Incorporating a purchasing perspective early will save money, get better product and ensure excellent project execution. As tribal casino development becomes increasingly complex, one vital aspect that is often overlooked is FF&E (furniture, fixtures and equipment) and OS&E (operating supplies and equipment) sourcing and procurement.
All the effort put into project planning by the tribal council and project manager can be wasted if a clear FF&E and OS&E purchasing strategy is not developed, communicated to the entire project team, and executed well. During predevelopment, tribal project managers should engage a professional purchasing company to help develop that strategy.
An effective FF&E and OS&E sourcing strategy starts at the conceptual stage of a project and helps define the budget and scope constraints. At PMI Tribal Services, we work closely with our clients to provide them with robust predevelopment planning tools focused on FF&E and OS&E sourcing. The first step is to develop line-item conceptual FF&E and OS&E budgets.
Key attributes of a valuable FF&E and OS&E conceptual budget are:
- Itemization where possible
- Clearly listed exclusions
- Budget assumptions based on design concepts
- Developed through multiple drafts
- Uses current manufacturer direct pricing data (Not dealer pricing)
FF&E and OS&E conceptual budgets give tribal clients actionable information and are based on current market pricing, which helps make conversations about design details efficient and effective. A large-volume purchasing company, like PMI, provides market-referenced pricing data. This is significant, because a purchasing company is not a furniture dealer but rather a company that purchases directly from manufacturers as the owner, thereby obtaining manufacturer direct costs.
Partnering with the interior designer and project manager, PMI’s conceptual budgeting process incorporates the design goals of the tribe as understood by the interior designer and the schedule goals controlled by the project manager. Multiple drafts of a conceptual budget require collaboration between the tribal council, the project manager, designer and purchasing company. The end of the conceptual budgeting process produces a team committed to a common budget and scope because every stakeholder contributed to its development. Once developed, the project conceptual budget is the best stepping-off point for ongoing successful project execution excellence.
Excellent project sourcing will result in better product, on-time completion, and lower project costs. An FF&E and OS&E sourcing strategy starting from a well-developed conceptual budget will address the three constraints of time, quality and price. Professional purchasing services connect the conceptual budget with actual FF&E and OS&E production resources and enable tribes to make informed purchasing decisions.
The vendor selection process should be transparent and involve the tribe, project manager, designer and purchasing company to select the best vendor for each item or category. This is a key difference in developing and executing a sourcing strategy with an independent purchasing company rather that a furniture dealer or distributor. An independent purchasing company will bring large-volume buying power while a furniture dealer has limited relationships with a set number of manufacturers, thereby restricting the viable choices from which a tribe can select.
The independent purchasing company connects the project to the best product with no limitations by competitively bidding all product to qualified suppliers. In addition to price considerations, as sovereign nations, tribes’ sourcing strategies must incorporate tax mitigation measures. Mitigating tax exposure requires diligent attention to detail and a coordinated system of project expediting.
Because most of the product purchased for casino projects is made to order and must fit within a construction schedule, having a purchasing timeline that details purchasing milestones is critical to a project’s success. During the predevelopment stage, the purchasing company, project manager and contractor coordinate construction activities with the various lead times for sourcing and manufacturing of all the product that occur along the contractor’s critical path. As the project progresses, regular communication between the contractor and purchasing agent related to deliveries and construction progress is very important.
In-house expediting services should be a key component of any purchasing agent’s involvement with tribal projects. Instead of delegating project expediting to a third party, the purchasing company should be in control of the deliveries as part of the purchasing process. In-house project expediting is an integral part of the purchasing services, and increases the level of project control and likelihood of on-time project completion. In-house expediting also increases the quality of communication among the project team. Just like the development of the conceptual budget, the production expediting phase of a project is collaborative and requires close communication with the project team.
Key attributes of FF&E and OS&E strategy execution:
- Purchasing timeline coordinates with construction schedule
- Transparent bid process referencing the budget
- Collaborative vendor selection process
- Tax mitigation consideration
- In-house project expediting
- Close collaborative communication
As a native-owned company, PMI Tribal Services understands that the decisions related to product cost and the resulting project savings achieved through sourcing and bidding activities directly impact the benefits available to tribal members through tribal casino development. Those savings can be multiplied if a well-developed FF&E and OS&E purchasing strategy is implemented from the start to the finish of a project.
