Objective & Subjective Procurement

Rogerio Bonatto Creative Thinking, Procurement, Project Management 2 Comments

Objective & Subjective Procurement

The Problem

When preparing a complex source selection process, it is important to develop the bid evaluation methodology. How to balance objective and subjective criteria?

Despite how rigorous and objective the requirements are, the concept of evaluation implies the existence of a strong subjective component. Subjective, in this case, refers to the personal opinions, feelings and perspectives that influence the decision-making process.

Explaining the Complexity

Presently, it is common to blame poor decisions to subjectivity. Some people seem to confuse the concepts: saying that objective is right; subjective is wrong. Examining the issue, it is useful to analyse the following statements:

  • Subjectivity is present not only during the analysis of proposals, but since preparation of the requirements and the evaluation process;
  • The quantitative approach is normally associated to objectivity, while the qualitative aspect is commonly linked to subjectivity;
  • It is easy to objectively quantify and compare stated performance with requirements, while it is subjective to assess how the differences between two offers will affect the achievement of objectives;
  • On most occasions, there is no direct relation between numbers and results and, for instance, a company can possibly increase sales 100% with only a 20% reduction in price;
  • Risks and external threats and opportunities are very hard to predict in a numeric, factual or objective way.

How to Proceed

Due to the combination of subjective and objective aspects involved in each procurement process, the use of multi-criteria decision methodologies should be considered. Especially when dealing with high-value or strategic acquisitions, a rational decision-making process is critical to choosing the best solution, equipment or supplier.

There are many well-developed methodologies that can (and should) be tailored to the procurement project. Among a dozen options, one of the most interesting is the AHP* model – Analytic Hierarchy Process – that fits well in very complex competition situations.

Conclusions

  • Despite the clamour for objective decision-making, we must remember that mandatory requirements and straight procedures do not create an objective assessment;
  • A selection process is only a way to control and set limits for a subjective evaluation;
  • Subjectivity is inherent the evaluation, which is why the recommendation for rational decision-making is: before you announce the decision, consider all objective aspects, but sleep on it first, and rely on your sense of intuition (trust your gut-feeling);
  • Finally, consider the citation:
“Not everything that counts can be counted, and not everything that can be counted counts.”Albert Einstein(?)

How do you suggest to format the subjective conclusions in a report? Could we find a way “monetise” the result, adjusting the value of each offer? Please, post your ideas in the comments area.

*Suggested reading: “Decision by Objectives: How to Convince Others That You are Right”, by Ernest H Forman and Mary Ann Selly.

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Comments 2

  1. Caro Rogério, procurando um local na sua página do facebook onde pedesse encaixar os meus parabéns pelo seu aniversário, vim bater neste seu interessante artigo.
    Parabéns por ele e, aproveitando a oportunidade, envio também meus parabéns pela data desejando que saúde e sucesso façam parte intensa da sua nova idade! Abraço!!!

    1. Post
      Author

      Caro Comandante Jaguar,

      Grato pelos cumprimentos e pelos comentários relativos ao artigo.
      Tenho alguns outros assuntos em lista de espera para elaboração de artigo. Espero poder, em breve, publicar.
      Forte abraço,

      Rogerio

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