Ask any Asset Manager or procurement specialist what the worst part of their job is, and they’ll probably tell you how frustrated they are with their tender processes. Well, we have some good news. We’ve been trialling some tools that make tendering faster, cheaper, easier and (most importantly!), sharper.
Rubbish In – Rubbish Out
So, what do we want from a good tender – and what don’t we want? Everyone knows the ‘Rubbish In – Rubbish Out’ mantra: without good procurement tools, you won’t get good procurement decisions. To deliver the best value for money, a procurement process needs to be four things: consistent, transparent, fit-for-purpose and cost-efficient.
- To be consistent, the acid test is that the decision is based on selection criteria that will be applied in the same way by any tender evaluator.
- Transparency – stating your evaluation criteria clearly in the RFT is important, because it enables your suppliers to know what you want and give you the information you’re looking for.
- Procurement tools need to be fit-for-purpose because the drivers for value for money are not that same, for example, for a wastewater treatment plant as they are for potable water quality monitoring or de-sludging services.
- Cost-efficiency should be a no-brainer. It’s an unnecessary time-waster for both bidders and evaluators when the questions in an RFT are generic or irrelevant to the project-specific success factors.
Tools that work
To keep your procurement process cost-efficient, your first task is to eliminate unsuitable bidders. Save them, and you, the time and costs associated with preparing and evaluating tenders that simply won’t cut the mustard. To do this, you’ll need to think about the minimum requirements for any capable supplier, as well as the factors that would make a bidder unsuitable.
Will industry experience, minimum plant levels, past performance standards, or certification standards be essential? Make them transparent through using a prequalification process, preconditions, or an EOI so that you’ll only need to evaluate bids that are worth considering.
Once you’ve excluded the unsuitable bidders, you’re ready to sharpen your procurement tools to get the very best bang you can, for your bucks. The questions in your RFT should be tightly focused on the factors that will differentiate the bidders. And those are usually based on how well they will mitigate project-specific risks; or what opportunities they can come up with to leverage added value for your project (in the short term) or your asset (long-term whole-of-life benefits).
By reducing your questions to focus on these, and only these areas, you’re cutting to the chase on what will make a difference on your project. You’re saving time and costs out of tendering for both bidders and evaluators, and you’re sending a clear message to bidders about what you value.
Cutting the time spent in evaluation makes sense for everyone, provided that’s not at the expense of quality evaluation. The best way to reduce evaluation time is quite simple: agree on how you’ll evaluate the tenders before you start, and get all your evaluation team to stick to the plan. The traditional alternative – to evaluate all the bids and then come to a moderation room with a bunch of different opinions to resolve – is messy, time-consuming, invites conflict, and it’s far more difficult to justify.
The best tool to achieve this is to develop anchored marking scales – objectively defined scoresheets for each attribute that enable fast, consistent and well justified decisions from the evaluation team. Coupled with response templates that give you the information from the bidders in a consistent format, these Clever Buying tools have contributed to reducing evaluation time from weeks down to days, saving thousands of dollars of costs in tender evaluation, while also giving greater confidence that the decision made is the right one for the project.
Tools that don’t work
We couldn’t let this conversation finish without mentioning a couple of practices that might look good on the surface, but always disappoint in practice. Both these fail because they assume that one size fits all in tendering.
The first on the list of failures is standardised RFT templates. On the surface, they might seem a great idea – ask the same questions every time, and you’ll save time, right? In practice, this is 100% wrong. Asking the same questions for projects with different priorities, success factors, risks and opportunities is like asking the same questions for a Maths exam, a Japanese exam, and a Technical Drawing exam. It won’t give you the tools you need to determine if one bidder is more capable than another in relation to your project.
The second is the practice of using standardised scales for evaluation, without pinning them to an objective description of the requirements within each attribute. A standardised scoresheet which uses words like ‘exceptional’, ‘relevant’, or ‘adequate’ – without defining what those parameters are in factual terms, will always invite variation and subjectivity into the evaluation process. That leads to time-consuming conflict, shaky justifications, and a general lack of confidence that best value has been achieved.
Neither of these practices will actually save time and costs from tender evaluation; nor will they provide reliable, well-supported decisions that demonstrate that best value has been achieved.
The secret of developing tools that work to streamline tender evaluation is simple: it’s all about planning. With intelligent design of the tools you’ll use, the process becomes simple, efficient, and valuable. And the process is then everything you need it to be: consistent, transparent, fit-for-purpose and cost-efficient.