Project Selection Process S080

Blog: Biz-Performance, David Brown

S080 – Prepare and issue ITT

DEFINITION

Prepare, review, agree and issue Invitation to Tender.

SUMMARY

Prepare full Invitation to Tender (ITT) document containing, background, tendering rules, explanation of overall requirement and detailed requirements in Requirement Matrix “question and answer” format.

PATH PLANNING GUIDANCE

This process is normal practice.

DEPENDENCIES

Prerequisites (Finish-Finish):

Requirement Matrix prioritised by criticality (S070)
Short List of vendors to receive ITT (S110)

Dependent procedures (Finish-Start):

Vendor Conference (S170)
Receive and mark responses (S190)

RECEIVABLES

Requirement Matrix prioritised by criticality
short list of vendors identified in previous processes

DELIVERABLES

Invitation to Tender (ITT)

TOOLS

Examples: Request For Proposal (includes questionnaires in appendices)
Examples: Request For Proposal Signoff Letter
Examples: Request For Proposal Review Workshop agenda
Requirements – library of example requirements matrices
Examples: System Requirements Worksheet

DETAILED DESCRIPTION OF TASKS

Terminology

In this document we are using the expression “Invitation to Tender” or “ITT”. Many organisations have their own normal expression for this concept, for example:

Request for Proposal (RFP)
Request for Tender (RFT)
Request to Tender (RTT)

Similarly, the expressions “Proposal”, “Tender”, “Offer”, and “Bid” can normally be taken to mean the same thing, ie a formal offer to supply specified goods or services subject to specified terms and conditions. In many situations, subject to the precise wording used and the legal system that applies, the information stated may be legally binding once accepted by the buyer.

In some cases, the full picture of the client organisation’s needs may not be clear and it may not yet be appropriate to enter into legally binding negotiations. In such cases, it may be appropriate to issue a Request for Information, rather than an Invitation to Tender. (Note that everything takes more time and effort as soon as there is a suggestion that it might be legally binding.) However, this should not be taken as a shortcut as the full detail must be stated and agreed at some stage.

During an engagement it is normal to adopt the form of language most familiar to the client organisation.

Format of the Invitation to Tender (ITT)

The Software Application Implementation Process does not require a specific format of ITT although there are some clear needs concerning its contents. An example format is shown later in this Process description. Where the client has specific requirements these should be followed. This is frequently the case with public sector organisations which have specific rules about tendering procedures.

Objectives of the Invitation to Tender (ITT)

The objectives of the Invitation to Tender (ITT) are:

to give the vendor sufficient understanding of the client organisation and its needs for new systems such that the vendor can effectively evaluate how to respond to those needs,
to define in detail the specific requirements that must be met in any proposed solution,
to elicit details about the vendor’s proposed solution in a way that is

structured such that it is easy to evaluate and compare with the original requirements and against the other vendors’ responses,
precise and specific such that the vendor must give thorough and genuine responses to the client’s needs,
formal such that it can be made legally binding in the event of the vendor being chosen and contracted with,

to gather further information about the vendor and the proposed solution that will help in the decision making process, for example, details about the reliability and quality of the vendor organisation,
to obtain specific quotations concerning costs, timescales, capacity, service levels etc.
to define precisely how the vendor should respond to the ITT in terms of

format,
timescales,
level of detail,
explanations of responses,
incorporation of responses in any future legally binding contract,
clarification of queries,
contacts with the client organisation, consultants or project team,
availability of vendor conference (if applicable).

Contents of the Invitation to Tender (ITT)

The contents of the Invitation to Tender (ITT) should reflect the objectives described above. Typical contents might include:

covering letter,
background to the organisation and its requirement for new systems,
general description of the requirements in the form of a textual overview
tendering rules – details of how to respond etc
request for documentation (consider what type of additional documentation might usefully be requested from the vendor, eg manuals, training schedules)
full Requirements Matrices showing detailed requirements and their criticality (but not the detailed weightings)
tables showing any other key facts required by the vendor, eg volumes, existing equipment and software etc
questionnaires covering any other information sought by the project team to help in assessing the proposal, eg size of the vendor, version numbers for the applications proposed
table of costs – requesting costs in a specified format to cover all anticipated forms of costs including initial costs and recurring costs (such as licence charges and maintenance fees) and ad hoc costs (such as fees for training courses, consultancy or additional documentation).

The ITT often contains confidential information about the client’s business and safeguards should be taken to prevent disclosure to outside parties. This would normally include a statement in the introduction to the ITT concerning confidentiality. It may be appropriate to assert in the covering letter that the vendor accepts the requirement for confidentiality by opening the detailed ITT document.

Vendors must be allowed a reasonable amount of time to respond to the ITT. It is in both parties’ best interests that sufficient time be allowed to address the needs fully and to provide a good quality of response. The time will vary according to the complexity of requirements, solution and ITT. Time must be allowed for the vendor to receive the ITT, to allocate it to appropriate staff, to assess the needs, to calculate the best solution they can offer, to write about that solution, to answer all the detailed questions, to review the response, to print it and to deliver it back to the project team. Altogether, this process takes a minimum of two weeks even in the simplest of cases. Most ITTs will require a month or more to respond to completely and reliably. Where additional contacts or activities are planned during this period (eg Vendor Conferences) further time should be allowed. If the ITT is unusually complex, it may be appropriate to calculate the estimated time based upon the amount of work likely to be performed by each vendor in answering.

The table of contents from the example (Examples: Request For Proposal) is as follows:

Background Information

Introduction

Confidentiality

Business Profile

Technical Profile

MIS Support

System Users

General System Requirements

Overview

Critical Requirements

Implementation Support

Ongoing Support

Growth Capacity

Technical Constraints

Proposal Guidelines

Proposal Content

Proposal Preparation

Prime Contractor’s Responsibility

Proposed Costs

Proposal Distribution and Deadline

Preparation Costs

Evaluation Process

Evaluation Criteria

Evaluation Process

Evaluation Schedule

Contract Negotiations

System Evaluation Period

Unsatisfactory Performance

Appendices

A – Overview of Product and Information Flow

B – Illustration of a Central-Billed Chain-Account Transaction

C – Volume Statistics and Estimates

D – Software Vendor Profile Questionnaire

E – Hardware Vendor Profile Questionnaire

F – Software Profile Questionnaire

G – Hardware Profile Questionnaire

H – Cost Summary Questionnaire

I – System Requirements Worksheets

Automation / use of electronic documents

It is becoming increasingly practical and beneficial to pass some or all of the ITT documentation to the vendors in an electronic format and invite them to return their responses in an electronic format (and also in a formal signed paper version for legal reasons).

The following advantages may be gained by doing so:

the vendors can respond faster with less effort if they are not concerned with the writing of a document from scratch,
the vendor can easily incorporate text and data from the ITT in the response,
the project team can rearrange the responses into tabular form showing the corresponding responses of all vendors alongside each other and alongside the original questions,
the tables of costs can be directly taken into spreadsheets for calculation and comparisons,
the responses can easily be incorporated into other documents, eg issues copied into the Issues List, quotations and tables of costs pasted in the final report or re-used during the subsequent design and documentation of the system – this can be of particular value where the proposal contains diagrams or tables relating to the design of the packages.

Some projects have introduced a form of self-assessment using pre-defined codes for the vendors’ responses. The vendor has to respond with the code that best represents the response to the requirement (for example – fully meets requirement, modifications needed, cannot do it). This allows the results to be read directly into an assessment tool by which the tabulated results can be generated automatically. Whilst this is a practical approach, it can overemphasize the numerical result of the scoring process (see the discussion of this in process S060) and it tends to discourage the provision of detailed responses and explanations.

Getting at the truth

The vendor organisation will normally be trying to do all it can to win the contract. This means that it might distort its response in any way it can provided that it would not be lying. As an extreme example, some vendors might say “Yes” to a requirement when the truth is “Yes – we can do this but we have to modify the program”. In practice, many vendors are honest and helpful, but even the best will try to present the most positive possible picture of their capabilities.

It is important, therefore, that the project team construct the ITT so far as is possible to get at the truth. Here are some suggestions:

Make sure the text explaining the tendering rules specifies unambiguously that full and complete answers with explanations must be given. Either the individual questions should be written to be imperative and specific as to the form of response, or general rules could precede the detailed statements of requirements.
Make sure it is clear that the answers will be incorporated into any ensuing contract.
Word the detailed questions or statements of requirements such that they fully test for the desired results ( eg “can the standard package as proposed …” rather than “can your software …”)
Seek explanations rather than affirmations, eg “how does the package …” rather than “does the package …”

Approach to defining, agreeing and issuing the ITT

The project team would normally prepare a draft Invitation to Tender, based on the results of the requirements work and any further investigations. This should cover in draft format, the topics and considerations listed above. The document will mostly be built from documentation prepared and agreed earlier during the Requirements and Selection segments. If there are any further areas required, it may be possible to base these on the standard Consultants questionnaires and other examples.

As with advertisements (see Process S020) and Pre-qualification (S050), there is a choice of tactics regarding the naming of the client organisation and the address to submit responses to. If the client’s identity has not already been disclosed, the main options are:

issue the ITT in the client organisation’s name – ensures proper attention is paid to the true customer but can involve an unwelcome amount of contact from salesmen,
issue the ITT in the client organisation’s name but with the Consultant as the only named contacts – avoids the problem of too much contact from the salesmen and shows the selection process will be serious and fair; it can, however, distance the true customers from the process,
issue the ITT in Consultant’s name with the client remaining anonymous – completely avoids the problem of unwelcome contacts but makes it difficult to give the vendors a good level of information about the organisation and its needs.

The ITT is a key document which should be reviewed, agreed and signed off by the client organisation. It is common to organise a review workshop to agree the draft contents with key management. See the example workshop agenda (Examples: RFP Review Workshop Agenda).

It may be appropriate to involve the client organisation’s legal staff or legal advisers at this stage to ensure that the ITT requests information and suggests terms and conditions in a way that is appropriate for the organisation. Legal advice is usually time consuming and expensive so this decision should normally be left entirely to the appropriate representative of the client organisation. Some organisations refer all major purchases to the legal advisers whereas others rely on their standard practices and/or the vendors’ terms and conditions. (Legal advisers may also be consulted subsequently when preparing or agreeing the detailed contracts – see Process S300 and S310.)

It is usually a good idea to establish now who will be reviewing the proposals when they are received and requesting that the vendors send the required number of copies. This is much more convenient than trying to photocopy the proposals when they arrive. The request would be included in the tendering rules in the ITT and/or covering letter.

When the final version has been prepared, the client organisation should formally indicate its acceptance of the document before it is issued to potential vendors. This may be in the form of an acceptance letter (see Examples: RFP Signoff Letter) or by getting the key client sponsor to sign the covering letter and thus take direct responsibility for the ITT.

Following the issue of the Invitation to Tender, appropriate steps should be taken to provide adequate support to the vendors, for example, by making available relevant team members or staff to respond to any requests for clarification or further information. To be fair to all vendors any significant additional information which is disclosed as a result should be copied to the other vendors.

It is not normal to enter into other forms of cooperation or contacts with the vendors at this time. For example, demonstrations should not be scheduled until the tenders have been received and social contacts or business entertaining contacts are undesirable.