Multicriteria approach to select the most economically advantageous tender. The application of AHP in Italian public procurement
| Published date | 02 September 2019 |
| Pages | 201-223 |
| DOI | https://doi.org/10.1108/JOPP-05-2018-0020 |
| Date | 02 September 2019 |
| Author | Gabriella Marcarelli,Andrea Nappi |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue |
Multicriteria approach to select
the most economically
advantageous tender
The application of AHP in Italian
public procurement
Gabriella Marcarelli
Department of Law, Economics, Management and Quantitative Methods,
University of Sannio, Benevento, Italy, and
Andrea Nappi
Master degree in Manager of Public Administration, Benevento, Italy
Abstract
Purpose –This paper aims to show how the proposed approach (two analytic hierarchy process [AHP] models)
may allow dealing with the best tender selection process in an organic and simple way and ensure the consistency
check of the judgements, the necessary step for having reliable results. At first,this paper highlights some critical
issues regarding the weighted sum model (WSM) and the algorithms frequently used to evaluate the most economic
advantageous tender. Then, it proposes to extend the AHP approach to the evaluation of both the qualitative and
quantitative components of a public procurement award. Finally, the WSM and the AHP are applied to the same
case study to show, step by step, some criticisms of the former and some advantages of the latter.
Design/methodology/approach –This paper proposes to apply two AHP models to evaluate both
qualitativeand quantitative components of a public tender. The quality and cost models allow to identifyand
select the tenderassociated with the highest quality/cost ratio.
Findings –The assessment of the WSM and the AHP models, and some differences between them,build
upon their application as an example of publicprocurement. A case study is used as a teaching device (Yin,
2003) to highlight why the AHP may provide different results.In particular, an important issue concerning
the evaluation of qualitative requirements is explored: the consistency of judgements expressed by the
committeemembers.
Social implications –This approach provides analytical tools for public management that allow
appropriateimplementation of their management function and allow a realisationof the strategicobjectives of
European Union law and Italianlegislation on public procurement. It would help managersto prioritise their
goals and criteria and evaluate them in a scientific way. The model integrates multiple qualitative and
quantitative criteria,simplifies the selection process, achieves optimal use of funds and leads to cost savings.
It allows to reduce the discretionalpower of both the contracting issuer, in the choice of the formulato adopt
for calculating the coefficients, and the committee members, allowing tender evaluation to have more trust
and ensure the fairnessof public procurement matters and quality of the object purchased.
Originality/value –This paper proposes the use of two hierarchical models to evaluate qualitative and
quantitativerequirements and provide the ranking among several tenders.
Keywords AHP, Public procurement, Most economic advantageous tender
Paper type Research paper
1. Introduction
The selection of the best tender is an important step during government procurement
processes. According to the rules on public procurement in the European Union (Directives
AHP in Italian
public
procurement
201
Received19 May 2018
Revised16 November 2018
Accepted1 February 2019
Journalof Public Procurement
Vol.19 No. 3, 2019
pp. 201-223
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-05-2018-0020
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1535-0118.htm
2014/23/EU, 2014/24/EU and 2014/25/EU of the European Parliament and Council of 26
February 2014) and in Italy (Legislative Decree 50/2016,as amended and supplemented by
Legislative Decree 56/2017, hereinafter referred to as the Code), the most economic
advantageous tender (MEAT) may be considered the standardcriterion for tender selection
in Italy. The Code applies to public works, supply and service contracts, and concessions
awarded by contracting authorities and other awarding entities, such as state, regional or
local authorities and public companies. According to MEAT, the evaluation committee (a
group of experts) has to consider several qualitative and quantitative evaluation criteria
simultaneously: this takes quality, price, maintenance cost, life-cycle cost, technical merits,
time, and extent and length of guarantees into evaluationitems. So, the selection of the best
tender may be considereda typical multicriteria problem.
Multicriteria methods, characterised by rational and objective procedures, provide
appropriate tools and software that allow a realisation of the strategic objectives of
European Union law and Italianlegislation on public procurement. The use of a multicriteria
decision support system allows rational, transparent and coherent choices to be made
without removing subjectivity.It does not provide an optimal solution from a technical and
objective point of view but gives to the decisionmaker a tool to organise the logical process
of making a choice.
Many problems may occur in a public tender process. First of all, there is corruption
(Soudry, 2004): public officerscould favour a certain bidder by assigning a high weight to a
criterion that only the bidder would meet fully. Furthermore, some analytical methods and
formulas used for the evaluation of tenders may favour the selection of a tender to the
detriment of the best.
In recent years, many procedures have been proposed for selecting the MEAT with the
aim to meet the requirements of full transparency and ensure competitiveness among
bidders.
Many scholars have criticised the MEAT for its potentialsuch as the low adaptability to
administrative culture, unfamiliarity with purchasing operation during the preliminary
stage, difficulty selecting experienced evaluation committee members (Wang and Chang,
2001), and the quality of the evaluation committee and inappropriate evaluating methods
(Wang et al., 2004).
Furthermore, since the MEAT is a group decision process, it has some disadvantages,
such as uncertainty in responsibilities, time consumption and higher costs but also some
advantages, such as facilitating participation, understanding and minimising personal
subjectivity (Tsaiet al.,2007).
Several researchers have proposed a multicriteria approach to facilitate bid evaluation
processes, and some restrictions in using that approach for public tender are discussed in
Bana e Costa et al. (2002).Sciancalepore et al. (2011) presented a classification of
multicriteria methods showing their strengths and weaknesses. Some applications of
multicriteria methods, in particular, the analytic hierarchy process (AHP), on public
procurement have been proposed in the literature: Diabagaté et al. (2015) applied the AHP
to select the best tender during the awarding of contracts for an IT master plan’s
realisation; Puri and Tiwari (2015) for a contractor selection decision Wang et al. (2013),
to weight decision criteria.
In Anagnostopoulos and Vavatsikos’(2006) study, the AHP has been proposed for
supporting public authorities in contractor prequalification: the authors used the AHP
because it minimises subjective judgements, since state administrators having to be
accountable fortheir decisions dislike the use of ambiguous evaluationcriteria.
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