More utility, oil, and gas companies are moving toward formal RFP or RFQ processes to manage their inspection services. There are many motivations behind this including cost optimization, standardizing inspection requirements, and creating more strategic relationships with smaller vendor bases.
Overall, the decision to utilize a standardized third-party inspection model can be helpful to meeting the long-term goals of the company. Just some of the benefits include negotiating better pricing, improving performance of inspection programs, and enhancing the effectiveness of reporting and compliance.
To realize these objectives, it’s important to focus on the right aspects of choosing a partner in your standard selection process. Here are the five most essential considerations to factor into your selection process when preparing your next request for quote or proposal.
Bigger Companies Don’t Always Have the Best Talent.
One of the biggest pitfalls in selecting a third-party inspection company can be looking past the vendor’s company size or brand to understand more about their talent. The largest companies may or may not utilize their resources to emphasize selecting and nurturing high-quality talent – instead focusing on volume of hires.
Focus on ensuring vendors emphasize the quality of their talent and keeping their best talent. Factors such as training, leadership, coaching, soft skills development, and performance management can make a substantial impact on whether your company can hit long-term performance goals. Make time to understand how your potential vendors identify the top talent, retaining their best people, and providing you the quality of person you’re looking for.
Lowest Price is Not the Same as Total Value.
When evaluating third-party inspection services, most companies focus on labor rates, per diem, mileage, and overhead rates. While this is an easy way to compare apples to apples, inspection services can improve safety, reduce risk incidents, and impact long-term strategic initiatives. Treating these services as though they are commodities can disregard the long-term impact – or even prevent you from achieving positive long-term results.
Identify partners who are focused on helping you meet long-term strategic goals in addition to providing fair and reasonable pricing. Analyze long-term costs including reduction of risk events, reduction of work disruptions, lower inspector turnover, improved culture and performance, and fewer compliance issues related to reporting. These strategic costs add up over time and can make even the lowest price offers too expensive to manage over the life of a contract.
Bad Decisions can Impact Internal Culture and Long-Term Performance.
Sometimes companies will select primarily based on small differences in labor rates. This selection criteria, while necessary as part of the model, can lead companies to make decisions that negatively impact their culture, inspection accuracy, and performance. Labor for talented individuals is not something that can be achieved with the cheapest rates. When companies make decisions based on $5 or $10 per hour, they often sacrifice talented inspectors with more experience, more certifications, and more soft skills training.
Focus on finding partners that emphasize identifying, retaining, and nurturing talented individuals. Align with your vendor on what skills, qualifications, culture traits, technical skills, and soft skills a qualified inspector should have to fit best in your culture. This process can be difficult if you’ve never done this before, but your vendor should be able to support you in identifying these qualifications. When you hire the right inspection company, you can acquire inspectors that are a better fit for your culture and your needs – reducing long-term turnover, improving results, and making compliance easier.
Third-Party Inspection Strategy is Not One-Size-Fits-All.
Eliminating costs such as per diem or travel is often on the list of requirements for many companies. What many companies find, however, is that different locations may affect the availability of talent. When standardizing your third-party inspection services, staffing inspectors for a project in a major metropolitan area is difficult to compare side-by-side to a project in a small rural area. Not only will average hourly labor rates vary from area to area or state to state, the size of the talent pool itself can shrink dramatically in smaller towns or rural areas. Limiting yourself to local markets and vendors only may also restrict your vendor’s ability to move talent from one project to another – further limiting proven talent pool.
Discuss these scenarios with potential vendors to understand their approach or require a Q&A segment in your request for proposal to understand this. You should be looking for vendors and partners that will advise and guide your team based on local market rates, talent pool size, and potential pitfalls for various projects. While some projects may be easier to complete without these fees (per diem or travel), others may benefit from offering fees to expand the talent pool and competitiveness in the local market.
Lack of KPI Planning Creates Ineffective Vendor Measurements.
When identifying the strategy for your request for quote or proposal, it’s important to understand what vendors will be measured on in the long-term. Many companies don’t take the time to align stakeholder groups and think of meaningful measurement strategies. Just focusing on cost only captures a small portion of the impact these services can have.
Expand your strategy to focus on long-term impacts as well including risk events, compliance and reporting, turnover or retention, technical knowledge, culture improvements or NPS, and other factors that can make an impact in your teams. As part of this approach, align with key team leaders and identify a measurement strategy that works for your team’s long-term goals and sets the groundwork for a continuous improvement process.
Alignment of Culture and Strategy
As an additional focus area, look for companies and vendors that are aligned with your strategy and culture. Whether you are emphasizing culture initiatives such as diversity and inclusion or teamwork, the companies you choose and the way those companies select talent can enhance those initiatives or detract from them.
Identify partners in third-party inspection that are in alignment with your strategic goals, long-term improvement goals, and culture goals. When you choose vendors that are customer-centric and focused on collaboration with your team members, you can more effectively work toward those goals with a constant improvement process. This is a substantial value-added resource that is far too often overlooked.
Focus on Strategy
Ultimately, third-party inspection services can have a strategic impact on your business. Treating them like a commodity minimizes the impact that compliance, risk management, and talent improvements can have to your brand. Make sure your request for quote or proposal process focuses on selecting the right partner on a variety of metrics – including risk management, timely documentation, continuous improvement, and talent strategies.
For more information or to learn more about improving your inspection services, feel free to contact us for a complimentary consultation and review.