Low Bid vs. Best Value: How to Get the Best Quality for the Best Price in the Furniture Procurement Process
There are two approaches to commercial furniture procurement. One arrives at the winner of a bid; one arrives at the best partner for the project.
As a commercial furniture dealer, we operate within the broader industry of architecture, engineering, and construction, experiencing a similar procurement process to some of these adjacent trades. When approached about a project, we have encountered a wide array of approaches to the furniture procurement process and have found that some work exceedingly better than others in achieving clients’ goals.
In general, when clients come to us with furniture needs they are all hoping to achieve the same thing—a space design that: functions efficiently to meet company and employee goals, looks aesthetically pleasing, complementing the culture of a company, and fits within the allotted resources that a company has for the space. While the end goals overlap for most companies, the procurement process often does not. Most often, we see two approaches to the procurement process:
The Traditional Low Bid Model
When a client takes the approach of a bid process to select a commercial furniture partner, the flow typically follows the above. Either the client, or a consultant hired by the client (most often an architecture & design firm), will determine what products are needed for the space. They will estimate quantities and possibly specify certain design features, and then release a Request for Proposal. Furniture consultants review the package, submit a bid proposal back to the client, and then the client will select a partner, most often based on the decision factor of price.
With this model:
The Best Value Model
When a client pursues the best value model for furniture procurement, they focus on choosing the right partner up front and then work through planning, design, and pricing exercises as a team, culminating in the selection of products best suited for the function, aesthetic, and resource needs of the space and the company.
With this model:
On first glance, it’s easy to simplify the tension between these two furniture procurement processes and illustrate why the best value model works more efficiently and productively for both clients and vendors. However, there are some legitimate realities of the industry that have perpetuated the traditional way of thinking.
What Keeps the Traditional Low Bid Model Alive
Here are a few of the reasons that the traditional low bid model stays alive despite the numerous benefits of the best value model:
1. Distrust: Confusing Pricing, Overwhelming Options, and Limited Understanding
In the furniture world, pricing can be confusing, options are overwhelming, and there’s a limited understanding of the furniture process from clients. These gaps in knowledge naturally breed an environment of distrust. Clients, who are under informed, worry that they will be cheated or taken advantage of on price because of their lack of knowledge, so they simplify the bid process to quantifiable factors rather than qualitative qualifications.
2. Tradition: “This is how we have always done it.”
Clients who have operated in the architecture, engineering, and construction industry have always relied on the bidding process to choose partners, so it’s difficult to break from this method.
3. Perceived Value: Furniture as a Commodity
While a single chair may be a commodity, the process for procuring furniture for a large project is not. A well-informed process includes space planning & design, product selection & procurement, order entry & project management, product receiving & delivery, and installation & warranty. Not every vendor provides equal expertise, value, and service over the course of the project process.
4. Legal Regulations: Formal and Required Bid Processes
There are a handful of public institutions, like government entities and education facilities, that still require bid processes in an attempt to ensure fairness and transparency.
A Case for the Best Value Model
While the fourth reason above for the traditional low bid model is unavoidable apart from governmental policy changes, the first three reasons, when re-examined, actually provide better evidence for the best value model.
1. Combatting Distrust: Choose a Partner Based on Trust and More
As a client, if your primary goal is to select the most qualified partner for your project, asking them to submit their lowest bid price is not likely to achieve it. While the low bid model may bring some transparency into price comparisons, research has found that “when the bidding process is set up correctly, pricing will be on-budget and within an approximate 5% range between bidders” (and, if the bid range is wider than 5%, it’s likely that the pricing isn’t comparing apples to apples, and therefore unreliable).
Additionally, most furniture dealerships, including BII, have access to hundreds of commercial furniture product lines with different price points, and, therefore, are able to work with any budget. Together, these two truths mean that price and product selection are fairly comparable among any furniture dealer partner. Because the only significant differentiators between vendors lie in the people and company, doesn’t it make more sense to choose a partner based on qualities such as trustworthiness, project process, past experience, design expertise, or other factors that will actually influence how well a furniture project goes?
“The principle of best value procurement is that not the client, but the expert vendor, best knows the reality in the supply chain”
– BEST VALUE EXPERTS ACADEMY
2. Combatting Tradition: Products and Processes have Evolved, so Should Procurement
“The principle of best value procurement is that not the client, but the expert vendor, best knows the reality in the supply chain” (source: Best Value Experts Academy). As prices are relatively comparable between furniture vendors, the differentiating factor for value is expertise. The traditional model of low bid arrives at a solution that was built to win the bid, not serve the client best. Oftentimes, the winning bid proposal ends up being irrelevant after layout and products change within the months after the bid process. If this happens, clients are stuck working through change orders with a vendor who was never chosen for their expertise or teamwork in the first place.
An additional benefit of the best value model is that the furniture partner is able to apply their expertise during the design phase of a project. They can work directly with the architect and interior designer to help value engineer and raise potential issues that may be overlooked. Architects, when designing plans for a space, typically use stock “symbols” for furniture that may or may not represent the correct dimensions of the actual furniture that will occupy the space after construction. This lack of connection between the design and the end product can create huge problems or unrealized potential within a space.
3. Combatting Perceived Value: Partners, Not the Lowest Price, Offer the Highest Value
Clients grasp the concept that a structural engineer is more qualified than they are to design the foundation of their building, but they may not understand or believe in the value that the furniture partner is adding to the project. Because people are so familiar with procuring furniture for their homes, they can minimize or even undermine a furniture partner on a project. As noted by CBRE, “With furniture being the second largest spend on a project (~30%), construction being the largest, the negative reaction toward furniture signals a need for change in the traditional bidding and buying process.” Because furniture is such a large investment within an overall project, it is imperative that this part of the scope is executed as efficiently and flawlessly as possible.
Additionally, the furniture on a project will serve as the connection point between the physical space and the people who occupy it. While the structural integrity of a building is vital, it’s often the look and the feel of the furniture within a space that directly affects employee well-being on a day-to-day basis. As mentioned before, low bid furniture is selected to win a project, not better the experience of your company’s employees.
One final consideration: as a client, you will spend a lot of time during the course of a project with the furniture partner you select. While you should choose the partner with the most aligned expertise for the project, it’s incredibly important to consider how well your team will work relationally with the furniture partner.
To put it simply: pick someone you like.
Because of everything outlined above, and based on over three decades of experience working on commercial furniture projects, we truly believe that the best value model will deliver the best results in the end. If you want to hear a little more about how we approach the partnership process, don’t just take our word for it. Listen to what our clients, like NNU, has to say:
If you’re interested in learning more about our process and approach to furniture planning, design, and selection, reach out to us today.
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