1. Evaluation by Best Value for Money Methodology
Procurement Division
Evaluation by Best Value for Money Methodology

2. Best Value for Money
Best value principle as per UN Financial Regulations & Rules: 5.12
Due consideration when exercising the procurement function
Move from a principle to a method to apply best value in procurement
Best value in procurement is a practice used world wide in public and international procurement operations
Best value method involves all procurement stakeholders
Requisitioner
Procurement Staff
LCC
HCC
Contract Approving Authority

3. Best Value for Money
Requisition must describe the goods and/or service in terms of functionality, deliverable, business solution
No specification or “how to do it” – Must be outcome based
Procurement under best value for money method is based on pre-established criteria for evaluation with weighted scores assigned to technical and commercial evaluation
Information about criteria is communicated to the vendors at the solicitation phase
Range assigned to technical evaluation varies from % and % is assigned to financial / commercial evaluation
Allocation is determined by market structure, objectives to achieve, professional judgment and risk assessment
Market structure: from Monopolistic to Open Competition (oligopolistic)

4. Best Value for Money
After receipt of proposal, technical evaluation is conducted by a team of staff from the requisitioning office(s)
Based on the pre-established criteria, technical offers are rated with points assigned to each category of criteria
The best technical offer receives the highest score

5. Best Value for Money
For example, technical evaluation of specific equipment may include evaluation criteria such as:
Pass or Fail (ISO certification)
Delivery lead time (15 points)
Fuel consumption rate (20 points)
Warranty conditions (15 points)
Noise level (10 points)
Power capacity output (15 points)
Global support for spare parts (25 points)
Total = 100 pts and will count for 60% of the overall evaluation

6. Best Value for Money
Financial evaluation is conducted by the Procurement Division upon completion of technical evaluation
Lowest priced offer is given the maximum number of points. All other financial and commercial elements receive points in inverse proportion
Total = 100 pts and will count for 40% of the overall evaluation

7. Technical Evaluation (60%) Commercial Evaluation (40%)
Best Value for Money
For example, in the scenario below, company A offering the second lowest price is the best value based on the combination of technical and financial evaluation having the highest total score
Technical Evaluation (60%)
Commercial Evaluation (40%)
Total Score
Score (A)
Adjusted Score (B)
Price (C)
Score (D)
(B) + (D) A
90.0
54.0
$230,000
38.3
92.3 B
70.0
42.0
$280,000
31.4
73.4 C
85.0
51.0
$220,000
40.0
91.0 D
88.0
52.8
$240,000
36.7
89.5

8. Best Value for Money Statistic
In 2004 and 2005, a total of 117 tenders were processed under the best value for money evaluation method for a total contract value of $738 million
- Corrigendum to paragraph 66 of A/60/846/Add.5 will be issued
117 tenders represents approximately 13% of total number of tenders issued in 2004 and 2005
Note of caution:
Difference in contract award value and actual expenses (system contract)
Certain contract value do not expense 100%

9. Conclusion Best value for money is a principle set in FR&R
Best value for money, for the procurement function, is an evaluation methodology based on a systematic and transparent process which maximizes the business solution for the Organization