A generalised price-scoring model for tender evaluation

Abstract

This paper proposes a generalised price-scoring model derived from behavioural features of prospect theory for use in a tender evaluation program. It has the potential to overcome the limitations of existing price models by allowing the withinprice attribute score variations to be adjusted by a preference factor. It improves selectivity and incorporates a preference function that emphasises the evaluator and decision maker’s preference in the lowest price by allowing a price-scoring curve to be derived from the skewness of the distribution of tender prices and the tender participation rate. It identifies prices that exceed the project budget and penalises them. Statistical data from a survey of tender prices was used to specify the model for practical use. Comparison between generic classes of models using price difference and price ratio functions as price gain measures is made to illustrate the model’s general applicability. With the choices made available in this generalised pricescoring model, it is possible to compare the various methods of tender evaluation by computer simulation.