Automating Tendering Processes with Web Services: A Case Study on Building Construction Tendering in Hong Kong Patrick C. K. HUNG Faculty of Business and Information Technology, University of Ontario Institute of Technology Dickson K. W. CHIU Senior Member, IEEE Dickson Computer Systems Hong Kong NG, Lick Lun Nick Lai Sau Chan Dept. of Computer Science Hong Kong University of Science & Technology {nickng,

TPMGDN Introduction Tendering processes involves lots of business procedures Internal integration: communicate with other systems such as supply, order, purchase, procurement, account, … External integration: need a framework for all stakeholders to follow to enable application-to-application communication over Internet Current manual or only semi-automated Involves both humans (esp. decision) and systems Important for enterprises and government suppliers

TPMGDN Case Study in Building Construction Problems of tendering done by hand late submission of the tender booklet calculation errors by hand / spreadsheet Benefits of automatic e-tendering tenderer make final decision of the price in almost the last minutes update price of the material from ERP and external sources Client easy generation of the tender report after electronic submission Benefits of web-services Different tenderer may have different database and system need to use an open standard for the data exchange

TPMGDN Typical e-tendering system

TPMGDN Typical tendering process for building construction

TPMGDN Tendering Business Processes

TPMGDN Request to Participate (RTP) MessagesDescription Request to participate Sent by a supplier to the CA to request participation. Contains all required information. RTP ResponseSent by the CA to a supplier in response to a previous request to participate to acknowledge receipt of RTP.

TPMGDN Invitation to Tender (ITT) MessagesDescription Short-listing ResultNotification of rejected suppliers by the CA of the result of the short-listing process. Invitation to tenderSent by the CA to a supplier in order to invite it to submit a tender, after a previous request to participate.

TPMGDN Tender Submission (TS) MessagesDescription TenderOffer sent by the supplier to the CA. A tender may take the form of an electronic catalogue. Reception ResponseSent by the CA to a supplier in response to a tender submitted. It acknowledges the receipt of the tender submitted.

TPMGDN Tender Award Notification (TAN) MessagesDescription Award NoticeSent by the CA for official publication using the corresponding standard form. Award ResultNotification of the tenders by the CA of the result of the awarding process.

TPMGDN System Architecture The pricing system can use e-Negotiation approach or traditional method

TPMGDN Data Flow Overview Client Tenderer Tender-out Supplier Sub- contractor Database Call quotation Subcontract Tender-in … … … Sub- contractor Supplier … Price information

TPMGDN Data Conceptual Model

TPMGDN Web Service Implementation Overview

TPMGDN SOAP Message Embedded in HTTP Request POST /Tender HTTP/1.1 Host: Content-Type: text/xml; charset="utf-8" Content-Length: nnnn <SOAP-ENV:Envelope xmlns:SOAP-ENV=" SOAP-ENV:encodingStyle=" HKUST English Cash

TPMGDN SOAP Message Embedded in HTTP Response HTTP/ OK Content-Type: text/xml; charset="utf-8" Content-Length: nnnn <SOAP-ENV:Envelope xmlns:SOAP-ENV=" SOAP-ENV:encodingStyle=" true

TPMGDN Example Decision Metrics Metrics M i Score X i Weight W i M 1 : CostX=0: >=3000 X=1: 2000<=M1<3000 X=2: 1000<=M1<2000 X=3: 0<=M1< M 2 : LocationX=0: Other Countries X=1: US-Based X=2: INDIA-Based X=3: CHINA-Based 1 M 3 : ScaleX=0: Small-Scaled X=1: Middle-Scaled X=2: Large-Scaled X=3: Enterprise-Scaled 2

TPMGDN Example Weighted Average Score TendererMetrics StatusScoreWeighted Average Score SiSi MiMi XiXi S1S1 M 1 =2,500 M 2 =INDIA M 3 =Enterprise X=1 X=2 X=3 {3(1)+1(2)+2(3)}/6 =1.83 S2S2 M 1 =8,500 M 2 =US M 3 =Enterprise X=0 X=1 X=3 {3(0)+1(1)+2(3)}/6 =1.17 S3S3 M 1 =2,100 M 2 =CHINA M 3 =Middle X=1 X=3 X=1 {3(1)+1(3)+2(1)}/6 =1.33 S4S4 M 1 =1,580 M 2 =JAPAN M 3 =Enterprise X=2 X=0 X=3 {3(2)+1(0)+2(3)}/6 =2 S5S5 M 1 =2,900 M 2 =UK M 3 =Large X=1 X=0 X=2 {3(1)+1(0)+2(2)}/6 =1.17

TPMGDN Example Ranking Rank RTenderer S i Weighted Average Score Top-3 Decision 1 st S4S4 2Accept 2 nd S1S1 1.83Accept 3 rd S3S3 1.33Accept 4 th S 2, S Reject

TPMGDN Exception Handling Web Services Tender Addendum Consistency of the tender document Bulk discount Additional information provided by tenderer Withdraw of tender

TPMGDN Summary Digitalization of the tender document Process and data integration Timely actions Reduced human effort Web service based architecture with the SOAP messages exchange during tendering processes Typical example application scenario and data model Establish cross-organizational collaboration via existing Internet standards supporting both human Web-based and application programmatic interactions smaller business partners with varies degree of automation event passing with the publish-and-subscribe paradigm facilitate exception handling

TPMGDN Future Work Further integration studies internal integration of tendering processes with ERP / DSS external integration with e-marketplaces and brokers sub-contracting Similar integration work can be done for other related business processes in enterprises Managing the complexity of Web service composition Further development methodologies Monitoring and alerts Further decision models

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