CASE STUDY
The SR100M Lowest Bidder Trap
How a government agency lost 50% of project value by choosing the
cheapest contractor—and how financial analysis could have prevented it
The Vision: Modernizing City Infrastructure
AMBITIOUS PROJECT
A government agency launches an ambitious SR200M transportation hub project to modernize city
infrastructure and boost economic development. Five major contractors compete for the prestigious contract.
The Fatal Choice: Lowest Bidder Wins
COST FOCUSED
Company A wins with the lowest bid, beating Company B by just 8%. The decision seems fiscally responsible
—save taxpayer money and deliver infrastructure on budget.
The Red Flags (Overlooked)
The Collapse: Project Stops Mid-Construction
CRITICAL FAILURE
Within six months, Company A's financial instability becomes catastrophic. Construction halts mid-project,
labor strikes emerge, and the agency is forced to re-tender the entire project.
The Devastating Impact
Additional Consequences
Damaged stakeholder confidence
Political fallout and investigations
Economic development delays
Public trust erosion
The Prevention: Financial Analytics in Procurement
SOLUTION
Modern procurement requires automated risk scoring and real-time financial analysis. Company A's distress
signals were clear in the data—if anyone had looked.
What the Data Revealed
Overleveraged Structure
3:1 debt ratio vs. 0.5:1 benchmark
Liquidity Crisis
0.8 current ratio, 0.5 quick ratio
Negative Cash Flow
-SR10M from operations
Payment Delays
120-day payables vs. 60-day norm
Key Takeaways: The True Cost of "Cheap"
Financial Health Matters
Low bids often hide distressed companies
Automated Screening Works
Technology can flag risk in real-time
Data Reveals Truth
Metrics expose risk before contracts are signed
Upfront Investment Saves Millions
Proper evaluation prevents catastrophic failures
"In procurement, the lowest price often comes at the highest cost."
Don't Let This Happen to Your Project
Smart procurement starts with financial due diligence. Protect taxpayer
money and project success with data-driven decisions.
