For sure, you may be presented with arguments such as:
- We are not able to retrieve and aggregate the quantities.
- We do not have the time to do it.
- We do not see the value of doing it.
However, the problem is how will you do a proper bid analysis without projected volumes? If not including projected volumes it will be a pure price list comparison which could be analytical correct but even worse; business wise completely misleading.
Usually, I compare this with a similar discussion of how to evaluate an RFI. Here, more commonly, there is a better understanding that we need to apply weights at questionnaire and question level in order to calculate a weighted total score of the responses. Because otherwise, what would a score say without the individual weights?
In the exact same manner projected volumes should be viewed as weights on individual items and where high runner items consequently are being priced as such. For low volume items, the price is more or less unimportant from a bid analysis perspective. So in essence, projected quantities are vital:
- To enable a proper bid analysis .
- To convey the “weights” for individual items that tend to run in high quantities, thus ensuring that the most competitive prices are given to these items specifically.
- To avoid a misleading result out of the bid analysis.
A final piece of advice, yes it is true that you probably have to work a bit to retrieve a quantity projection of the items. But be pragmatic and it does not necessarily mean that you have to be very specific in the estimated numbers. Start with an overview and make a percentage distribution between the items. Make a sanity check of the volume distribution together with the historical cost, check the calculated spend vs. historical data. A good guestimate is good enough and the importance is that you can identify the high and low runners.
