Using Selection Criteria in Vendor Bid Analysis
By Maggie Klenke
Choosing among competitive bids is a challenging process. It can often involve a committee representing a variety of disciplines and agendas. A fair and impartial analysis that results in a consensus decision is the goal, but competing priorities and hidden biases often frustrates it. One way to achieve the desired results is to use a methodology based on selection criteria that are agreed to prior to receiving the first bid.
In this method, the selection criteria are divided into two major categories – the “musts” and the “wants.” If any vendor proposal does not meet the requirements for even one “must” criterion, it must be eliminated. These kinds of criteria are the minimum requirements such as capacity to serve the current size and some minimal growth.
The “want” criteria are all of the other things that you’d like to have with the system/service under consideration. They might include features and functions, cost-effectiveness, vendor support capabilities. Some of these will be “yes/no” decisions, but most will be achieved to some degree. An example might be reliability of a system. It isn’t a question of whether it is reliable or not, but the degree to which it can be depended upon to work every day. Cost of one system can be compared to cost of another to select one that is more cost-effective than another.
Each “want” criterion must be given a relative weight to display its importance compared to all other “want” items. The total of all want criteria must be 100 points, or 100% of the decision. For technology acquisitions it is common to divide the “want” criteria into three major categories – technology, cost, and vendor capabilities. An example of a criteria list is provided at the end of the article.
This list (probably without the relative weights) can be provided to the vendors in the RFP once the committee and management have approved it. It will help to focus the bids on the relevant issues and minimize the marketing language in the bids.
Once the bids are received, the committee must review the bids for compliance with the “must” criteria. Any failures will eliminate that vendor. Once that is completed, the remaining vendors will be scored against each other on the “want” criteria. For example, if redundancy is the criteria and it has a weight of 10 points (as in the sample below), then the committee considers all vendors and selects the one that is judged to be the best of all bidders. That bidder is given a score of 10. All other vendors are judged against the best vendor and given a relative score. It is OK to have tied scores and even zero scores. Once all have been scored, then the score is multiplied times the weight that was given to that criteria. So the winning vendor in redundancy would receive a weighted score of 10 X 10 or 100 points. Another vendor given a score of 6 would receive 6 X 10 or 60 points.
This process is repeated for each criteria item until all have been scored. The weighted scores are added to obtain the final score for each vendor. The one with the most points is the winner and generally represents the best-balanced choice for the organization.
For more information about the application of this process, please refer to The New Rational Manager by Kepner and Tregoe. I have personally used this process in hundreds of client projects over the years and have found it capable of bringing a diverse and contentious committee to consensus. It results in a decision that can be defended, even in the most politically-charged environments.
Maggie Klenke has written numerous books and articles related to call center and WFM. A semi-retired industry consultant, Maggie serves as an Educational Advisor for SWPP. She may be reached at Maggie.firstname.lastname@example.org.