PM598 – Contract and Procurement Management
PEACH COMPUTER COMPANY Case Analysis
At the meeting, the decision was made to utilize detailed design and engineering specifications so as to obtain competitive bids on the project. The executive committee required completion of the building within twelve months since the new facility would allow for production necessary to meet a new government contract. The contract was of vital importance to Peach since it would yield additional net income of $4,000,000 annually. Within 2 months after the meeting, Don issued a request for proposal using the recommended specification method with a specific construction time of 9 months. Four proposals were received. Don reviewed them ...view middle of the document...
Frazier Construction was a firm from Florida who had completed several projects around the country for competitors of Peach. Known for speed and flexibility, they had a reputation of finishing projects in 95% of the required time. Don had invited them to bid since he noticed the Peach competitors tended to give Frazier repeat business. Their bid was $6,100,000.
Foreman Builders was following Peach from Minnesota where they had completed three projects for Don. A small, minority-owned firm, Foreman was not well-capitalized but Don liked the fact that he dealt directly with the owner, Chuck, and his son, Jay. Foreman had not worked in Ohio, but knew the building type quite well and felt that nine months was sufficient time to complete the project. Don felt their quality was second to none, and was not surprised with their bid of $6,025,000 with a required deposit of $850,000.
D.A. Evans Company was a national builder of strong reputation. Highly sought-after, they were known for on-time, on-budget delivery of high quality. Don had not worked with them before and knew this only from articles in the national construction magazine, ENR. A large corporation, Evans was also in the market to replace PCs throughout their offices within the next 18 months – a fact that Don became aware of through his marketing group. This potentially represented sales of $20,000,000 for Peach and a boost to the bottom line of $800,000 if Evans decided to purchase Peach computers instead of IBM. Their bid was one hour late and was $6,500,000.