The low bid scoring formula, also know as the “Relative to lowest bid score,” is the most used method / formula in the world. It is called relative to lowest bid score because the lowest bid gets the maximum price points and other bidders get proportionally less. E.g. if a price is double the lowest bid, it get half of the maximum price points. It is so much used that many people do not even know that it is not the only formula for evaluating the price component of a bid.
Formula
Mathematically it is written as: Best Value total score = Σ WQ x Qi + WP x Pbest / Pi
WQ = Weight of a Quality criterium
Qi = Quality score of bidder i on a Quality criterium
Σ = sum; multiple scores of multiple weighted Quality criteria are summed; WQ1 x Qi1 + WQ2 x Qi2 + etc
WP = Weight of Price
Pbest = Price of lowest (responsive) bid
Pi = Price of bidder i
The bidder with highest Best Value total score wins
Example
An RFP document will have a criteria and weight table like this:
max points in percent Criteria
60 30% Experience
40 20% Extent of quality control / quality assurance
30 15% Time to completion
70 35% Price score
200 100%
In this case, there are 3 Quality criteria, so Σ WQ x Q i = 60 x Qi1 + 40 x Qi2 + 30 x Qi3
Example: Bidder A scores 40 (of 60), 30 (of 40), 20 (of 30) and submits a price of $ 10,000. Bidder B scores 32, 20, 22 and submits $ 8,000. Bidder A has more points (146) than bidder B (144) and wins.
max points | in percent | Criteria | bidder A | (%) | bidder B | (%) |
60 | 30% | Experience | 40 | 20% | 32 | 16% |
40 | 20% | Extent of quality assurance | 30 | 15% | 20 | 10% |
30 | 15% | Time to completion | 20 | 10% | 22 | 11% |
70 | 35% | Price score | 56* | 28% | 70** | 35% |
200 | 100% | total | 146 | 73% | 144 | 72% |
* 8,000 / 10,000 x 70 (max points) = 56 points ** 8,000/8,000 x 70 = 70 points