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Technical Evaluation 1
- Thread starter thalathb
- Start date
Compare total cost to purchase (purchase price, sales tax, import duties, freight, insurance). Compare recommended spare parts list with costs. Advantages and disadvantages of each one. Does the more expensive one have an advantage (economic, operational, reliability) over the least expensive one?
Good luck,
Latexman
Good luck,
Latexman
-
1
- #3
Much depends on the target specification and who wrote it.
The target specification is what someone prepared that went out to the vendors for them to provide quotes.
The logical first step would be to technically evaluate each offer against the target specification.
You may find a clear winner but before you go into writing, have a word with your boss about what you have found.
You might be tempted to compare one offer against another but take care, the real control is the target specification.
The target specification may have been deliberately written around a particular vendors offering.
If you didn't write this then you may want to be cautious about what you do.
Nor should you assume that because one offer is technically better than the other that in some way that it is preferable.
Also consider that for any high cost purchases just about everyone will be in on the decision at a level higher than your boss. The Finance Director, Purchasing Manager and so on.
There may be reasons why more than one quote has been sought and it may simply be a stratagem to simulate "competitive bidding" (and some suppliers, if they know they don't have a chance will bid too high or bid at cost plus safety margin just to play silly buggers and make some one suspicious of the chosen offer either because the price is too high or suspiciously low).
The real danger is that Purchasing may make its own choices about which offer to accept based on reasons of its own. If the offers are technically comparable or merely close, what your boss wants may not be what he gets.
If you have any worries about what you find out and how you should present it, you need to discuss with your boss (I wouldn't put anything in writing just yet) and get a heads up. He may know who he wants to go with and may not ell you directly but he might set out the areas in which you should investigate.
What your boss may really want is a "justification" for going with the vendor he has already chosen. He is going to have to defend his choice against the buyers. You work for him.
You might want to discriminate between capital costs and long term cost of ownership but only if it serves.
This may appear a financial concern but its roots are often technical and you might get drawn into this when it isn't going to help.
Many a time the lower cost item gets purchased even though it costs more in the long term; the equipment will be bought from one budget and maintained from another.
Plus buyers like to intervene and "save the company money" (in the short term which is what management like because they think in terms of end of the month figures, not long term).
Some suppliers have "strategic alliances" whereby they represent a single source" supplier and thus it helps purchasing keep their supplier list to a minimum with some overhead cost savings you won't be able to assess from these bids. In practise it can and often does mean that what gets bought is less good that an equivalent item, it may also cost more per item. There may or may not be a net cost advantage to purchasing them.
Don't be too quick to make any judgements about the choices that do get made, there may be a lot of factors outside the technical specification and even outside of the overt commercial considerations.
Best course: remember you work for your boss and he not only has to make a choice, he doesn't want to be reversed by the bid review group.
Take a look and then verbally discuss with him.
Listen carefully and act accordingly.
JMW
The target specification is what someone prepared that went out to the vendors for them to provide quotes.
The logical first step would be to technically evaluate each offer against the target specification.
You may find a clear winner but before you go into writing, have a word with your boss about what you have found.
You might be tempted to compare one offer against another but take care, the real control is the target specification.
The target specification may have been deliberately written around a particular vendors offering.
If you didn't write this then you may want to be cautious about what you do.
Nor should you assume that because one offer is technically better than the other that in some way that it is preferable.
Also consider that for any high cost purchases just about everyone will be in on the decision at a level higher than your boss. The Finance Director, Purchasing Manager and so on.
There may be reasons why more than one quote has been sought and it may simply be a stratagem to simulate "competitive bidding" (and some suppliers, if they know they don't have a chance will bid too high or bid at cost plus safety margin just to play silly buggers and make some one suspicious of the chosen offer either because the price is too high or suspiciously low).
The real danger is that Purchasing may make its own choices about which offer to accept based on reasons of its own. If the offers are technically comparable or merely close, what your boss wants may not be what he gets.
If you have any worries about what you find out and how you should present it, you need to discuss with your boss (I wouldn't put anything in writing just yet) and get a heads up. He may know who he wants to go with and may not ell you directly but he might set out the areas in which you should investigate.
What your boss may really want is a "justification" for going with the vendor he has already chosen. He is going to have to defend his choice against the buyers. You work for him.
You might want to discriminate between capital costs and long term cost of ownership but only if it serves.
This may appear a financial concern but its roots are often technical and you might get drawn into this when it isn't going to help.
Many a time the lower cost item gets purchased even though it costs more in the long term; the equipment will be bought from one budget and maintained from another.
Plus buyers like to intervene and "save the company money" (in the short term which is what management like because they think in terms of end of the month figures, not long term).
Some suppliers have "strategic alliances" whereby they represent a single source" supplier and thus it helps purchasing keep their supplier list to a minimum with some overhead cost savings you won't be able to assess from these bids. In practise it can and often does mean that what gets bought is less good that an equivalent item, it may also cost more per item. There may or may not be a net cost advantage to purchasing them.
Don't be too quick to make any judgements about the choices that do get made, there may be a lot of factors outside the technical specification and even outside of the overt commercial considerations.
Best course: remember you work for your boss and he not only has to make a choice, he doesn't want to be reversed by the bid review group.
Take a look and then verbally discuss with him.
Listen carefully and act accordingly.
JMW
Use a spreadsheet. Provide a column for each bidder. Some proposals include a base and optional offer. List such options as a separate bid.
List the inquiry item number and key specification topics. Mark whether the proposals reflect compliance; and whether such aspects are acceptable or not.
Separately list the commercial issues such that procurement can determine which prices to include - and against which inquiry item. Include delivery times and whether acceptable or not.
Most contractors differentiate spare parts, commissioning components and consumables from the capital cost. You may address this topic if significant understanding that the commercial aspects are often left to procurement or client consideration.
Expand the installation costs if evaluating completely different technologies for the same equipment. For an example I may issue an inquiry for a process hydrogen sulfide analyzer. Perhaps one manufacturer offers a gas chromatograph, one offers a lead acetate paper tape type and one offers a fluorescence technique. This evaluation might address the initial cost and differences in the cost of consumables for a year of operation.
Initial operating costs are dependent upon the contract - and whose money is being spent. This is where a lump sum turnkey project to build a plant would differ from a reimbursible project. Even if the job is lump sum, the consumables might be important if the contract includes the initial startup.
And don't let either bidder buy you lunch from the time that the inquiry is issued until the PO is placed. ;-)
List the inquiry item number and key specification topics. Mark whether the proposals reflect compliance; and whether such aspects are acceptable or not.
Separately list the commercial issues such that procurement can determine which prices to include - and against which inquiry item. Include delivery times and whether acceptable or not.
Most contractors differentiate spare parts, commissioning components and consumables from the capital cost. You may address this topic if significant understanding that the commercial aspects are often left to procurement or client consideration.
Expand the installation costs if evaluating completely different technologies for the same equipment. For an example I may issue an inquiry for a process hydrogen sulfide analyzer. Perhaps one manufacturer offers a gas chromatograph, one offers a lead acetate paper tape type and one offers a fluorescence technique. This evaluation might address the initial cost and differences in the cost of consumables for a year of operation.
Initial operating costs are dependent upon the contract - and whose money is being spent. This is where a lump sum turnkey project to build a plant would differ from a reimbursible project. Even if the job is lump sum, the consumables might be important if the contract includes the initial startup.
And don't let either bidder buy you lunch from the time that the inquiry is issued until the PO is placed. ;-)
If your factory already has one of these pieces of equipment, you'll want input from the folks that run the plant (operators, engineers, maintenance). Buying the same make and model will save on many things (spare parts, training, engineering, maintenance). If your plant does not have one of these pieces of equipment, you'll want to be sure they have input into the purchase process and everyone is aligned. If your boss is not over the plant, beware! You have to work for him, and the plant folks may want the one he doesn't want, and around here, the plant carries a BIG stick!
Good luck,
Latexman
Good luck,
Latexman
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