Evaluation of Vendor Proposals

Organisations invest time and money in planning and implementing a strategic sourcing programme. But without an objective vendor evaluation process there is a risk of selecting a vendor who may initially appear to offer the most cost effective solution, yet ultimately costs more over the life of the contract.

Hudson & Yorke have identified three key risks that should be assessed for any proposed vendor solution. The Strategic Risk evaluates to what extent the vendor’s solution fits the client’s business strategy. The Delivery Risk assesses the vendor’s capability to transition services from the current mode of operations to the future proposed model. The Commercial Risk evaluates the stability and/or predictability of the contract value and the business case over the life of the contract. It is only by following a thorough and objective evaluation of these risks that clients can be confident in their preferred vendor solution.

"Upon completion of the evaluation of RFP responses, we advocate taking two vendors through to the contract negotiation phase," says Andrew Wilson, Head of Consulting Services at Hudson & Yorke. "We also recommend to our clients that they draft their contract(s) based on their stated requirements and preferred terms, rather than rely on vendors’ generic terms and conditions. It is essential that the evaluation process imposes an objective appraisal of the commercial terms, the technical solution and the delivery model."