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Meaningful ways to pick a supplier

January 7, 2020

Recently I’ve seen a few freelance jobs come up that use a particular approach to tender evaluation and this has got me all confused.

The (more formal) clients that I work with have scoring systems for evaluating tenders, and tenders are scored on elements including price, quality, skills etc.

The bit that has me baffled is a way that clients seem to be evaluating the pricing element of late.  Here’s a real example:

The lowest compliant total firm price will be awarded the maximum percentage mark. All other compliant tenders will be awarded the appropriate percentage mark in relation to the tender with the lowest score.

Basically the bidder that quotes the lowest cost for the job gets most points, and then all the other bidders are ranked against this.  So if you put in the lowest bid you get the most points, and if you put in the highest bid, you get the least points.  Then points mean prizes, as the bidder with the most points will get the job.  Hurray!

OK that’s a process, that’s quantifiable, that’s a way of converting hundreds of pages of blah into a decision.

But as a potential supplier I’m so confused as to how to play this game.

When I’m costing up for a job I want to:

  • Propose a solid methodology that will get a good outcome for the client
  • Maximise income for myself within what is available
  • Win the work

So when the bidding criteria are set out as I described, I want to bid lowest so that I get more points, but I don’t want to shoot myself in the foot by bidding too low and losing money that could have been in my pocket.  The amount I bid feels very much like guesswork.

When I’m doing my costing I have my daily rates and ways of totting things up but it is also very easy to go +/- a few days work by adding in or taking out tasks.  But who knows if the client might see these tasks as superfluous to requirements, or the quirky touch that appeals to the client and ultimately gives me the win.

Eeeeeee, I could go round in circles for hours trying to second-guess this stuff and pick my final number.

OK OK, so we’re in a capitalist world here and this is the nature of business.  Yes kind of… but we’re also not.  I’m talking about spending public money here.

When you’re a supplier bidding to spend public money there isn’t often a huge amount of scope for cost variation.  These clients typically have a ring-fenced budget for the work which is almost always advertised in the tendering documents.  This is the money the client expects to spend on the work, and this money is probably ‘restricted’ to this task.

Here’s a real example.  I was bidding for a job and the budget was advertised as £8k-10k.  I went in at £8,925.  I was told that five suppliers were selected for interview (and thus scored) and that all five bid within a £400 range.

In those circumstances and on that scale it feels very arbitrary that one supplier would get more points than the others.  That someone would rank first (or second or third or fourth) and that someone would rank last over a matter of £400.

But more so, what this method (apparently) takes no account of is the VALUE that each bid provides.

Two £9k bids could be very different.

  • One could be offering a lot more days of work for the same money
  • One could be offering a much more experienced consultant for the same money
  • One could be offering a more robust / innovative methodology for the same money
  • One could be a cracking project, but the supplier could be an absolute d!ck to work with

It seems so odd to me that a supplier could win a contract simply because they guessed a number lower than the other bidders, regardless of value.

This isn’t done in a vacuum of course.  As I outlined above the tenders are also scored on a bunch of other factors, and there’s weightings and averages and so on.  The pricing element is just a part of all that.  But I’m told that once they sift out the dross, that scoring can be pretty close – and therefore in the end the choice could come down to a couple of points lost because your bid was a hundred quid higher than someone else’s.

OK fair enough, so I get that the client needs to have some way of comparing us and needs to do this in a transparent way.

Maybe more goes on behind the scenes that I don’t know about.

But there’s something about this pseudo-objective approach that rankles.  Yes, it is a way of quantifying the difference between two bidders – but is it actually a useful and meaningful way of doing so?

It is my view that when there is a ring-fenced budget of public money it would be better simply to judge the money side as pass/fail (i.e. was the bid within the budget, or not?) and that the client should select a supplier based on their professional subjective judgement of value provided.

I’d rather lose a bid because the client didn’t like my methodology or working style, rather than because I picked the wrong number out of the sky.

 

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