Discover each of the markedly different formula-based approaches you can use to calculate overall bid scores that rank your bids and identify the Most Advantageous Tender (MAT).
With over 20 years’ experience in delivering best possible outcomes, our expert services team are on hand to help you select and prove through testing the best approach for your project.
Find out how to calculate:
- Value for Money (VfM)
- Weighted Value for Money (WVfM)
- Willingness to Pay (WTP)
- Relative (Percentage) Assessment
It’s important to recognise that different mathematical formulas combine the quality scores of bids and bid prices differently.
In certain scenarios, such as when scores and prices are close, it is possible that one formula may select a different winning bid than another formula, even when all other conditions in the competition are the same.
Choosing the right formula for any competition is therefore a key decision that needs to be tested, as it can be material to the outcome.
Selecting the right formula for your competition is a critical decision.
Through rigorous testing, you can ensure that the chosen approach aligns with your project’s objectives and helps you make informed decisions that lead to successful procurement outcomes.
Our experienced team is here to assist you in navigating this complex process and optimising your strategy for maximum success.
Value for Money (VfM) Index
Tender MEAT Score = Quality Score (%) ÷ Price or Cost (£)
VfM Rating of 0.375 = 75 ÷ £200k
This formula (or its reciprocal) is widely used in public procurement across the European Union, North America and by some UK Government Departments. Also known as ‘bang per buck’.
Note: Quality includes all non-cost scored award criteria and is typically scored as a percentage out of 100%.
Weighted Value for Money (WVfM) Index
Tender MEAT Score = Quality Score (quality weight/price weight) ÷ Price or Cost (£)
WVfM Rating of 3.248 = 75(60/40) ÷ £200k
This formula is an adaption of the Value for Money Index formula (above), that allows price/cost or quality to be weighted, by raising the quality score to a power greater than 1 (i.e. favouring quality) or less than 1 (i.e. favouring price).
Note: In this example the quality/price ratio is 60:40 (i.e. 60% weighting on quality and 40% weighting on price). As with the 1st formula, quality is typically scored as a percentage out of 100%, irrespective of the % weight attributed to its importance.
Willingness to Pay (WTP)
Tender MEAT Score = Price or Cost (£) − (Quality x ‘b’)
Cost Rating of £50k = £200k − (75 x £2k)
RVfM/WTP has been successfully used on procurements valued from £5M to £5bn.
Note: ‘b’ is the Authority weighting or multiplier chosen to favour price or quality, sometimes referred to as the ‘Willingness to Pay Gradient’.
Relative (Percentage) Assessment
Tender MEAT Score = (lowest bid price tendered ÷ individual bid price tendered) x price weight (60%) + quality score x quality weight (40%)
Characterising the four MEAT formulas
| Nature of the formula | Formula can be weighted | VfM relationship between cost and quality | |
|---|---|---|---|
| Value for Money Index | Absolute | No | Linear |
| Weighted Value for Money Index | Absolute | Yes | Non-Linear |
| Willingness to Pay (RVfM) | Absolute | Yes | Linear |
| Relative (Percentage) Assessment | Relative | Yes | Non-Linear |
MEAT jargon buster
Absolute formula
Any MEAT formula that does not utilise information from other submitted bids as a reference point. In other words, the overall MEAT score calculation depends only on the cost/price and quality of a given bid.
Relative or comparative formula
Any MEAT formula that utilises information from one or more other submitted bids as a reference point. In other words, the overall MEAT score calculation depends on the cost/price and quality of a given bid AND the information in another bid, such as the overall lowest submitted bid price.
Weighting
In the context of MEAT formula, this refers to the Price-Quality Ratio. There are multiple references in Public Contracting Regulations 2015.
Price-Quality Ratio
This is the emphasis or high-level weighting that an Authority identifies, tests for suitability and publishes as part of the award criteria in tendering instructions. There are two references in Public Contracting Regulations 2015. Some MEAT formulas cannot vary the price-quality ratio.
Gradient (classic)
The measure of the steepness of a slope. Vertical distance divided by horizontal distance.
Willingness to Pay (WTP) Gradient
Shown as ‘b’ in the 3rd formula above. The amount of money an Authority is ‘willing to pay’ for a 1% increase in the quality score of a tender, assuming quality is scored out of 100%. Or, money divided by quality.
Linear
Able to be represented by a straight line on a graph.
MEAT formula (and Value for Money) linearity
The value for money linearity between quality (value) and price (money) can vary according to MEAT formula. This is known to be significant in determining the winning bid.