[webproducers] Reveal actual budget in RFP?

Hi folks, 

I'm about the circulate an RFP to Web design firms for a
rearchitecture/redesign of an existing site that enjoys some
prestige. The RFP includes a ambitious scope of work. Based
on what I know about the market today, I'm pretty sure that
the full scope can't be performed for the fixed budget.
Let's say for arguments sake that this budget is $150k.

So, I'm asking bidders to make sure that the proposals
explicitly exclude those features -- e.g., a user
registration system -- that they won't be able to provide
given the budget. This will let me pick the vendor bidding
the most bang for my buck. 

Now, design firms always want to know the budget before
preparing a bid. I wondering whether I should give the real
budget, or an understated one, say $120k. The hard-nosed
negotiator in me says that there are two risks to revealing
the actual budget: 

a) if I'm wrong that the entire project isn't doable for
$150k, then I'm leaving money on the table. Given that bids
expand to consume the available budget, I'll end up with
less competitive proposals that I would if, say, I didn't
reveal a budget, or understated it. 

b) vendors may assume that I'm not serious about the fixed
budget, and will bid thinking that future negotiating will
determine that actual (higher) price. This will make it hard
for me to identify the proposals that offer the most genuine
value.

As well, playing a game by saying that the budget is $120k
(when it's really $150k) leaves me wiggle room in case my
assumption about the too-expensive market cost of the
project is in fact correct. I *can* separately negotiate
additional features up to 150k without the risk of leaving
money on the table. 

However, playing a game by understating the actual budget in
the RFP leaves a bad taste in my mouth. Econ theory says
that markets work best when all parties are in possession of
the same set of truthful facts. At the least, understating
the budget leaves me open to vendors thinking "What a
clueless client. He wants the moon for a measly $120k! I'll
pass on this disaster in the making." 

Are there other drawbacks to understating the budget? Any
advice? 

Thanks,
Tom Davey 

-- 
Tom Davey
tom@xxxxxxxxxxxx
New York NY USA

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