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Underbid And Overpromise

As usual, I don’t get it. I don’t get the underbid-overpromise epidemic that’s been left untreated for ages. Proposal teams, under persistent pressure from executives to win contracts from customers, and isolated from hearing negative feedback by unintegrated program execution and product development teams, perpetually underbid on price/delivery and over-promise on product features and performance. This unquestioned underbid-overpromise industry worst practice has been entrenched in mediocracies since the dawn of the cover-your-ass, ironclad contract. The undiscussable but real tendency to, uh, “exaggerate” an org’s potential to deliver is baked into the system. That’s because  competitors and customers are willing co-conspirators in this cycle of woe. The stalemate ensures that there’s no incentive for changing the busted system. As the saying goes; “if we can’t fix it, it ain’t broke!“. D’oh!

If a company actually could take the high road and submit more realistic proposals to customers, they’d go out of business because non-individual customers (i.e. dysfunctional org bureaucracies where no one takes responsibility for outcomes) choose the lowest bidder 99.99999% of the time. I said “actually could” in the previous sentence because most companies “can’t“. That’s because most are so poorly managed that they don’t know what or where their real costs are. Unrecorded overtime, vague and generic work breakdown structures, inscrutable processes, and wrongly charged time all guarantee that the corpo head sheds don’t have a clue where their major cost sinks are. Bummer.

  1. Ray's avatar
    Ray
    April 9, 2010 at 8:00 am

    Isn’t that what “metrics” is for? You can’t cost accurately what you don’t know. I believe many companies say they want metrics but in the end want plausible deniablity when putting a proposal together. Real metrics get in the way of winning contracts. When there are metrics, the we can be “20% to 50% more productive” statements start coming out. Then all you were on the original proposal to beginning of contract are gone when the true (shown by real metrics) costs start to hit.

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