🇦🇺Australia

Bad Vendor Selection Costs

1 verified sources

Definition

In vendor selection, failure to properly assess TCO, compliance, scalability, and fit results in excessive costs from licensing, training, support, and rework. Government guidelines emphasize structured processes to avoid these risks.

Key Findings

  • Financial Impact: AUD 50,000+ per project in excess TCO (licensing, deployment, ongoing support); 20-40% higher costs from unfit vendors
  • Frequency: Per procurement cycle (1-4 times/year)
  • Root Cause: Lack of structured criteria-based evaluation, ignoring TCO and compliance checkpoints

Why This Matters

The Pitch: IT System Design Services firms in Australia 🇦🇺 waste AUD 50,000+ annually on poor vendor choices. Automation of vendor evaluation eliminates decision errors.

Affected Stakeholders

Procurement Managers, IT Directors, CFOs

Deep Analysis (Premium)

Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Procurement Process Overruns

AUD 20,000-30,000 per selection in consultant fees, demos, and internal time (40-80 hours/stakeholder)

ATO BAS Lodgement Penalties

AUD 222 failure-to-lodge penalty per BAS + AUD 52/week thereafter (ATO standard rates)

Fair Work Record-Keeping Fines

AUD 4,560 per breach for failing to keep employee records (Fair Work Ombudsman penalties)

Rework from Poor Solution Design Documentation

20-40 hours rework per business case at AUD 150/hour architect rate = AUD 3,000-6,000

Delayed Invoicing from Design Documentation Gaps

15-30 days increased DSO = AUD 5,000-10,000 tied capital per AUD 100k project

Unbezahlte Change Requests durch fehlende schriftliche Nachträge

Quantified (logic-based): ~3–5 % of project revenue; e.g. AUD 15,000–25,000 on a AUD 500,000 IT system design project, or ~AUD 150,000/year for a firm with 10 such projects.

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