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Competitive procurement to save costs of sport events

Event organisers may therefore be missing out on valuable opportunities to save costs, streamline suppliers, increase certainty and test the market. One way of achieving all of these things is to run a competitive procurement process for an event’s support services, says Simon Shooter, partner in Bird & Bird’s international Commercial Group.

“While a competitive procurement exercise can conveniently be dismissed as being disruptive and expensive, in our experience they are very much worth the effort in saving costs and obtaining certainty over price and service delivery at a time when international sporting events are looming and event support services are likely to be at an all time premium,” he says.

In a procurement process, the central theme is saving costs.  As part of the tender process, suppliers are forced to compete with each other and encouraged to think outside the box with regard to their cost profile.

The costs of event services represent hard costs for the event organiser and directly affect the amount of profit that can be generated. A procurement process aims to give the event organiser certainty as to the cost of future events and that such cost represents reasonable value for money.

Also as part of the procurement process, the number of suppliers can be reduced through certain suppliers bidding for more than one service area which they either provide themselves or subcontract to others.  Less suppliers means less bureaucratic and administrative burden. It may also further reduce costs as the event organiser is able to benefit from economies of scale and pay for less administration.

Following the procurement process, an event organiser may decide to award longer term contracts, safe in the knowledge that they have secured a good price with an independently index-linked mechanism for price review over the subsequent years. The prospect of a long term contract is also a good incentive for suppliers to offer further discounts.

As well as certainty of cost, longer term contracts provide greater certainty of supply. With the ‘Decade of Sport’ now upon us, event organisers require certainty that their suppliers will not leave them stranded in favour of events such as London 2012, the 2014 Commonwealth Games, the 2015 rugby union World Cup and the 2019 cricket World Cup. With a long-term contract, suppliers are tied into service delivery and price at a time where event support services will be difficult to find.

By taking time at the outset to formulate a set of standard terms that works for them, the event organiser is rewarded with reduced contract management effort and administrative burden. It is surprising how many companies do not employ written terms of business – at the best of times this is a dangerous situation to be in when things go wrong but in the current economic climate, a written contract is imperative. Event organisers can exert greater control over the risk profile of their events with an effective contract and manage scenarios such as supplier insolvency or non-performance.   

A competitive procurement process is an ideal way to find out what an event organiser might be missing out on both in terms of value for money and quality of service.  Even if an event organiser decides to remain with some or even all of its incumbent suppliers, at least they can proceed safe in the knowledge that it has the right business partner and are operating under a contract that works for the event organiser at the market competitive price.

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