View Single Post
  #5  
Old 12-16-2013, 07:42 PM
ahrani82
Guest
 
Posts: n/a
Default

I imposed the same logic to our cost savings calculation.

Cost saving = average of Evaluated bid prices - Resulting Contract Price

Evaluated bid prices = adjusted bid price after clarifications, negotiations and risk assessment
Resulting Contract Price = negotiated final value with the recommended bidder.

It is based on the simple logic that bids are a reflection of market price for goods/services. This would not apply to fuel or vehicles or other commodities or services that published unit rates are readily available.
So, if the bids prices viewed as market prices, then the average of bid prices are deemed as the market price.

However, if commodity you are buying has a set market rate, such as MSRP for vehicle, than I would calculate cost savings from MSRP since without tendering or negotiations, that is the set price for the goods.

Hope I have clarified how I perceive cost savings in supply chain as deductions obtained from tendering process.
Reply With Quote