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Dave Stephens on technology and business trends

Buying Services – A “How Not To” Guide

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As you all know I live in Half Moon Bay. It’s a weird place. First of all, who heard of a city without an elected Mayor? Instead, some yahoo years ago thought it would be a good idea to “share” the mayorship and designed it as a rotating seat – everyone in the city council gets a turn. Whee! So you’ve got this eunuch of a mayor for a year – and just when they figure out what the heck is going on – boom, they’re out. And who really pays attention to city council seats – it’s some strange high school throwback popularity contest.

Why the venom? Well, it all started long, long ago…

The city of Half Moon Bay decided they wanted a park. So they bought some land. If memory serves they spent a few million for some pretty good acreage in an awful spot – right off a highway with no clear access without screwing up traffic. Which doesn’t necessarily make the whole idea bad – just a challenge & possibly a pretty good land deal.

Then they sat on the land while signing up a design firm. Half Moon Bay sent out an RFP for design services back in late 2004. But like most cities, they obviously weren’t schooled in Procurement 101. Out of 13 bids they picked a group called MIG (Moore Iacofano Goltsman). According to the Half Moon Bay Review, these guys had an impressive track record of prior park work in the San Francisco Bay Area.

The original authorization was for $250,000 worth of design services. And for a park, that sure seems like enough (estimated land size, my best recollection, <20 acres). It’s supposed to include basic stuff such as- a basketball court, an amphitheatre, a baseball diamond, a “meadow”, etc. Well, through the magic of T&M, change orders, etc, the payout so far for the designers has been rumored to be $345,000.

The Half Moon Bay city council is now upset. But what they deserve is a good long look in the mirror. It’s their fault – structuring a contract that sets appropriate incentives and penalties, and most importantly, caps costs, is essential in effectively managing services spend. The slippery slope of “wandering requirements” can lead to these horrifically bad outcomes.

By the way, the story gets far worse. The budget estimate for construction of the park was around 6MM. The estimate provided by the high-priced designers, without any cost breakdown or apologies, stands between 12.1 and 14.5MM. So now the city of Half Moon Bay has spent through the nose to design a park that doesn’t fit their budget.

In the meantime, our “mayor” has another 4 months in office. What a mess!


Written by Dave Stephens

08/24/06 8:43 PM at 8:43 pm

Posted in Opinion

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