College-grad-fotolia_49900605This northeastern university attracts students pursuing careers in engineering, business, arts and sciences, education and health professions. Its 3,500 students depend on state-of-the-art facilities and services.

Faced with skyrocketing energy prices, the college needed to limit its upside exposure to price increases. In an effort to find an alternate supplier for electricity, they retained a firm to conduct a reverse auction. In this scenario, the sellers compete to provide the lowest pricing.

“Cost Control Associates showed us that a one-size-fits-all reverse auction process does not always produce the best results.”

The Challenge

The University was committed to the reverse auction process. Its goal was to meet or beat a previously established budget. Because internal staff had little experience in procuring the sizable energy supplies required to power the university, the college sought an independent firm to guide them. For starters, they wanted a review of the proposed scope of the auction and any related contractual documents. They also wanted the auction monitored to ensure they would get their desired outcome of lower priced electricity. Adding to the challenge, they needed a contract in place prior to the new fiscal year.

The Solution

After reviewing the scope and related documents, Cost Control Associates recommended some changes to eliminate less beneficial items and better position the university. Cost Control energy experts monitored the auction, evaluated results and presented a comprehensive report telling the college it would not receive an adequate level of savings with the winning bidder.

Cost Control Associates offered an alternate plan and issued an RFP to suppliers whose customer base was similar to the load offered by the university. Cost Control then managed the procurement process to meet the university’s tight deadline. Cost Control Associates succeeded in limiting upside exposure to price increases.

The projected savings of $317,000 was more than 300% greater than the auction yielded. Pleased by the outcome, the university retained Cost Control for its Energy Procurement Services that include procurement of energy, establishment of budgets, pricing models, tracking plans and execution. Cost Control Associates continues to be a resource for the university.

“We abandoned the reverse auction results and used Cost Control’s RFP process. We tripled the savings the reverse auction process produced.”

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