A couple of weeks ago, I posted an article estimating the number of suppliers you need in order to ensure you end up with three qualified bids.  In that article, I mentioned that the first step in the process was to develop a supplier profile.

Today I want to share the top 6 criteria I use to develop my supplier profiles.

Before I get into the list of criteria, I should mention that what follows is meant only as a cursory list of pre-qualifying criteria.  This list should not be used as a comprehensive qualification of a supplier.  At this stage all we are doing is pre-qualifying the Supplier to participate in the solicitation.

I typically try to gather this information using information from third party credit rating agencies.  I prefer not to call suppliers until I am sure they are a good fit for my project.  Unfortunately, this is often imperfect because Suppliers tend not to update information with reporting agencies.  If I doubt the validity of the information, or I am unable to find the information I am looking for, I will call and interview the Supplier over the phone.

Annual Revenue

A Supplier’s annual revenue gives you insight into the size of projects the firm can handle.

Don’t ever hire a firm who’s annual revenue is lower than your project’s value.  I like to select suppliers who’s revenue is neither too high nor too low.

Some suppliers can be sensitive about sharing their annual revenue.  When I get push-back, I explain that the information will be used to pre-qualify the supplier for the work.  I also explain that sharing this info will help ensure they are bidding with similar size suppliers.  Typically this is enough to get them to share an approximate value.

Employee headcount

Employee headcount gives a sense of the depth the firm has.

You want to be sure that a departure from the firm does not devastate your project.  I look for at least three times the number of Full-Time employees needed to perform the work.

Be sure the headcount given is the number of Full-Time Employees.  Contractors and temporary employees should not be counted.

Geography Served

Verify the firm is not located more than 1 to 2 hours away from your job-site.  Remember that this is just a pre-qualification.   You will want to know more about their experience in the specific jurisdiction, but that will come later.

If you have a single project, or you know where the contractor’s office is located, you can probably skip this part, but if you are looking for a supplier to support multiple sites or multiple projects, be sure to confirm that they can serve your area.

Services Offered

Your profile should include a list of all the services you require.

Think carefully about what services you want the supplier to perform.  For example if you want the supplier to develop a budget or a schedule, be sure to confirm they do this.  If you want Design Build services be sure to confirm that they can work this way.

The services needed may seem obvious, but think carefully about what you want and be sure the Supplier offers all of the services.

Previous Experience

It’s essential to know that the bidder has previous experience in your specific kind of work.

Remember that this is a pre-qualification, so a simple question about previous projects should suffice.  Ask about the experience in your business sector (i.e. Office, Residential, Industrial, Retail, etc.).  Also ask about experience with any special circumstances such as working with a leased space or other coordination that you may require.

Proficiency

Beyond the services and experience, sometimes certain proficiencies are also desired.

Consider specific software you want them to know, proficiency with specific equipment, or other specific expertise you desire.

Closing

Pre-qualifying your supplier pool is a fundamental and essential step to ensure success in your project.  Take the time to think through what you are looking for in a supplier.  Keep in mind that the first supplier that comes along (or answers the phone) is not always the most qualified.  Invest some real time in researching your pool and you will be sure to have better quality bids.

What other criteria would you use to pre-qualify suppliers? Are there any I missed?  Are there any you had not thought about?  Tell me your stories.

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