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The_Tendering_Process
| The Tendering Process
The Tendering Process - A high Level Guide
Fulfilling a business need requires that the best possible
solution is selected from a host of competing solutions. The
only way to do this is through the process of competitive
evaluation - i.e. the tendering process
The Business Need
A tender is published in response to a perceived business need
that can only be fulfilled by an external party. Business change
and needs are fuelled by changes in the business process (es)
that the organisation employs. It is an accepted fact the
organisation’s business processes are geared towards achieving
the tactical goals and objectives of the business. Note that the
organisation structure serves as a functional division of the
business processes, whereas any technological solution supports
the execution of the process. Organisations should not limit
processes to the capabilities of any organisational or
technological solution. Business change should start with the
Business Processes and move upwards and outwards to include the
organisation structure as well as the technology enablers. The
initial requirement definition should start with the Business
Processes – with a clear goal identified for the business
change. The requirements definition is a two-stage process –
First assess the current situation, then define the desired
situation. Typical examples of exercises to conduct during this
phase include, but are not limited to:
-Business Process Assessments
-Organisational Assessments
-Technology Assessments -Business Process (Re-) Engineering
-Organisational (Re-) Engineering
-Technology Solution Definition
It is imperative to research the services or products available
in the market. Make a list of the requirements common to all of
the services / products. Note that this list defines your
requirements for the product / service. List requirements
uncommon to the products and services. This list of requirements
defines those requirements that are not necessary, but will
benefit your organisation. The results of the abovementioned
exercises should provide you with enough information to develop
a detailed requirement definition. Also include the assessment
of the current situation for later inclusion in the RFP –
bidders may require this information to tailor their solutions
to your specifications, as well as provide more accurate
estimates on time, resources and cost.
Write The RFP
The Request For Proposal (RFP) details the response requirements
as well as the solution requirements. Furthermore, the RFP sets
the basis of all agreements between your company and the vendor,
unless otherwise specified in the formal agreement established
with the selected vendor. The format of the RFP should contain
certain elements on which the vendor must respond. The content
will differ based on the nature of the required solution;
however, each RFP should have common elements. At a high level
the RFP content hierarchy may take the following form:
1.Introduction
The introduction contains the preamble, instructions on how to
read the RFP, as well as a Glossary of Terms. This chapter is
for the benefit of the bidders in order to clarify the body of
the RFP.
2.Instructions To The Vendor
This chapter sets the groundrules that all bidders must obey if
they do not want to be disqualified during the evaluation
process. Note that the most important items to mention here are
the deadlines, procedures for submission, procedures for
clarification as well as other items to which a bidder’s tender
must comply. Also indicate the need for Tender Securities and
Performance Bonds. Clearly indicate what fines will be hefted
against the bidder should he fail to provide the solution within
the scope of this RFP.
3.Your Company Overview
If required, this section defines the current situation
experienced by your company. Be sure to include the results of
the exercises conducted during the Requirement Definition stage
dealing with the subject at hand.
4.Solution Overview
This section defines the high level overview of the required
solution. Be sure to incorporate all the subsequent components
of the entire solution. Note that should you choose to have
multiple bidders for each individual component, everyone will
need to be aware of those components and how they would interact
with the specific solution. Normally it is preferred to have
bidders partner in order to present a single, global and
coherent solution. In such a case one of the bidders should act
as the primary liaison and be held accountable for all
subsequent bid components. It is the prerogative of the bidders
to establish whatever alliances or partnerships are required for
a full solution.
5. Business Profile
This section defines those items on which you will evaluate the
business profile of a prospective bidder. Note that you should
eveluate on numerous fronts, especially if the result of the
tender is a long-term commitment, or of high value. In this
section you request the bidder to supply such information on
business alliances, partnerships, financial stability, market
share, and etcetera. Also to consider are the capabilities of
the bidder to support you after selection, as well as the
infrastructure required to provide the solution.
6. Project Approach & Methodologies
This section requests the bidder to demonstrate the ability to
work in a structured and predefined manner. Typically all
bidders respond positively in this section, but if it should be
that a bidder is not familiar with specific terms and
terminology common in the field of project management, flag this
bidder during the evaluation process for extra attention to
detail. Furthermore, should a bidder indicate that they are
familiar / expert in the requirements you stated, then they
should be able to supply the necessary paperwork to substantiate
such a claim. Also request the necessary Curriculum Vitae of the
assignment team if required. This is useful during the
evaluation process to determine if a bidder has the necessary
skillets within the project scope.
7. Functional, Legislative, & Technical Requirements
This section documents the requirements defined during the
Requirement Definition. Bidders must indicate the compliance to
the requirements. Should a requirement not be met, then this
must be clearly indicated. Some bidders may try to create the
illusion that they support all the requirements. In order to
catch this out, structure your requirements in such a way as to
allow interdependence of requirements, or duplication with
different wording. It may be necessary to obtain the services of
a subject matter expert when writing this section.
8. Financial
This section requests the bidder to define the cost elements
associated with his bid. Ensure that you request a Bill of
Quantities, Individual Costs as well as total solution cost.
Furthermore, also request that the bidder indicate the preferred
payment instruments, expense phasing, and other financial items
that you might require.
9. References
Request that the Bidder provide a set of references to companies
where the same product / service was provided. Indicate that the
bidder should distinguish between industries in which these
companies operate. This will allow you to judge the capability
of the bidder to supply your business needs, as well as have an
understanding of your core business.
Response Templates
It is also a good idea to prepare templates for the bidders to
complete and furnish their responses with. This will place all
bidders on equal footing during the evaluation process.
Furthermore, predefined response formats makes the evaluation a
lot easier than when each bidder prepares a tender according to
their own formats. Ensure that your RFP is kept confidential
during and after preparation. The heart and soul of the
tendering process is its competitive nature. Furthermore, it is
preferred not to involve personnel that has personal
relationships to any of your prospective bidders.
Longlists and Shortlists
The purpose of this exercise is to determine a shortlist of
bidders that will receive your RFP once it is published. The
objectives are simple: Define a longlist of possible bidders and
eliminate the ones unsuitable to your needs until you have a
shortlist.
Define the Longlist
Research the suppliers of the product / service that your RFP
defines. This may be done through networking, prior business
contacts, directories, and the internet.
Define the Shortlist
Define a set of mission critical requirements that the solution
absolutely must support. Eliminate bidders from the longlist.
Typically this is done by comparing the elimination criteria to
their product or service. If even one of the elimination
criteria is not met, then eliminate that vendor.
Request For Information
You have the option to make use of a Request For Information.
This document defines the nature of your request and informs
potential bidders that they are being considered for the
evaluation process. Request bidders to indicate their compliance
status to your elimination criteria. The RFI must make clear
that it is only that – a request for information and not an
invitation.
Invitation To Bid
Send a general correspondence to all potential bidders on your
shortlist. The purpose of the correspondence is twofold – First,
you are inviting the bidders to indicate their willingness to
participate in the tendering process. Bidders must respond via
formal communication indicating their willingness to submit a
tender. Second, bidders are informed of the time and place of
the RFP pickup. It is normal to request bidders to sign a
confidentiality and non-disclosure agreement as a part of this
correspondence. This agreement must be submitted at RFP pickup.
Furthermore, this agreement should contain the necessary clauses
to ensure the return of your RFP copy should the bidder decide
not to participate at a later date.
RFP Distribution
Based on the responses to the Invitation to Bid, define a
distribution list or document. Each bidder must sign, and your
company representative must countersign this document when
bidders are collecting the RFP. This will protect your company
in cases where the bidder claims not to have received the RFP.
Furthermore, the bidder must also submit the confidentiality and
non-disclosure agreement send with the Invitation To Bid.
RFI’s & Bidder Bulletins
It is commonplace that bidders will have questions regarding
your RFP after their review. Ensure that your RFP defines the
procedure for bidders sending RFI’s to your company, the
deadline date (s) for all RFI’s, as well as a common Bidders
Bulletin date for responding to all RFI’s. The purpose is to
collect all information requests, address them, and distribute
the results to all the bidders at once. Ensure that bidder
anonymity is maintained during a bidders bulleting.
Tender Submission
Bidders must submit their tenders in accordance to the rules
lain out in your RFP, unless otherwise indicated in a Bidders
Bulleting. It is prudent not to accept late tenders, as this may
cause discontent under bidders or factions in your organisation.
It is also prudent to have bidders submit tenders in sealed
envelopes, with a different envelope for the Functional &
Technical Bid and the Financial Bid. Do not open the envelopes
until the start of the evaluation process.
Evaluation & Selection
It is preferred to follow a structured methodology during the
evaluation and selection process. The purpose is to evaluate all
tenders in an unbiased manner. Establish this methodology prior
to writing your RFP. Your RFP structure and response templates
must also be built in such a way as to facilitate an easy
evaluation. Another important factor to consider is to obtain a
buy-in and sign-off on the Evaluation Methodology prior to
writing the RFP from all stakeholders. This may very well avoid
future unpleasantness should someone disagree with the selection
following the evaluation and selection process.
Tender Evaluation
Evaluate the financial and technical bids separately. In order
to maintain impartiality, evaluate the technical and functional
tenders first, before opening the financial tenders. It is
prudent to have subject matter experts evaluate the functional
and technical tenders. The process of evaluation takes place
immediately after the proposal submission deadline. The first
round of the evaluation is an elimination round. All the tenders
will be benchmarked against criteria defined by your company
during the writing of your RFP. The result of the elimination
round is a shortlist of vendors. The evaluation and
recommendation process must consider the various factors, for
example:
-Functional & Technical Fit of the Proposed Solution
-Bidder Business Profile
-Bidder Credentials -Etcetera
No single factor must influence the evaluation process - the
defined methodology must be based on robust objective grounds
and must provide an equal opportunity to all participating
bidders. Develop a report on the evaluation and recommendation
of the bidder shortlist / selected vendor. This report must be
signed off by all the stakeholders (in your company) of the
tendering process. The content of this report is confidential
and must not be divulged to parties or bidders other than the
stakeholders in the tendering process. Also, notify those
vendors that were not selected of their elimination and proceed
with your selection. Should it be required, you may employ
further techniques in evaluating the tenders. An example
includes scripted presentations of your short listed bidders. In
order to obtain buy-in within your company, include the general
personnel dealing with the issue at hand on a daily basis within
your evaluation team during the scripted presentations. Ensure
that each evaluator prepares a scoring for each bidder following
the presentation. Scores are defined on the scripts prepared for
this presentation. It is also prudent to assign a person that
will chair the presentation and keep to the schedule.
About the author:
Riaan Pieterse is the CEO and founder of Kerberos Internet
Services CC, South Africa. Having spent a number of years
conducting various consulting assignments in the Far East,
Middle East, Africa and Europe to businesses and governments
alike, Riaan has a solid understanding of the business and
technology issues in today's market.
For more information visit http://www.kerberosdev.net
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