Situation:

Company is losing bids to China based companies due to price.

Need to differentiate by delivering higher quality, higher service and price certainty.

Must improve quality AND reduce costs with "uncontrollable subcontractors"

Subcontractor market traditionally bids low to win jobs and recoups profits by variation orders for a final price about 150% of original bid (this was found as part of PMMS investigation)

Approach & Results

SASP team including part-time PMMS leader.

Conducted a full market review including sourcing visits to truly understand this subcontracting market in the region including:

Cost drivers

Capabilities, attributes & direction

Set up partnering supply agreements on true day 1 costs with payment linked to service level agreements and no excessive variation pricing.

Considered a breakthrough model for businesses non HK sites to replicate.

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