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A comparative study of formulas for choosing the economically most advantageous tender

Przemyslaw S. Stilger (Manchester Business School.)
Jan Siderius (Member of the EU Expert Group on eProcurement.)
Erik M. Van Raaij (Rotterdam School of Management and institute for Health Policy and Management, Erasmus University.)

Journal of Public Procurement

ISSN: 1535-0118

Article publication date: 1 March 2017

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Abstract

Choosing the best bid is a central step in any tendering process. If the award criterion is the economically most advantageous tender (EMAT), this involves scoring bids on price and quality and ranking them. Scores are calculated using a bid evaluation formula that takes as inputs price and quality, and their respective weights. The choice of formula critically affects which bid wins. We study 38 such formulas and discuss several of their aspects, such as how much the outcome of a tender depends on which formula is being used, relative versus absolute scoring, ranking paradox, iso-utility curves, protection against a winner with an extremely high price, and how a formula reflects the weights of price and quality. Based on these analyses, we summarize the (dis)advantages and risks of certain formulas and provide associated warnings when applying certain formulas in practice.

Citation

Stilger, P.S., Siderius, J. and Raaij, E.M.V. (2017), "A comparative study of formulas for choosing the economically most advantageous tender", Journal of Public Procurement, Vol. 17 No. 1, pp. 89-125. https://doi.org/10.1108/JOPP-17-01-2017-B004

Publisher

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Emerald Publishing Limited

Copyright © 2017 by PrAcademics Press