Business 315, Price Analysis: The Value of Comparing Competitive Bidders

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Price analysis: The value of comparing competitive bidders When comparing competitive bids for a particular price or service, some systematic method of price comparison is essential. Of course, in some instances, it will be stipulated that a particular price ceiling is in place which will limit the number and types of bidders, or a particular relationship with a contractor has already been established for a series of contracts. However, when this is not the case, it is essential to use a method that offers the most effective way to find the best possible quality of service at the lowest possible cost. The simplest and most effective way is to compare the bids of a variety of competitive bidders. It should be noted that "the lowest bid may not always represent the lowest cost. The total cost of acquisition must be analyzed" with comparative price bidding (Price analysis techniques, 2011, Procurement). The lowest bid may not be of the highest quality, and additional costs might ensue due to bringing the work up to standard or for early replacement, redesign, or repairs (Price analysis techniques, 2011, Procurement). While it is impossible to know the future for certain, some projection is required for each available bid to truly understand its total cost in real terms. Other ways to assess bids include comparing how much the same types of bids cost in the past, or basing costs upon available quoted prices of input costs. However, this can be problematic, given the

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