Procurement Division Evaluation by Best Value for Money Methodology - - PowerPoint PPT Presentation

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Procurement Division

Evaluation by Best Value for Money Methodology

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Best Value for Money

• Best value principle as per UN Financial Regulations &

Rules: 5.12

– Due consideration when exercising the procurement function

• Move from a principle to a method to apply best value in

procurement

• Best value in procurement is a practice used world wide in

public and international procurement operations

• Best value method involves all procurement stakeholders

– Requisitioner – Procurement Staff – LCC – HCC – Contract Approving Authority

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Best Value for Money

• Requisition must describe the goods and/or service in

terms of functionality, deliverable, business solution

– No specification or “how to do it” – Must be outcome based

• Procurement under best value for money method is

based on pre-established criteria for evaluation with weighted scores assigned to technical and commercial evaluation

• Information about criteria is communicated to the

vendors at the solicitation phase

• Range assigned to technical evaluation varies from 40-

50-60% and 60-50-40% is assigned to financial / commercial evaluation

– Allocation is determined by market structure, objectives to achieve, professional judgment and risk assessment

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Best Value for Money

• After receipt of proposal, technical

evaluation is conducted by a team of staff from the requisitioning office(s)

• Based on the pre-established criteria,

technical offers are rated with points assigned to each category of criteria

• The best technical offer receives the

highest score

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Best Value for Money

• For example, technical evaluation of specific

equipment may include evaluation criteria such as:

• Pass or Fail (ISO certification)
• Delivery lead time (15 points)
• Fuel consumption rate (20 points)
• Warranty conditions (15 points)
• Noise level (10 points)
• Power capacity output (15 points)
• Global support for spare parts (25 points)
• Total = 100 pts and will count for 60% of the overall

evaluation

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Best Value for Money

• Financial evaluation is conducted by the

Procurement Division upon completion of technical evaluation

• Lowest priced offer is given the maximum

number of points. All other financial and commercial elements receive points in inverse proportion

• Total = 100 pts and will count for 40% of

the overall evaluation

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Best Value for Money

• For example, in the scenario below, company

A offering the second lowest price is the best value based on the combination of technical and financial evaluation having the highest total score

Technical Evaluation (60%) Commercial Evaluation (40%) Total Score Score (A) Adjusted Score (B) Price (C) Score (D) (B) + (D) A 90.0 54.0 $230,000 38.3 92.3 B 70.0 42.0 $280,000 31.4 73.4 C 85.0 51.0 $220,000 40.0 91.0 D 88.0 52.8 $240,000 36.7 89.5

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Best Value for Money Statistic

• In 2004 and 2005, a total of 117 tenders were

processed under the best value for money evaluation method for a total contract value of $738 million

• Corrigendum to paragraph 66 of A/60/846/Add.5 will be

issued

• 117 tenders represents approximately 13% of

total number of tenders issued in 2004 and 2005

• Note of caution:

– Difference in contract award value and actual expenses (system contract)

• Certain contract value do not expense 100%

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Conclusion

• Best value for money is a principle set in

FR&R

• Best value for money, for the procurement

function, is an evaluation methodology based on a systematic and transparent process which maximizes the business solution for the Organization