Once you have made the necessary adjustments so each proposal can be fairly compared, should you select the lowest, the middle?  We believe that neither is the right answer.  Instead, we recommend evaluating each proposal based on several factors of which the price should be one.

The selection methodology we recommend is to decide first on which criteria you are going to base your decision.  Then you will want to establish the importance of each criteria.  Finally, you can generate a score for each proposal based on the criteria and their importance.

Cost Criteria

First, decide the criteria you will be using.  Cost is clearly one criteria but other criteria might be quality of verified work, length of time in business, closeness to project location (the assumption is that the closer a contractor is geographically to a project the more they will be able to supervise for less cost), ease of communicating to the contractor, ability of the contractor to write clearly (here we are referring to their proposal and how easy it was for you to understand) and any other criteria that you think important.

Criteria Importance

Next, you want to establish the relative importance for each criteria you have identified.  It is not important that these values for each criteria add up to anything just that the values you give each criteria are relative.  For example, assuming cost is the most important, you might decide to give the proposal with the lowest cost a value of 20 and then the next lowest proposal a lower value based on the difference in cost.  So if the lowest proposal was $50,000 and the next lowest $52,000, you might decide to lower the value by 1 per $1,000 so this second proposal would have a value of 18. Now you would assign values to the next most important criteria, perhaps verified quality.  May be quality is important but not as much as cost so you decide that quality is only about half as important as cost.  With that established, you can give the proposal from the contractor with the highest verified quality a value 10.  In this illustration, let’s assume that the proposal with the lowest cost did not have verified quality so that proposal has a value of 0 for a total score of 20 (20+0) while the other proposal with verified quality but higher cost ends up with a score of 28 (18+10).  So in this illustration, with only these two criteria, you would select the higher priced proposal because of the verified quality.

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