Association of Colleges - Further Education Library of Procurement

Assume a simple specification with a number of non-financial (ie technical, qualitative, environmental and social) criteria and a single purchase price. It is considered that the non-financial criteria of the submissions are four times as important as the price to be paid. Therefore, the weighting of non-financial : price is 4:1 or 0.8:0.2.

Four submissions have been received and each evaluated by the 3 same users.  The score allocated were as follows: 

Non-Financial Evaluation      Firm A        Firm B       Firm C      Firm D
User 1                                           45               42              43             39
User 2                                           40               43              44             37
User 3                                           38               41              42             41
Total score                                   123             126             129           117

Relative Non-Financial score    95.35         97.67         100.00        90.70

Financial – price                       £10,500     £10,350       £11,750       £9,900

Relative Financial score            94.29         95.65          84.26       100.00

Composite calculation    
Non-Financial score (*0.8)             76.28        78.14          80.00         72.56
Financial (price) score (*0.2)          18.86        19.13          16.85         20.00

Final score                                 95.14        97.27          96.85         92.56

Comments:

• The average score is calculated for each firm. The highest score (Firm C) is allocated 100 points and the others given a relative score using the formula [firm’s score/highest score] x 100 eg Firm A is [41/43] x 100 = 95.35.
• The lowest price, Firm D, is allocated 100 points and the others given a relative score using a different formula [Lowest price/Lowest price] x 100 eg Firm A is [9900/10500] x 100 = 94.28.
• The scores are then adjusted using the set weightings for technical and price ie 80:20. So, again for Firm A, the technical score is adjusted to [95.35 x 0.8] = 76.27 and price score to [94.29 x 0.2] = 18.86. These are then added together, giving an overall score of 95.13.
• The highest overall score was 97.46 for Firm B and the recommendation would be to award the contract to Firm B.
• The worked example is available to download by clicking here.
   

The methodology used in the whole life costing model is similar to this simple example, except that it uses four weighted dimensions - financial, technical quality and environmental and social – rather then the two used here – non-financial and price. Further, within each of the four dimensions, the individual criteria are also weighted.
 

Tagging this document or page with a word will add that word to the search terms for finding this page

You can use the above rating system to highlight how useful this content was to you