Once the quotations are made and recorded, it is important for both parties (the buyer and the seller) to know how their quotations will be evaluated. Since, so many quotations are received from various clients, thus, it is not easy to choose one of those and fix the deal immediately. Hence, these quotations are to be evaluated effectively and without any errors. Also, the evaluation is helpful for both parties and not just the vendor who receives all the quotations. The need for evaluation for the buyer side is to get an idea for its probability to get the deal fixed. On the other hand, the supplier has to evaluate to finalize one dealer out of many. Thus, the purpose of Quotation Evaluation is to know which party offers the lowest price with the required specifications along with terms and conditions of the supply of material specified in the deal document, and to compare different offers or quotes.
Guidelines to Consider Quotation Evaluation
To determine if an offer is acceptable or not, non-price related factors like the ones listed below are usually considered. And finally the one with the lowest acceptable offer gets selected. Generally these factors are: compliance with the technical characteristics and specifications, international standards, and the technical norms and policies. Also, compatibility of the material with existing equipment / machine and standardization plans is also taken care of. Compliance with the specified delivery schedules, comparison of samples from vendors, payment terms and conditions, warranties, guarantees, availability and accessibility of spare parts after-sales service along with training are also the possible factors behind a Quotation Evaluation. Further aspects for Quotation Evaluation include operating and maintenance costs. Lastly and broadly one considers capability and capacity, financial conditions and performance of vendor in the industry.
Technical Aspects for Quotations Evaluation
The criteria used for Quotation Evaluation is termed as Request for Quotation i.e. RFQ. This will assess the strengths and weaknesses of each quotation relatively with others. If you know your quotation and its evaluation, you will be able to focus on your efforts on these specific areas which have higher weight-age for evaluation of quotations.
Firstly your quotation must comply with the conditions specified for participation and other required terms or policies. If it doesn’t satisfy, you are simply eliminated from the list for further Quotation Evaluation.
Next comes the non-cost evaluation which is specified in the RFQ document. It may include the technical merits, the capacity and capability of your business to fulfill technical competence, financial stability and experience which is relevant to the industry or the business. It can be anything from relevant knowledge and appropriate skills, availability of chief personnel, assurance of quality, and the risk factors, both business and financial.
Value for Money
Last component for Quotation Evaluation would be the assessment for value of money. But do keep in mind that this never means choosing the cheapest price straight away. For this, the contracting agency weighs up the benefits of each quotation against its costs i.e. cost-benefit analysis. This assessment also considers wider benefits to the location or the state, i.e. providing employment opportunities.