If you work in commercial real estate (CRE), does your vendor selection process help you stay on budget? Or do you pay more than you should for vendors?
A good vendor selection process helps you get the best vendor at the best price, helping you stay on budget. But if your vendor selection process isn’t rigorous, you’re likely overpaying for vendors. This means higher operating costs negatively impact your revenue.
Anyone can improve their vendor selection process to help you stay on—or even under budget.
To do so, you need to create a vendor selection process that looks at a variety of vendors, reduces administrative work, and makes comparison easy.
Here’s how to do it.
Step 1: Expand Your Vendor Selection Search
The first thing to do is to expand your vendor search, ideally to include more diverse vendors. With more vendors to choose from, it’s easier to get a better price.
So when you need a new vendor, do you look in the same places every time? Such as vendors you’ve used in the past, or recommendations from other property management professionals?
If you rely on the small vendor pool in your network, you’re unlikely to get the best vendor price. Vendors you’ve already used may overcharge because you’ve been happy with them in the past. And recommended vendors may give you a high quote because they think you won’t shop around much after getting a recommendation.
This is why having a narrow vendor search can cost you. And if you overpay vendors by thousands each year, you have less money for everything else you need to do, which can cut into your revenue.
To avoid being overcharged, don’t rely solely on known vendors—look at a wider variety of potential vendors. Searching online works, although it’s time-consuming. And there’s no guarantee you’ll find a high-quality vendor.
There is a better way: use RFP automation software that comes with a trusted vendor database. Then you can browse vendors throughout your area without having to spend hours scouring the internet. And you can typically access vendor reviews, service history, and more. This gives you everything you need to select a great vendor at the right price.
Step 2: Reduce Administrative Work
Reducing unnecessary administrative work is another way to save money and get your vendor selection process ready for budget season.
The competitive bid process can require a lot of administrative work. You have to write the RFP, which can take hours or days. Then you have to respond to vendors who have questions about your request. Or chase up vendors who are unresponsive or forget to submit their proposal on time.
Altogether, the vendor selection process can take weeks. The more time you spend on the process, the more costly it is. So a time-consuming vendor selection process increases the overall cost of each vendor, increasing your operating costs, and potentially putting you over budget.
To save money on administrative resources, streamline the RFP process. While hiring additional team members could make the process faster, it won’t lower your operating costs.
However, RFP automation software can. Some CRE software such as Building Engines’ Prism Bid Management comes with pre-made request templates, so you can write an RFP in minutes. This software automates time-consuming vendor communication, like following up and replacing unresponsive vendors.
When you only spend minutes on the vendor sourcing process, that saves money. With reduced vendor sourcing costs, you can focus on other tasks that generate more revenue for your buildings.
Step 3: Compare Vendors Side-By-Side
Along with expanding your search and reducing administrative work, comparing vendors side-by-side helps you save money for budget season.
Getting the proposals you need for a vendor search can be challenging. Equally difficult is choosing the right vendor. While every vendor submits a proposal, every proposal can look vastly different, and include completely different information.
For example, the most important vendor characteristics for you might be price, the scope of work, and clean up. But what if you receive three proposals, and each proposal mentions those characteristics in different parts of the proposal? You have to spend time meticulously combing through the proposals to find and compare what you need.
And after all that work, you may not even find what you need. Then you have to choose a vendor based on incomplete information. This can lead to choosing the wrong vendor, at the wrong price.
Instead of going through all this for potentially subpar results, you can use RFP automation software to make comparisons easy. Look for software that automatically generates side-by-side comparison tables, so you can see all the important info at a glance.
Having easy comparisons makes vendor pricing more transparent. It means you don’t have to worry about missing add-ons that drive the price sky-high after you choose a vendor. Instead, you can easily see each vendor’s complete price, making it simple to choose a vendor with the most competitive price.
With side-by-side comparison, you can choose the right vendor at the right price in minutes, helping reduce vendor expenses and increase your revenue.
Software Makes Quality Vendor Selection Easy
Selecting a new vendor can be a time-consuming, frustrating, and expensive process. With CRE budget season just around the corner, improving your vendor selection process is a great way to save time and reduce expenses.
The easiest way to do this is with RFP automation software. It allows you to expand your vendor search, reduce your administrative burden by automating communication, and compare vendors side-by-side to ensure the right price.
If you’re looking for bid management software to help get your vendor selection process ready for budget season, consider Prism by Building Engines. With Prism’s Bid Management module, you can use a trusted vendor database, write RFPs from pre-made templates, automate vendor communication, automatically generate vendor comparison, and more.
Want to learn more about how Bid Management can help you? Check out Building Engines’ eBook Find the Right Vendors at the Right Price for your Budget to find out if you’re making common costly vendor selection mistakes.