Coming up with a significant differentiator for a multi-million-euro competitive bid

The proven way to add value is to do extremely difficult work, the kind of work that no-one else has thought of no-one else wants to do. Consider for a moment that what Apple has done to become a market leader, has been difficult. Consider that no-one wants to work with corpses, but undertakers will always have work, and people would pay lots for them to “make it all go way”.  Like the “Dirty Jobs” in Mike Rowe’s TV series, there are essential, but dirty, services. And then there are just plain almost-impossible services, and highly developed, complex products. And projects that are so scary and risky, that all the client wants to hear from their service provider is: “We can do it. Let’s go”.

In consulting, Scott Alexander hit it on the nail when he said:

“All good is hard. All evil is easy. Dying, losing, cheating, and mediocrity is easy. Stay away from easy.”

When designing a project or developing a skill, get to grips with the most difficult parts – the parts that others are too scared, confused or lazy to tackle. If it’s easy, it’s not for you.

The client – Alstom Power

In 2007, Alstom Power, the French multinational engineering company, started on the bid process for a multi-million dollar Turbine Island contract for two coal-fired power plants in South Africa, Medupi and Kusile. The technical details and cost of the proposal were much of a muchness. It would not set them apart from their competitors. But the way in which the information was presented could make the difference.

Red Pennant was involved with the preparation of the RFP responses for the Instrumentation and Control (I&C) part of the scope of work. Getting this done involved about 3 months of preparation with the bid team of German, Ukrainian, Belgian, and Italian techno-geeks, to make sense of their strange Engineering slang and gigabytes of diagrams, plans and specification sheets.

The goal was to present their ideas in a format that the client, the adjudication panel of all-powerful state-owned (parastatal) electricity provider, Eskom, could understand, and like. They did.  So much for the first difficulty, getting over the language problem.

Providing a significant differentiator

Alstom was short-listed with its two biggest competitors. This meant that they would have to come up with a concrete proposal for one very important, but almost impossibly complex, part of the undertaking; the CSDP – Competitive Supplier Development Program.  This was not the first time Alstom had come up against the local CSDP program, but this time it was on an unprecedented scale and complexity.  The CSDP established by the South African Department of Public Enterprises (DPE) involves “procuring in such a way as to increase the competitiveness, capacity and capability of the local supply base, where there are comparative advantages and potential competitive advantages of local supply”.

This meant that Alstom had to come up with ways to use local labour and resources to develop the C&I market in South Africa. The problem was, there was only a handful of specialized C&I workers available in the country. Medupi and Kusile were the first new power plants to be built in South Africa in decades. Normally, companies that won Government tenders would just bring their workforce in from outside the country. The CDSP stopped the importation of foreign labor for this kind of contract. The CSDP was weighed heavily enough in the RFP points system to be the difference between losing and getting the contract.

What made this part of the proposal more complicated was that initially, Alstom had only aimed to use the CSDP plan for only one plant, Medupi. But during the process, Eskom decided to bundle the two plants, Medupi and Kusile together, effectively doubling the work for the bidders. Eskom’s aim was to see if they could get savings through economies of scale.

The solution was:

  1. Form an SME (Small-Medium-Enterprise) for low-cost, locally-developed, platform-independent software solutions for plant automation and integrated control;
  2. Parallel to that, run an eight-year skills development program to provide the skilled Engineers in time for the construction of the plants;
  3. Migrate the SME into a sustainable, self-funding business, integrated into the mainstream activities of Alstom S&E Africa and Medupi and Kusile’s operations.

In short, Alstom came up with an offering that truly differentiated them by proposing to so something incredibly difficult, complicated and necessary – a real game-changer, in fact.

Program design

Over the next year, Red Pennant and our team of independent financial, training, and property experts – Rakesh Beekum, then CIO of SAICA, the South African Institute of Chartered Accountants; Kerry Millar of Real FMG, and Annette Ferreira, from the International Competencies Network (ICN); designed an eight- year-program from the ground up to source and qualify C&I Engineers, specialized technicians and artisans, to work on the plants – should Alstom get the contract.

The Managing Director of Alstom Power Service, Patrick de Geest, who led the bid, realized that the client was less interested in the technical specifications of the short-listed companies (methodology, control system architecture, asset management, power plant simulations, and specialized arguments on “fieldbus wars”), because those were givens, than in what they could deliver in terms of the requisite CSDP. He wanted to present a compelling scenario, and everything about the CSDP proposal was 100% authentic – from the audited CAPEX and OPEX budgets of the SME, the cost analysis of property for the facility that the program would require, the skills development and selection programs, school-university bridging programs, the school syllabi and university degree curricula.

The final proposal – thought to be impossible – was practically concrete and visualized in detail – and since nothing like that had ever been proposed as a CSDP initiative, the client was very interested and bought into it. The C&I tender, worth €200-million was successfully awarded to Alstom Power for the Medupi and Kusile power plants in 2009.

Further reading:

Announcement of the successful C&I bid
Medupi and Kusile: Super-critical giants of South Africa (In; ModernPowerSystems supplement, April 2009) medupi-kusile-south-africa-editorial

About the header: Medupi Power Station under construction

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