Problem: Many contractors say that their COGS (cost of goods sold) consumes 10-30% of their expenses. Obviously, this cost is passed on the customer. Bidding can be made far more efficient with BidPool Adjudicated Smart Contract Gaming platform.
For example: 5 contractors may spend $10K bidding on a 1 million dollar project that only one will win. Further, each contractor may only win 1 out of 5 bids submitted. These losses are ultimately passed on to the market in increased cost, lack of industry collaboration, and influence peddling. As such, the cost of bidding is represented by the following relationship:
Cost of bidding = COGS multiplied by Number of Bidders
Adjudicated smart contract: Consider a process where a project owner and all 5 contractors (or more) each put a $10K promissory note into a blockchain escrow account. An engineering firm such as Coengineers, PLLC will then perform a 3rd-party project definition report and Statement of Work that collects all relevant information that the contractors would need to bid on a job. All contractors are then invited to an electronic RFP.
Game Mechanics: Whoever wins the RFP pays (by escrow release) $10K to Coengineers, PLLC for the SOW report. The losers pay nothing. If the owner does not select a contractor, the owner then pays for the report and can use it to hold another contest in the future. These savings are ultimately wrapped into the discount of the projects according to the following relationship:
Cost of bidding = COGS divided by number of bidders
Aligned Incentives: Where there is no penalty for either winning or losing, the incentive to cheat is reduced. The Value Game realigns major incentives and the projects benefit from.
- Improve matching of qualifications to the project
- Improve quality and seriousness of owners (no “tire kickers”)
- Eliminates bidding redundancy
- Everyone bids “apples to apples”
- Rewards collaboration and intangible assets
- Reduces project variance (i.e., change orders)
- Reduces marginal cost of additional bidders
- Opens market to more bidders (prediction markets)
- Increases transparency
- Reduces project costs
- Insulates conflict of interest
- Resistant to corruption
A comprehensive project definition can be used for many purposes downstream:
- Contractor RFI/RFP
- Master Schedule
- Bank Financing
- Project Insurance
- Statement of work
- Contract language
- Inspection compliance
- Construction and Accounting Forensics
Future advancements in financial technologies such as the Blockchain protocol and Knowledge asset networks such as the Curiosumé protocol will allow BidPool to scale infinitely to many project types, markets, and jurisdictions.
BidPool is a Value Game that reduces the cost of procurement, increasing project assurance, and realigning market incentives to reward high integrity and not reward low integrity. By introducing simple game mechanics and deploying modern financial and knowledge Asset technologies, BidPool may generalize procurement across markets and industries with direct lineage to the banking, insurance, and engineering sectors.
For more information contact Coengineers.com