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Old 12-16-2013, 08:01 PM
ahrani82
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Hi,

The hyperlink is broken so I cannot look at blog.

When we conduct price/cost analysis for non-competitive purchases, we require more involvement from subject matter expert.

When we go competitive and have values to compare to competing bidders, non technical expert (supply chain personnel) can analyze if values are fair and reasonable.
For example, if we are buying a highly technical customized equipment, then I would have not much understanding of how difficult it is to create one. But if I were to compete the requirement, then I can look at several bid prices and see which bid prices are within the reasonable range.

However, if we do not compete, it could be one of two cases.

Case 1: Historical value or market value available

Using the historical value or market value, analyze how the single bid price differ from those values. Support change from values by assessing possible contributing factors for cost increase/decrease. For example, if bid price is 5% more than historical value one year ago, then look at CPI or other trends to see if there are indicators of overall cost increase.

Case 2: assume that there are no historical value or market values set
Require input from a subject matter expert to answer some of possible questions to create our own estimated value of the goods/services.

- Does this contain IP that require patent? If so, how much is the value?
- How many engineering hours does it require to develop such machine?
- If they are using pre-manufactured parts, list if parts and quantity. (parts prices will be researched)
- Does this require speciality facility to build? If so, what are daily usage cost of such facility?

In my opinion, sole sourcing is more challenging work for supply management personnel because we are still responsible for procuring goods/services at the best price possible regardless of the decision to sole source.
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