Can Today’s ERP Handle Bid Evaluation Process?

Featured article by Madhavi Putta, Independent Technology Author

What is Bid Evaluation?

The Bid evaluation is a process that takes places after a bid proposal is submitted by the supplier in response to a bid and the bid date has ended.

Once the bid responses are received by the organization, bids are evaluated by a group of panelists to examine and determine the best offer in the effort to acquire goods and services for the organization. These panelists may interview the selected finalist(s) and conclude if necessary, in determining the most economically advantageous procurement bidding.

How are Bid Evaluated?

The evaluation is the key instrument to determine the best value of a bid response. The bids are evaluated based on some of the following criteria:

1. Criteria and Sub criteria
2. Proposal
3. No Requirements
4. Technical Evaluation
5. (includes design, past work, testimonials, Formatting Requirements etc.)

Bid Scoring and Award Process:

Based on the nature of each bid proposal the buyer’s discussion with organization procurement and contracting teams to formulate scoring objectives. Each bid is given scores against each criteria and the scores are summarized on the bid proposal.

In short, the implementation of this awarding approach requires the technical/quality and economic proposals of bidders to be scored and weighed to allow the buyer to rank them and identify the most economically advantageous bidder.

How are ERP and cloud-based systems handles Bid evaluation and Scoring Rules?

Not all the ERP and cloud-based system has process delivered that fits the bid evaluation criteria that is needed for every business. Some formulas need to be built for tool efficiency and effective working based on organization needs. Automation will require processes to support real-time transactions to stay competitive and the formulas to build the real-time transactions could be simple to complex ones.

1. Criteria and Sub criteria Methods

Each bid is given a score against each criteria. The total of all criteria’s equals to 100. Each criteria can have multiple sub-criteria. Sub-criteria scores add up to criteria scores and equals to 100. 0 may be the least score and 10 may be the highest score.

2. Cost Proposal

A cost proposal includes two elements: projections or estimates of costs, and the data used to support those estimates.

• * Labor Hours
• * Over Time Hours
• * Travel Charges
• * Rental Car Charges
• * Flight Tickets
• * Food Charges

3. Potential Yes/No Requirements:

Yes/No requirements are sometimes part of crucial scoring requirements.

• * Qualifications
• * Experience
• * Mandatory Bidder’s conference
• * Minimum Technical Scores
• * Formatting Requirements

4. Technical Evaluation

A technical evaluation is used to rate bidders on how well their proposal meet the technical and performance specifications as listed in the proposal.

5. Documentation

Documentation also has some weightage towards scoring.

• * Design
• * Experience
• * Testimonials
• * Formatting Requirements etc.

Formulas:

Examples of few mathematical formulas that can be incorporated into today’s ERP tool to enable them to calculate the scores for finalizing the vendor.

1. Criteria A has 4 sub-criteria. Weight of each sub-criteria is 25 points.

Total weight of sub-criteria = 25 x 4 = 100

Therefore, Total weight of Criteria A = 100

2. Another example of mathematical formula for calculating final and price scores.

Final Scores = Technical Score + Qualification Score + Cost Proposal

3. Formula for calculating Price Score

Price Score = Lowest price bid * price weighted / Price of bid being evaluated

Conclusion:

Once the formulas are determined based on the evaluation method that the agency uses and if these formulas are incorporated into any ERP tool or cloud-based tool then, procuring goods and services for both public and private sectors will be much easier and this would increase cost efficiency in the day to day business in a timely manner.

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