Determining Cost Factors for Commercial Evaluation in Event Planning: A Guide for Junior Buyers
As a junior procurement professional venturing into the world of event management, understanding how to structure Requests for Proposal (RFPs) and evaluate bids can be a complex task. A key aspect involves identifying which costs to include in your commercial assessment to ensure a fair and comprehensive awarding process. This article aims to clarify these considerations, drawing on practical experience and best practices in the industry.
The Context: Procuring an End-to-End Product Launch Event
Imagine you are preparing an RFP for an upcoming product launch event. The scope encompasses everything from conceptualization and planning to on-site execution and post-event activities. The selected event agency will be responsible for managing multiple facets, including:
- Concept creation and event design
- Overall project management
- Coordination of external vendors (catering, photography, entertainment, etc.)
Furthermore, the agency will likely subcontract some services to third-party suppliers. Clear financial structuring is essential, both to obtain accurate bids from agencies and to ensure transparent evaluation.
Distinguishing Between Agency and Third-Party Fees
When drafting your price sheet for potential agencies, a critical question arises: Should you separately delineate agency fees from third-party service costs? The answer is generally yes, for several reasons:
- Transparency: Separating agency fees and third-party costs provides clarity about what is included in their scope versus what expenses the agency will manage or pass through.
- Comparison of Bids: It facilitates apples-to-apples comparison among different proposals, especially if agencies have different approaches for procurement and subcontracting.
- Pricing Flexibility: It allows the evaluation team to understand the pricing structure and negotiate more effectively.
Typically, your RFP should request the agency to provide:
- A detailed fee proposal covering their scope (concept development, project management, coordination)
- Estimated costs for third-party services they plan to procure (with the expectation that these are pass-through costs)
What Costs Should Be Included in Commercial Evaluation?
The next crucial consideration is: On which costs should you base your commercial assessment? The common practice is to evaluate bids considering all relevant costs that impact the overall project budget. These generally include:
- Agency Fees: The agency’s professional charges for their services.
- Third-Party Service Costs: Expenses for external vendors such as catering, audiovisual, entertainment, security, and logistics.
Including both categories ensures that your evaluation captures the complete financial
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