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Independent estimate: Quampus question

Posted: Wed Jul 02, 2014 7:36 pm
by harin4627
Larry is the project manager and working with procurement department of his organization to do procurement for his project. Procurement department said these are usual commodities and same has been procured many time. Also as this has been procured multiple times, generally they receive response from 4-5 vendors for this procurement. To everyone’s surprise, almost 10-15 vendors responded and two of the bids are evidently lesser than independent estimate Larry has created. What can be the best explanation for lower bid in this scenario?
Price for the commodity in current market changed due to change in demand/supply for it
Procurement SOW created by buyer was not clear enough for seller to make out the requirement
Procurement SOW created by buyer was clear but seller understood it incorrectly resulting lower bids
Bid document supplied by seller is having formula mistake resulting in lower bid

Quampus gives the answer as 1.

the question says "two of the bids are evidently lesser than independent estimate". PMBOK says that independent estimates are used to understand whether the SOW was clear or not.
In this case shouldn't be 2 a better answer.

Re: Independent estimate: Quampus question

Posted: Thu Jul 03, 2014 6:01 am
by namita
Hi Hari,

This is a kind of question where you need to think in the scenario described in question and not only with definition. There are many unusual things happened in the scenario:

1. Org has procured this commodity multiple times (lot of experience) and have a pattern of getting only 4-5 bids
2. This time number of bids increased to double
3. This time 2 bids have quoted less price than independent estimate which was created sometime back when Org might have procured this commodity for the first time and SOW understanding was not there. But now this option of SOW unclear can't be true as procurement has happened multiple times. Why SOW is misunderstood now?

Hope this is clear now. Feel free to ask follow up

Re: Independent estimate: Quampus question

Posted: Wed Jan 24, 2018 4:13 am
by ajaynit
Hi Namita,

with the above logic , why cant answer be :
Procurement SOW created by buyer was clear but seller understood it incorrectly resulting lower bids



thanks for clarifying, it will help me in making my concept clear in one of the most confusing area of procurement for me