Shared publicly  - 
 
What the... Could we please teach the Government how to do business negotiations?

This morning I read an article titled: "The Government saves billions on railroad signals" (http://www.business.dk/oekonomi/staten-sparer-milliarder-paa-billige-togsignaler) ...it's in Danish, so let me give you short version.

Apparently, the national railroad network is in need of new signaling and have set aside 21.7 billion for the project. They are now finalizing the negotiations with contractors, which will be done by September. But already now they are telling the press that the they expect to save 4 to 8 billion, because the price offered was lower than what they expected. And they are also telling the press that they have set aside 3.9 billion for unexpected budget increases.

What the heck?

You don't tell contractors (especially not Government contractors) that you are willing to pay a much higher price than what they are offering. And you definitely don't tell them that you are willing to overlook an extra 3.9 billion. And you most definitely absolute NEVER tell this to contractors before the negotiations are over (and not even afterwards).

We all know Government projects miss the allocated the budgets, but with this media stunt they are just inviting the contractors to waste money. They are going spend those extra 3.9 billion + 10% extra... wouldn't you?

Read also my article from least year highlighting a few other examples: How Much Money? No Way! http://www.baekdal.com/opinion/how-much-money-no-way/
2
Morten Henricksen's profile photoThomas Baekdal's profile photo
5 comments
 
Wow... 173 million to train IT specialists for only three ships. How many IT people do they need?

And I see the Government has then budgeted an extra 229 million... again telling the contractor to use even more money. No wonder we have a financial crisis ;)
 
That's the problem if you use other People's money and don't care.
Add a comment...