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Competitive Bidding VS Negotiations

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anfal alhasani

on 21 March 2016

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Transcript of Competitive Bidding VS Negotiations

design by Dóri Sirály for Prezi
Based on the definition of the two methods ,
it would seem an owner would always choose a competitive bid method where the best price is presented.
so, Why is the negotiated method even considered?

First, consider that the competitive "
hard bid
" process allows the owner to pick the "lowest bid" among numerous competing contractors. However, the lowest bid does not ensure the best value.
As we've all heard, "
you get what you pay for
". If a competitive bid process is chosen, the owner should
take great care to analyze the lowest bid to be certain quality, schedules, and scope will not be compromised.
In most cases, the negotiated approach provides the owner with the best value for their money.



Definitions
advantages & disadvantages
Competitive Bidding VS Negotiations
Criteria for use of Competitive bidding

1. The value of the procurement should be high
2. The specifications must be clear
3. There must be an adequate number of potential suppliers in the market
4. The potential suppliers must be both technically qualified and keen to win the business
5. There must be sufficient time available


Criteria for use of negotiation bidding

1.
The purchase involves a significant amount of money or requires an ongoing effort. In these situations,
negotiation may be used in conjunction with a bid.
2. The number of suppliers available is too limited to create competition bid.
3. New technologies or processes are required for which a selling price has yet to be determined.
4. The supplier is required to make a substantial financial investment or other resources.
5. There is not enough time available to seek competitive bids.
6. It is impossible to estimate production costs accurately
7. Price is not the only almost important criterion
8. Changes to specifications are likely

Open bidding & Negotiation should be used when:
prosess
contents
1. Definitions
2.Uses
3.Prosess
4.Advantgs &Disadvantages
competitive bid:

A competitive bid requires invited contractors to provide the best possible price for a defined scope of work. Once all bids are submitted, the lowest bid is typically chosen and the winning contractor signs a contract to begin work. This method enables the owner to compare prices before work begins.



A negotiation:

A negotiated bid is when an owner negotiates a price for services with a single contractor. In this method, contractors do not compete against each other for the lowest possible price and owners are not provided comparative pricing.

1.vision

why do we initiate a tendering process?
2.concept

what is the business solution we look for?
3.request for proposal
comment to the RFP docs and supplier condidates
business acceptance for the RFP
4.supplier qualification
define down selection criteria
5.decision

select the supplier
6.contract
Negotiation with the selected supplier

1.Specifications
2.Request for Bids
3.bidding
4.Reviewing the Bids
5.Awarding the Contract

negotiation

competitive bidding
Advantages:

1.
Lowest bid price selected
2. Simplified bid evaluation method
3. Open for any contractor

Disadvantages:

2. Low Quality of the work
3. Potential risks of project not identified
4. Qualification of the contractor not evaluated
5. Project experiences not used for future referenced


Advantages:
1. Finish very fast
2. The quality is high

Disadvantages:
1. Cost is very high

negotiation
competitive Bidding
Competitive Bidding VS Negotiations
Full transcript