inst/strategy_description/value_for_money_index.md

In lajh87/tessa: Tender Evaluation Strategy Scenario Analysis

To calculate a bidder's score using this mechanism you simply divide the non-cost score by the cost of the bid. This allows you to see how much 'quality' (which might be derived from purely technical or a combination of technical and commercial award criteria) you would receive for every £ (or £1000) you would spend. This makes sure that each £ is working hard to deliver as much capability as possible.

At first glance this mechanism would seem to be an option that would be suitable for all procurements. It is simple to calculate, transparent, and maximises return on investment. However, it is important to realise that in most cases there will be a level above which the addition of extra capability or points of non-cost score is not necessary and for which we would not want to spend more money. Doing so is often termed 'gold-plating'. For example, if you were more than content with an overall non-cost score of 80% and had a bid cost of £1m you may not want to pay an extra £180k for a bid scoring 99% even if the latter would achieve a higher VfM index score.

The disadvantage above can be mitigated by releasing either the budget or a not to exceed price. However, this mechanism does take a simplistic view of the relationship between the non-cost score and our desire and willingness to pay for additional non-cost elements. As a result it is recommended only for non-complex and lower value procurements (Cat C and D). This particularly suits procurements where your market analysis suggests there will be little difference between the bidders' non-cost scores as the bidders will be incentivised to reduce costs to differentiate themselves and win the competition.

lajh87/tessa documentation built on July 6, 2019, 12:06 a.m.