BUS605: Strategic Project Management

The axiom of RPDM is that suppliers are mainly evaluated and selected according to their capabilities and "RPDM competence". In other words, the aim is not to find the cheapest option, but the most economically advantageous one, and therefore, the selection criteria emphasize softer factors than just hard cash.

The selection process and evaluation criteria are adjusted to suit the particular circumstances for each project. Nearly always, the evaluation criterion is a combination of capability and price, where capability plays a bigger role than price (i.e., 75% versus 25%). The capability of a company can be evaluated in several areas, for example, their

(i) financial capacity;
(ii) legal obligations;
(iii) sector and RPDM competence;
(iv) technical capability;
(v) references;
(vi) organizational and project management procedures.

Another important issue of the procurement strategy is to make a decision in principle about the agreement types and tendering. This decision must be made because it affects how tendering is managed and what it encompasses. Tendering can be handled in two ways: partner organizations can be invited separately to tender or the proponents can be asked to form a consortium, which includes the most critical stakeholders for the project's execution.

There are also two different ways to make an agreement: bilateral or multi-party. A bilateral agreement means that the developer makes separate agreements with the general contractor and the main designer (architect). A multi-party agreement is a single agreement that is signed by both the general contractor and the main designer. The latter is more typical and recommended because a multi-party agreement is less prone to inconsistency. Moreover, the process of negotiating an agreement jointly deepens each party's understanding about the other's interests and increases the commitment to jointly defined goals.

Due to the diverse nature of RPDM projects, it is very typical that the proponents form a consortium that can take care of the whole project. Thus, it is in the customer's interest to give the industry as much information as possible about their intention to use RPDM, because then the proponents can start identifying and building their team before the customer issues the request for proposals. For example, the information can contain estimates of the project scale, scope, and timeframe.