O.R. Involvement in the Allocation of a Major Contract

Abstract

This paper describes North Thames Gas O.R. Department's involvement in the allocation of a contract covering the operational work on the Region's gas distribution network. This network is approx. 12,500 miles (20,000 km) in length and requires constant attention, such as additions, repairs to or replacements of parts of the network. Fifty percent of this work is currently carried out by the Region's own labour, the rest being undertaken by private contractors working under the terms of a contract for a defined period, normally 2 or 3 years. Between 15 and 20 contractors are initially invited to tender for the contract. Their tenders are then evaluated and the contract awarded to a number of the contractors, subject to the Region's financial and operational constraints.

The O.R. Department's involvement with the contract (which has a current value of £20m per year) includes:

1. checking the rates paid under the contract for pricing consistency;

2. devising computer models to evaluate the contractors' tenders;

3. assisting in the allocation of the contract.