Choosing the most economically advantageous tender using a multi-criteria decision analysis approach

Abstract

Purpose: The purpose of this paper is to propose and test a multi-criteria decision analysis (MCDA) approach based on an additive value function (AVF) to select the most economically advantageous tender under European Union public procurement regulations. Design/methodology/approach: A case study in which the AVF tender evaluation model is constructed by the procurement personnel and the results of the original, real-life public procurement evaluation model are compared to those discovered by the MCDA approach. Findings: The AVF model captures the preferences of the procurement authority in a more reliable and transparent manner than commonly used evaluation models based on scoring formulas. Practical implications: While commonly used in public procurement, relative scoring formulas can neither present the preferences of a procurement unit accurately nor do they enable bidders to draft bids according to these preferences. The proposed MCDA approach can achieve both. Originality/value: The contribution of this paper is threefold. First, the successful construction of the AVF model with procurement personnel is introduced. Second, the model is used in an actual, real-life case. Third, a thoughtful comparison of features, structures and results of the AVF model and the evaluation model using scoring formulas is presented.