Source Selection Analysis:The project manager and team must make decisions
around what criteria will be considered when selecting a vendor to
perform some of the project work.
Since competitive selection methods may require sellers to invest a large amount of time and resources upfront, it is a good practice to include the evaluation method in the procurement documents so bidders know how they will be evaluated.
Commonly used selection methods include the following:
- Least cost. Used for standard products or service or deliverables where well-established practices and standards exist and from which a specific and well-defined outcome is expected, which can be executed at different costs.
- Qualifications only. Used where the value of the procurement is relatively small. The buyer selects the bidder with the best qualifications, experience, expertise, specialization, and references.
- Quality-based/highest technical proposal score. The supplier submits proposal with both technical and cost details and is then invited to negotiate the contract if the technical proposal proves acceptable. Using this method, technical proposals are first evaluated based on the quality of the technical solution offered. The seller who submitted the highest-ranked technical proposal is selected if their financial proposal can be negotiated and accepte
- Quality and cost-based. The quality and cost-based method allows cost to be included as a factor in the seller selection process. In general, when risk and/or uncertainty are greater for the project, quality should be a key element when compared to cost.
- Sole source. The buyer asks a specific seller to prepare technical and financial proposals, which are then negotiated. Since there is no competition, this method is acceptable only when properly justified and should be viewed as an exception.
- Fixed budget. The fixed-budget method requires disclosing the available budget to invited sellers in the RFP and selecting the highest-ranking technical proposal within the budget. Because sellers are subject to a cost constraint, they will adapt the scope and quality of their offer to that budget. The buyer should therefore ensure that the budget is compatible with the SOW and that the seller will be able to perform the tasks within the budget. This method is appropriate only when the SOW is precisely defined, no changes are anticipated, and the budget is fixed and cannot be exceeded
Previous edition of PMBOK had a simple listing of criteria:
- Understanding the need
- Life-cycle cost
- Technical capability
- Risk
- Management approach
- Technical approach
- Warranty
- Financial capacity
- Production capacity
- Business size and type
- Past performance
- References
- Intellectual Property rights
- Proprietary rights
