The document discusses how metrics are integral to the tendering process and emphasizes the importance of a best value approach over traditional cost-based methods. It highlights the complexity of cost estimation, the role of expert involvement, and the necessity of understanding unique project requirements. By focusing on effort-related and performance metrics within an organization's DNA, it advocates for a shift towards value-based assessment in tendering.

1. Estimation in the tendering process
How good are metrics embedded in your DNA
Frank Vogelezang
Manager Pricing Office

2. Storyline
Tender metrics
Best Value Approach
Organisational

3. Tender metrics
The fastest and shiniest convertible for the lowest price

4. Tender
 Convertible
 6-cylinder engine
 > 300 horsepower
 0-100 km/h < 6 seconds
 Top speed > 250 km/h
 Light cast-alloy wheels
 Traction control
 Vacuum-assisted ventilated disc brakes

5. Metrics

6. Metrics : for a car, it’s simple
 About 2,000 parts to assemble
 Some time at the assembly line
 Shipping
 Tax
 Margin
 Selling price

7. Simple arithmatic?
 Parts from over 100 suppliers
 Assembly cost are different if you build more
 Shipping cost are different when you ship more
 Tax
 Margin depends on the brand value
 More experience per euro?

8. And now, IT
 No standard parts list
 No simple assembly plan
 Human labour determines cost
 Conditions are unique
 Customer is involved
 Requirements will change
 Uncertainty margin
 Selling price

9. IT only works well when it is in your DNA
Volume estimate
Volume estimate
Solution
Confront
&
Compare
Cost
Calculation
Staffing / Partnering
 Market standards (FPA, Service catalogs)
 Comparable customers and contracts
 Estimation tooling / Calculation models

10. But still

11. Best Value Approach
Offering solutions instead of piles of paperwork

12. = State your goals, not your specs
= Find an expert to do the job
= That’s what makes the expert an expert
= Use decisive metrics
= Don’t control the expert, minimize risk
Best Value Approach
 Minimize the need for decision making
 Understand why things happen
 Be able to predict future conditions
 Minimize the need for data
 Optimize results

13. Best value tender
 When it’s good weather
 Ride in the open air
 Dutch weather
 Dutch roads

14. How to identify an expert
You don’t need all the information to come up with the right answer
W L K T V R K P N Z
N D V N T ?
M R K
R K
W E L K A U T O V E R K O P E N Z E
A A N D E O V N T ?
M E R K
E R K A

15. Organisational DNA
What does Best Value do to your metrics

16. What does that mean for your metrics
 Effort-related metrics are only a small part of the story
 Metrics based on the value of IT solutions rather than the cost
− Reduced purchase cost for supplies
− Increased number of unique visitors to online presence
− Higher conversion rate for online retail
− Increased usage of data portals

17. Performance metrics out of the window

18. You allways need core metrics
 Amount of Work
 Productivity
 Effort
 Time
 Quality

19. That’s only possible if they are in your DNA