TENDER EVALUATION TIPS AND TRICKS
So you’re new to tender evaluation? Need to learn about what’s involved, but don’t know where to start?
This article gives you a snapshot of what to expect, and how to make life easier for everyone through some simple preparation.
Many Council tenders follow the NZTA Procurement model – a proven and well –defined method for evaluating tenders that is mandatory for any transport-related projects that are funded in part by central government. That model has become New Zealand’s benchmark, and has recently been updated to make it more flexible and useful to a wider range of contexts than the old version (CPP, Competitive Pricing Procedures).
If you’re going to be involved in evaluating transport projects, there should be at least one ‘Certified Tender Evaluator’ in the evaluation team, who will have gained lots of experience in these areas (as well as Contract Management and being an Engineer to the Contract) in order to become certified.
What Does an Ideal Tender Look Like?
Before we get stuck in the nitty-gritty, it’s worth thinking about what a perfect tendering process would be like. We think that a superb Tender process will:
1. Quickly uncover the factors that will differentiate good bids from average ones
2. Give both evaluators and respondents a clear and common understanding of how the tender will be evaluated, and where they should each put most energy to ensure success
3. Minimise paperwork
4. Get the right balance between tightly defined questions and opportunities for bidders to expand on the benefits they bring to the contract
5. Make it easy for evaluators to compare responses
6. Use an evaluation method that’s fair and appropriate for the job
Evaluators have two chances to achieve these ideals – in the way they put the documents together, and the way they mark them. We deal with what’s key to these two areas below.
Putting Together a Great RFT Document
Like most things, good preparation is the foundation of easy roll-out. To prepare well, you will need to:
1. Define the scope of work in fairly broad terms initially
2. Establish the key risks that might affect delivery of the project, work out how important they are, and think about how the ideal contractor will handle these.
3. Identify the 2-3 critical success factors that will determine how well the project is done
These factors will guide which evaluation methods you use, how you weight the categories in which you are seeking information, and ultimately, what questions you should ask to get the information you want.
Choosing an Evaluation Model
There are two main evaluation models in common use – Lowest Price Conforming, or Price Quality. In general, you use a Lowest Price Conforming method for simple or small projects which are relatively straightforward to deliver; and Price Quality for projects which are more complex and for which you need more information to decide which bidder has the best capabilities in relation to the project’s challenges.
If you do use Lowest Price Conforming, remember that the respondents will put just about all their energy into putting forward the cheapest price they can – so it’s unreasonable to ask for a large quantity or onerous attribute information with the bid.
Using Price Quality invites you to set weights on the relative importance of the Price against the Non Price Attributes (which most often include Relevant Experience, Track Record, Relevant Skills, Management Systems and Methodology). Volumes have been written about how to do this – in this summary, it’s enough to suggest you look at these carefully to make sure they reflect the risks and priorities you identified at the outset.
If everyone bidding will have adequate capability in any of these areas (Resources, for example) – consider leaving it out, and saving you, and the respondents, a whole heap of unnecessary work.
Ask the Right Questions
It’s always tempting to recycle a previous RFT, and tweak it for a new contract. This makes total sense, as long as:
- The original document was free from errors; and
- The tweaks you do reflect the priorities of the contract you are evaluating, and
- You are totally conscientious about ensuring that any changes you make are carried through the full document.
Hundreds of hours of evaluator time, forests of Notices to Tenderers (NTTs), and substantial goodwill can be saved if you take the time to check the RFT carefully. If at all possible, try responding to it yourself. That is by far the most powerful means to iron out any problems and minimise or eliminate the NTTs that you may have to issue later.
Consider setting up a template response format, that asks the questions you want, and gets respondents to answer them directly afterwards. This gives some significant benefits:
- It ensures you can easily find the answers to the questions, without sifting through so much waffle
- It makes your requirements crystal-clear to bidders
- Evaluation is fairer and more transparent
- It will hugely reduce the time and frustration for both you and the respondents in understanding what each other wants/ is communicating
However, if you take this (excellent!) approach, it’s worth investing in getting an independent professional to pull together the template tools, so that they are practical to use and don’t make things harder for respondents. This is a skill that the team at Plan A has developed in the past few years, and while it can be transferred, it’s not that easy to get it right first time.
Once you have issued your wonder RFT, it’s time to sit back and wait for the responses. If you’ve done your job right, then you won’t have a lot of queries or clarifications to deal with!
Evaluating the Responses
Evaluation is normally a two-step process.
In the Price Quality method, the first step involves each member of the Tender Evaluation Team (TET) making their own mind up on the scores that they attribute to the Non Price Attributes of each bidder's response . Having an anchored scale, as mentioned above – is invaluable here, as it reduces the amount of arm-wrestling that goes on in the second stage when their scores are significantly different.
Although it’s seldom done this way, it’s worth considering whether you allocate each member of the TET just one or two attribute sections to mark for all the bidders. This means that, although you have fewer opinions on the right scores for each section, you do get a consistent grading and there are less arguments needed to moderate the scores. Obviously, it will also save time on the evaluation. This method is most suitable when the project is well defined, with no major complexities and few significant risks.
The second step in a weighted attributes evaluation involves pulling the TET together to agree the final scores for the Attributes sections, and apply the Supplier Quality Premium. There are huge time savings in this approach if you use a template approach.
One major Council who we developed template RFT tools for, reported that these enabled them to reduce the TET moderation time from an average of SIX hours, to TWO hours. Consider the internal savings of this – when three or four TET members evaluate hundreds of tenders each year.
For a lowest price conforming bid, the first step simply involves opening the price envelopes to identify the lowest price bid.
For this evaluation method, the second step is also simple – it only involves ensuring that the TET agrees whether the attributes requirements for the lowest priced bid conform to the RFT requirements.
Completing the Tender Process
Once a preferred bidder has been chosen, the leader of the TET takes responsibility for the close-out of the procurement process. This normally involves:
- Formal notification to the preferred bidder
- Negotiating the final price, the programme, plus any tags or clarifications with the preferred bidder
- Signing the contract
- Notifying the unsuccessful bidders
- De-briefing with all bidders (as requested)
- Handover to the Engineer to the Contract
Six Tips To Help You Make Tender Evaluations Easier:
To summarise, here are six key ways that you can make life easier, and reduce the time and costs for evaluating tenders:
1. Identify the Contract Risks and Critical Success Factors before you start
2. Use that information to select the most appropriate evaluation method
3. Ask clear, relevant questions – consider getting professional help from a company like Plan A to set up templates for tender responses
4. Minimise inconsistencies, ambiguities and mistakes: Check your RFT by responding to it yourself
5. Use an anchored scale to reduce variability in tender assessments from members of the TET
6. De-brief with Bidders, so they (and you) can improve the process next time.
Plan A is now offering courses to evaluators based on the NZTA evaluation methods. These cover the key must-know areas of tender evaluation, as well as some important information that will help tender evaluators, and those who put together RFTs, to minimise the workload for everyone.
For more information, or to comment on this article, please contact Plan A at info!plana.co.nz or 0800 PLAN AA (752 622); or visit www.plana.co.nz/tenders
MBA(Hons). BSc. MNZIM.