Supplier and tender evaluation – a core procurement task (part 2)

We highlighted in part 1 of this series why procurement should take the process of tender evaluation seriously, given it is so important to one of our most fundamental tasks, that of choosing the best suppliers.  We also had some very pertinent comments after we published the last post – do take a look at them.

Now evaluation is a huge topic – there is without a doubt a book to be written about this. (Another retirement project perhaps)? We can’t hope to cover every detail, but today we’ll look at some of the key underpinning principles.  Note in all of these we’re talking fairly generically – there will be particular issues for public sector buyers and projects, and indeed for other sectors.

1.            Structured evaluation model

A proper evaluation model is key, designed and agreed before the tenders are received – and ideally, before they are issued . Indeed, it is best to shape the tender document based on the evaluation process (see point 3 below). We need to understand fully how we are going to assess the supplier  - what are the criteria against which we are going to assess them? How relatively important are these factors? How will we assess and mark them? Do we want to take factors into account beyond the written tender – for example, references or reference site visits, interviews or presentations? If so, how will we take those into account in terms of the overall model?  

2.            Stakeholder buy-in and involvement to the process

This was a great point emphasised by a couple of our commentators on the previous post. A common issue is procurement carry out a good structured evaluation, at which point the budget holder or other key stakeholder says, “no, you’ve chosen the wrong supplier”!

While it’s easy to simply curse the person – and there are times this is sheer pig-headedness, or even  something worse – it often reflects that you haven’t come up with an evaluation process which actually reflects the stakeholder’s true needs or sense of priorities.  Here’s the conversation I had a few times in my practitioner career:

Me:                        So, Trotter Enterprises have won the contract.

 Stakeholder:      I don’t want them! How on earth did they win?

M:                          Well, they were 20% cheaper than anyone else. And we weighted price at 60%, so that was pretty critical.

S:                            But price isn’t really that important, it’s their ability to deliver the project very quickly, and nationally, that really matters here. Trotters can’t do that!

M:                          Why didn’t you tell me that when I showed you the evaluation methodology?

S:                            Well, I was very busy.. I didn’t realise that’s what it meant...

So , if you are running the tender, it is up to you to make sure the users understand the implications of the evaluation process. That may mean modelling just what the mechanism might mean. And do explain how the supplier presentation is going to fit into the overall marking and that they can’t just choose the sales manager with the nicest smile! But all of this needs doing before the event.

3.            A detailed methodology  for marking / scoring the bids you receive

As well as the overall model, we need to plan for the detailed scoring against the criteria we’ve come up with. And this feeds back into the design of the tender document –  if you want to evaluate quality, ask question(s) about quality, and get a coherent response that can be clearly assessed and scored. Otherwise – as I’ve seen happen – you get the situation where the poor old evaluator is ploughing through a 200 page response to find the 27 different references to “quality” in 9 different sections of the document...

We also need to determine the scoring mechanism in terms of is a  five point / seven point / whatever scale. And remember, humans cannot accurately mark using more than about a seven point scale. Giving a response a mark out of 100 is ridiculous for instance (which I have seen).  Price (or whole life costs) also needs to be scored – which takes us onto the next point.

4.            A process for scoring price and combining that with non-price scores

This sounds like a very detailed issue, but it is one that causes much confusion and is a source of both internal issues (as per the Trotter Enterprises conversation above) and challenge from suppliers. It’s also very conceptually interesting - so much so we’ll come back to it in part 3 of this series.

 5.            A project plan for making this happen

Who is going to do all this, when, where, how, what is the governance and sign-off process? A lack of resource at evaluation stage is a key factor in over-running projects. There’s a major UK government contract at PQQ assessment stage currently that is running 3 months plus behind schedule. All because they didn’t plan for the number of responses they might receive and get resourced appropriately to handle and assess them.

So, in the next installment, we’ll take a look at the issues around scoring price, then finally in part 4 we’ll close with a summing up of evaluation and briefly touch on some technology issues and options.

First Voice

  1. TimBya:

    Absolutely spot on – wish I’d read Part 2 before I commented on Part 1!

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