When approaching the market, it is a given that a clear specification should be developed describing the requirements. To make evaluating the responses from vendors easier, it is common to break those specifications down into a set of response criteria, driving the vendors to answer individual aspects of the requirements directly. Reviewing the criteria, we might find something like:
2.1.34 Users should be able to select a preferred colour background and customise the interface design
3.2.12 The database should have the capacity to handle input from at least 30 concurrent users
Looking at those two criterion, clearly the ability to handle the volume of transactions is far more critical to success than keeping the users happy with the colour of their interface. This is where the various weighting models kick in to allow an emphasis in score allocation toward the more mission critical aspects of the requirements. The question here is, should we tell the market what our internal weightings are?
Ignoring that in some cases it is policy, or even legislated, to include or remove the weighting information, lets just look at the advantages of each option.
Exclude Weightings
So why would you hide the information? One reason is to buy time to finalise the weighting model. So long as the separation between the proponents and the team defining the weighting of each criteria is maintained, and the weighting model is finalised before the offers are opened, then there has been no compromising if the equity of the process. Where the project is on a tight timeline, this alone can buy you precious days, allowing the request to be issued to the market while internally continuing to make sure the weighting model will identify the key items that will drive a success outcome, and also identify the nice to haves and ideal solution items.
Another reason is knowledge is power, or more importantly, asymmetry of knowledge is power. What this means is the party with the most knowledge generally has the best bargaining power. In some cases, developing and maintaining an asymmetry if knowledge is a critical tactic in positioning the buyer for negotiating the deal. This is particularly true where the buyer inherently has less power than the seller. You may include some criteria in the offer documents specifically to provide a lever that you are willing to let slide so you can pull on a more critical lever to add value. For instance, looking at our criteria, a vendor may well assume that the solution may be accessed by vision impaired users who require the ability to select high contrast colours or maybe avoid certain colours. In such a circumstance, the ability to configure the interface becomes more mission critical.
Without visibility of the weightings, the vendors have to assume all criterion are critical and respond accordingly. This is the most frequently espoused reason for withholding the details of criteria weighting. If a vendor knows a requirement is only worth 2% of the final score, why put any effort into responding to it? A response to a criteria that is vague and lacks information could cause issues with separating a close scoring group of offers, and if we consider later negotiation, may reduce the ability to effectively plan the wriggle room on a given requirement.
Include Weightings
What then is the benefit of giving the vendors visibility if the weightings? If you are dealing with a high profile, highly competitive market that has a history of challenging outcomes and causing disruptions through complaints about the process, then the more clear and transparent your process of evaluation is, the less ammunition the proponents will have for disrupting the process with legal or political action. When I say political, I include contacting board members or senior management in a private company, which can have the same delaying impacts as politicians getting involved in the public sector. All it takes is for a disgruntled proponent to place a complaint with senior management, or the local member of parliament int he public sector, and the project can be delayed by the need to respond to the questions passed down before proceeding.
Another, and far more important reason for including the criteria weighting in the tender documents, is that sometimes it helps the clarity of the specifications to place emphasis on the big ticket items. Do I really care about the extensive details of how the user interface can be customised, or would I be happy for them to state “yes”? That gives them more time to focus on what I do care about and that is the capacity to expand the number of users. If the vendors know that they will not win if they don’t have key functionality, and provide a competitive pricing for it, then that can only benefit the quality of the responses.
Publishing weightings can also get you some easy savings in some situations as well. If the market is highly competitive, particularly if there is a down turn in demand for the product or services required, putting the offer out with a 30% weighting on price sends a very clear message to proponents and can result in significant cost reductions if your requirement is desirable enough to the market. However, when using price weightings higher than 20%, to prevent an under qualified offer undercutting the field by submitting a very low price, you should implement a two stage evaluation process, shortlisting first based on capability before moving to the commercial evaluation. For this to work and provide the greatest benefits, you must also have all the ingredients required to establish and maintain competitive tension in your procurements.
Conclusion
Inclusion or exclusion of weightings information is not a one size fits all option that should be enforced through legislation or policy. It is instead, another tool in the procurement professionals kit to be considered carefully with an understanding of the requirement, the market and is part of the overall strategy for how the best value for money can be extracted from the available suppliers.
What is the policy or common practice in your organisation? Do you have a personal belief or conviction on this subject? Then why not head over to the forums to share and be heard.