Correcting the fee-technical score variability imbalance in two-envelope fee tendering

Abstract

Consultants' fees and technical submissions in two-envelope fee tendering are usually converted to scores. The fee scores and technical (quality) scores are then multiplied by predetermined weightings and aggregated. To preserve the desired influence of the predetermined weightings, the fee score and technical score variability differences need to be balanced, otherwise, when aggregated, one variable will end up dominating the other variable. Currently, such adjustments are not undertaken in the popular two-envelope fee tendering models. It seems that in many cases the consultant selection becomes biased in favour of the lowest fee rather than the quality. Important influences that contribute to the fee-technical score variability imbalance include suicidal fees and non-serious fees (which increases fee variability) and similar size consultant firms with similar experience and workload levels offering similar, if not identical, services (which reduces technical score variability). This paper offers four alternative approaches to the correction of the fee-technical score variability imbalance. If the client is able to distinguish between suicidal, serious and non-serious fees, then it is suggested that first the consultants submitting suicidal and non-serious fees should be disregarded. A normalization approach (in which the consultant's technical and fee scores are re-scaled to fall between unity and zero) should then be applied. If the client is unable or unwilling to distinguish between suicidal, serious and non-serious fees then aggregating on the basis of the consultants fee and technical score rankings appears to be the best method out of the three remaining approaches.

Keywords:

• Bidding
• Consultant
• Technical Score
• Tendering
• Two-ENVELOPE
• Variability