are increasingly more efficient. Remote monitoring technology allow problems in a building to be fixed from afar, and closed-loop systems can power buildings entirely off the grid. Keeping up with these innovations is a full time job - a job that procurement professionals should not be expected to perform. Procurement professionals can get a much better result if they instead focus on designing RFPs that clearly define the challenges and goals for their facilities, and ask industry experts to propose solutions to those challenges within well articulated budget and time constraints. Bottom line: Ask for what is possible, and demand that those who respond to RFPs be held accountable for the solutions they propose.

The current procurement process tends to maintain the status quo, weighted heavily, if not exclusively, on the lowest first cost. Contractors have adapted to this process by limiting their scopes of work to win the low-bid war. This process does not ultimately serve the best interests of the building owner over the life of the building. Instead, building owners can be the architects of a well-crafted RFP that creates a race to the top, with bidders competing to propose the most creative, efficient solutions, rather than rushing to find the cheapest short-sighted fixes.

After all, a building is an asset that lasts decades, if not centuries. It does not make sense to seek out the cheapest immediate solution if it will require expensive maintenance or constant updating in order to meet the future needs of its occupants. In fact, the construction (first cost) of a building typically represents only 30 percent of the total cost of ownership. Making an appropriate initial investment and requesting a cutting-edge, sustainable building will ultimately reduce the total cost over the life of a building.

Likewise, the current built environment accounts for over 70 percent of energy used in the United States, and over half of all that energy is wasted - bad for the planet and bad for your pocket book. There is an enormous opportunity to conserve energy in this country simply by demanding that our buildings operate efficiently, and sustainably, through creative design, technology, operation and maintenance.  Bottom line? If RFPs continue to ask for old solutions, building owners will keep getting buildings of the past. By crafting an RFP that asks the right questions, innovators and problem solvers can deliver the right solutions, and buildings can achieve levels of performance that would never by possible otherwise.

Use the RFP process as a way to discover what your options are. Chance are, there is something better out there than you know. So ask for it.

Nancy Hamilton is the Business Development Director for McKinstry in Oregon. She is a 2011 Pivotal Leader and can be reached at nancyh@mckinstry.com.

The Pivotal Leaders business network aims to grow the Northwest clean tech industry by cultivating leadership in Oregon, Washington, Idaho and British Columbia. Through this twice-monthly column, members of the Pivotal Leaders network take turns discussing some of the most pressing issues and trends facing clean tech entrepreneurs in the Northwest and beyond.