How Much!!!

Published: Aug 31 , 2012
Author: Alan Smith

Virgin Trains aimed to shake up the railway business when it took over the West Coast mainline. Now, having lost the franchise to FirstGroup, are they tasting sour grapes or being genuine in their belief that FirstGroup are unable to deliver on their pitch?

In his blog Sir Richard voiced fears that the amount FirstGroup paid will make the contract unprofitable, which will force the Government to take back ownership of the line. This will make the deal a very poor one indeed for the country in the long run. This is what happened with the East Coast Main line, when first GNER (in 2007) and then National Express (in 2009) were stripped of the contract after they could not afford to pay the Government £1.3bn for the right to run the service.

Branson claims the Government are being duped again. He says, "Insanity is doing the same thing over and over again and expecting different results. When will the Department for Transport learn?"

Branson, never a man to back down from a fight, has launched an on line petition to get the government to re consider its position.

For the buyer, beware.

I was recently working with a procurement director who pitched out a major multi million pound project to 3 potential partners/suppliers. Two prices came in which were similar. 1 of the prices was significantly cheaper, in the order of 35% cheaper to be specific.

Price was an issue. But the procurement director needed reassurance that the cheaper price was deliverable. She met with the supplier and asked to 'deep dive' into the cost proposal. It soon became apparent that the quality and quantity of work required would be impossible at the lower rate.

Discussion over.

She did not want to work with a company that either under-priced in order to strategically come back for a 2nd bite, or just didn't understand their own business. Either a set of crooks or idiots in her view.

If Branson is right the risk of failure is great. Fool me once, shame on you. Fool me twice, shame on me. Fool me three times and I get what I deserve.

For the sales negotiator expect the buyer to ask the detail behind your offer and be prepared to substantiate it with logic, reason and credibility. For the buyer if an offer looks too good to be true, it probably is.

Alan Smith


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Alan Smith
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Muck Shift

Just when is a deal not a deal…? I heard this story from a friend of mine the other week; there are some lessons to be learned! So, my pal is a developer and is building some houses on what is essentially a square site. Two sides of the square can be accessed from the road in a neighboring housing estate and the other two are beside a field owned by another developer. There is a huge pile of muck to shift before the actual building project; this phase is known in the trade – and not unreasonably - as a "muck-shift"! As there will be 80 -100 lorries coming in and out each day for 6 weeks, it was considered more convenient to access the site over the field, so an approach was made to the developer to discuss the terms under which he would allow access. This is a standard arrangement and the deal typically is that the field would be returned to the owner in its original condition. Developer makes a bit of money, where otherwise he wouldn’t; homeowners in the adjoining estate are less inconvenienced; builder does not need to spend money cleaning the streets and getting them back to a usable state at the end of the project. Win-win.

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