How to relaunch your tendering system
From the June 2016 print issue.
Do you feel trapped in a tendering time warp, working in an institution that clings to technological platforms created in the 90s? Are you worried about keeping up with time pressures that seem destined to double between now and 2020? You are not alone. Fortunately, as this article explains, leading-edge innovations in tender call drafting, bid evaluation and price negotiations are taking the art of tendering to new heights of speed and precision.
Most organizations remained mired in outdated tendering templates that work on the same “fill in the blanks” logic of the standard form documents we once rolled into typewriters. Word processing software, high-powered computers and shared drive technologies only serve to obscure the fact that tendering templates remain dumb documents that require manual data entry, produce drafting gridlock and create version control chaos. These problems are made worse when your drafting team realizes mid-stream that they started drafting in the wrong template and now have to start over.
Smart templates that talk to drafting software represent a quantum leap in RFX drafting speed and precision, helping end-users develop project blueprints, automatically identify appropriate tendering templates, and assign drafting roles to different project team members. Smart templates take us light years ahead of current drafting procedures by enabling team members to upload concurrently their content to facilitate coordinated document drafting and editing and allowing for final document assembly with the push of a button.
Current bid evaluations tend to drag on for days. Evaluation team members get buried in a mountain of paper, inputting individual scores in spreadsheets, sitting through lengthy group scoring debates and waiting for someone to manually tally their individual scores into a final scorecard. Manual evaluations are also prone to high human error rates and are associated with poor recordkeeping practices. In recent years, these evaluation procedures have become easy targets for audit reviews and legal challenges. The delays and risks are compounded when projects get more complicated and evaluation teams get larger.
Automated evaluation platforms help accelerate the evaluation process and enhance its defensibility in three key ways. First of all, electronic evaluation platforms accept online bid submissions and provide evaluators with direct access to those bids. This reduces the risks created when bids get lost in traffic jams and have to be rejected as late and also eliminates the mountain of paper created by physical bid submissions and evaluations. Secondly, automated evaluation platforms allow individual evaluators to enter their scores and notes into a system that maintains a reliable audit trail. This enhances the defensibility of the evaluation process. Thirdly, automated evaluation platforms quickly identify areas with a significant divergence in scores. This helps evaluators quickly identifying potential problems areas, which reduces the risk of evaluation errors and cuts group evaluation times down from days to hours.
When it comes to price negotiations, best-and-final-offer tendering formats represents the current state of the art. Two or three short-listed finalists engage in concurrent negotiations with the purchasing institutions and are typically given about a week to submit their final price offers. These final offers are then scored to identify the best bid. As cutting edge as this may appear compared to a “one-shot” bidding process, two-stage tendering remains a primitive first step in the evolution to electronic reverse auctions.
In electronic reverse auctions, multiple finalists (not just two or three) can compete head-to-head in real-time online auctions. These finalists are given multiple opportunities to bid down their prices to beat their competitors. In addition to price only competitions, purchasing institutions can pre-load the technical scores of finalists into the system so that each bidder knows in real-time exactly how much it needs to lower its price to overtake the total score of its competitors.
Rather than waiting a week to receive and evaluate a final slow motion bid, electronic reverse auctions enable multiple bids from a larger group of competitors and convert the process from days to minutes. This results in significant price improvements over dramatically accelerated timeframes and allows the purchasing organization to declare its winners in real-time.
It doesn’t take 20/20 vision to recognize that time pressures will continue to accelerate at unprecedented rates in the next few years. To keep up with the pace of change, purchasing institutions need to invest in the technological innovations that will enable them to take tender call drafting, bid evaluations and price negotiations to the next level of speed and precision.