On: March 5, 2020 In: Cement Contracting

I will start by posting some questions:

  1. When you receive cement bids do you check to see if the bids are “apples to apples” or do you ignore that and simply pick the service company with the lowest bid price?
  2. Do you ever reconcile the cement bids versus the actual field and invoiced costs?
  3. At your company, who usually requests the cement bids? Is it the “senior” Drilling Engineer, a “young” Drilling Engineer, the Supply Chain / Contract Management personnel, or the Company Rep?
  4. When you have participated in a bid negotiation who is usually in the meeting for the two opposing sides (operator and service company)?

Now keeping in mind your answers I will tell you why you left money on the table.

  1. The cement service companies know most operators do not have the personnel, time, or training to properly evaluate cement bids to determine if they are apples to apples. The result is most operators base their vendor selection solely on the lowest bid price.  Due to this methodology, the cement service companies race each other to the bottom. Sometimes they bid outdated products that are no longer used with no intent to use them during the actual work.  Some bids I have seen are outright fraudulent.
  2. The cement service companies know most operators do not have the personnel, time, or training to compare bid, field, and invoice costs. They know sometimes the Company Rep or Drilling Engineer will notice the higher price and will need to make a concession.  The companies also know they can slip at least 90% of the markups through to you.
  3. Drilling is sexy. Everybody wants to get the basin record for the fastest hole, longest motor run, etc.  When was the last time you saw somebody publish on LinkedIn they got the best cement job in the basin at a reasonable price?  At most, operators a “young” Drilling Engineer or Supply Chain / Contract Manager is responsible for the cement pricing and/or cement contracts.  Guess what…. most of these people can’t tell you the difference in cement and concrete much less the difference in cement service company A & B’s pump trucks and that effect on pricing.
  4. Ever been in a cement contract negotiation meeting? Other than major operators with inhouse Cement SMEs who usually shows up?  The operator usually has a Drilling Manager (maybe), a Drilling Engineer, and a Supply Chain / Contract Manager.  The cement service company shows up with ten people including Cement Engineers, Cement Managers, and Lawyers and their only job is to negotiate cement contracts.  Who do you think has the advantage during the negotiation?

Why am I telling you all of this?   Unless you have a Cement SME with ample experience negotiating cement contracts, the cement service company is going to win.  They have years of experience and weeks of reviewing your bid to figure out how to win the work while maximizing their profits at your expense.

Case History

ACC was recently contracted to perform a cement tender for a deepwater operator.  The total time from generation of the first tender document to the signing of the commercial agreement was less than 7 weeks of which 4 weeks were allotted for the service companies to prepare their bids.  Total ACC work time was less than 10 days.  The operator saved 25%, and improved their slurry designs, as a result of ACC performing the cement tender.

ACC Experience

ACC has an unmatched team of experienced personnel for generating, managing, and negotiating commercial and / or legal contracts for both land and offshore cement bids.  In addition, ACC is capable of performing the same services for centralizers, cement heads, toe initiators, wiper plugs, float equipment, displacement fluids, etc.

The work can be performed for a fixed rate, day rate, or even on a cost savings (percentage) basis!  You read that correctly…we are so confident we will save you money we are willing to work on a “commission” only basis.

 

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