NIPSCO partners with Davey to create an innovative approach to bidding line maintenance work that saves time and expense for all involved.
Finding the optimal bid structure for a project can help reduce costs and improve efficiency for both client and service provider—but finding one that works well for all parties isn’t always easy. Northern Indiana Public Service Company (NIPSCO) had been bidding line clearance work on a quarterly basis. In the face of an increasing volume of work, the quarterly bidding process was becoming cumbersome. NIPSCO wanted to switch to an annual or multi-year contracting period to streamline the contracting process for both the company and the contractors.
Starting in early November 2017, many alternative pricing options were considered. These included unit pricing (for each type of trim unit and removal unit per region or area), lump sum per-annum pricing, line mile pricing, and a number of hybrid solutions. However, each time a solution was proposed it was found lacking. Contractors were finding it impractical to assess 600-800 line miles and generate a bid in a timely fashion. Also, the uncertainty and risk involved in estimating how much work would actually be involved over a longer period of time was resulting in an escalation of bid pricing. NIPSCO needed a bidding process that would allow contractors to confidently generate competitive pricing in a timely manner over a long-term contract.
Davey contacted NIPSCO’s procurement office and offered to partner to achieve a viable solution. Over the course of the next six weeks, representatives from both companies met at least weekly to discuss options and work through a pricing model.
Together, they abandoned the idea of a single price per line mile in favor of a modular pricing approach:
Using the new system, Davey placed bids on three of the nine service areas involved and also created baseline pricing on the remaining service areas to assist NIPSCO with other vendors.
The new, modular bidding system was put into place in April 2018 and was applied to over 2,000 line miles of maintenance work over all nine service areas. The new methodology is successful for a number of reasons:
All companies involved have been very pleased with the results, and look forward to a much easier bidding experience for years to come.