If you’re involved in tendering, bidding, or procurement needs and still don’t know the difference between QCBS and LCS? Then, you’re missing something! Knowing the key factors about these two terms that set them apart is important. It helps to organize procurement officers and bidders to choose the right evaluation method based on project requirements. By using the wrong approach, you may end up wasting money if the quality isn’t that good.
So, what QCBS and LCS are in procurements or tenders, let’s understand them in this guide. You’ll find every essential thing that you must know about their terms and why it’s important. Let’s get into it!
What is QCBS Tender?
QCBS is a shorter term for Quality-cum-cost based selection. It’s a way to choose the best option in which both the quality and price are considered together. Instead of going for the lowest bidder option, QCBS tenders allow you to get a better quality at a fair price. As per the government, for procuring works like construction projects and NCS (Non-consultancy services, e.g., IT services, security, or facility management), the contractor must apply QCBS methods. Where quality is more important than a low price.
For more information: Quality-cum-Cost Based Selection (QCBS) Method in Procurement of Works and Non-Consultancy Services (NCS).
QCBS Works in these simple steps:
That’s how quality-cum-cost based selection works in tenders:
Two-Stage Evaluation
There are two steps of evaluation: first, the quality or technical proposal will be checked. Second, if the quality is good enough, then the price will be evaluated.
Technical & Financial Assessment
Bidders will be ranked or categorized based on the quality. For example: experience, technical approach, and organization based on the QCBS tender documents. In the QCBS tender, if you qualify technically, then you’ll go on to the financial stage to select a bid.
Calculating Scores:
Now, the technical and financial scores are both combined, like 65% quality + 45% cost.
Deciding Winner
The bidder with the highest total score that is a perfect balance between quality and cost will win the contract. For example, if one company is priced cheaper and another one offers better quality, then the second company will win. Because QCBS picks the best balance between quality and cost.
Pros and Cons of Quality and Cost-Based Selection
QCBS might offer quality assurance, but people also face drawbacks to it. Let’s find it:
Pros of QCBS:
- Quality over price: With QCBS, you can rest assured knowing you’ll have the best quality at genuine pricing.
- Innovative ideas: Due to the quality approach, it invites creative ideas and new methods. Allowing bidders to provide the best solution, not just sticking to the cheapest price.
- Fair competition: Considering quality and cost together allows for rewarding skilled and experienced bidders to win.
- Suitable complex projects: It’s best for services like consulting, IT, and technical, where expertise and quality matter more than a budget.
Cons of QCBS:
- Complicated process: To strategically evaluate the bid may take more time and effort than low-cost tenders.
- Higher Cost: As it focuses on quality, the winning bid might come with a higher price. So, buyers need to pay more.
- Require Expertise: To win the contract, one must be skilled in fairly assessing technical proposals.
In simple words, QCBS is ideal for services where quality is a must and price aren’t a concern. If you’re unable to find QCBS in GeM portal, then you can reach out to TenderShark. They allow you to search for unlimited tenders in your state or location. The searches are completely free on this platform, so you can give it a try.
What is an LCS Tender?
LCS refers to least cost selection, that is, the tender method where the cheapest bid wins after meeting all the required technical criteria. LCS tenders are opposite to QCBS and most suitable for standard services like printing, audits, and routine supplies. LCS in procurement can be applied where technical innovation isn’t the purpose.
How does LCS work?
Here are the steps Least Cost Selection works in tenders:
Proposal Submission
Starting with submitting both technical and financial proposals. Bidders usually have to submit these separately. If submitting digitally through LCS in GeM portal, then you can directly submit them. But if offline, then seal the envelopes.
Technical Assessment
Only bidders who meet the tender documents requirements and criteria are capable of further processing. The terms include experience, innovation, projects, etc.
Financial Assessment
Once you’re technically qualified, make a financial proposal for bids.
Evaluation & Winner
The winner should have a score of 70/100, technically and financially above 70. Based on these calculations, the lowest evaluated cost will get a contract that meets basic technical needs.
Pros of Least Cost Selection (LCS)
- Low-cost guarantee: No matter which bid you choose, you can save on the bidding with the lowest prices among the technically qualified ones.
- Simple & Quick process: It’s easy to evaluate and implement. As it avoids complicated scoring systems, it reduces evaluation time.
- Best for Standardized goods: LCS is ideal for a product that requires basic quality, such as printing, housekeeping, stationery, etc.
- Less negotiation: Due to the lowest cost already, it doesn’t require much negotiation.
Cons of Least Cost Selection (LCS)
- Compromising on Quality: LCS may offer the lowest price due to the quality of its products or services.
- Limited innovation: Since only cost matters in this, bidders don’t receive any incentive or chances to present new ideas or advanced solutions.
- Risk of underquoting: Some bidders may quote a low price just to win the contract. While it leaves doubt on their potential to deliver the project on time.
- Long-term loss: It comes with low-cost products, which may require more maintenance and replacement costs.
In short, LCS is good when the requirement is simple and for regular products. But it may compromise on quality and increase long-term costs.
Conclusion
In conclusion, the thing that QCBS and LCS differ from each other is in prioritizing two different factors. QCBS prioritizes quality over price. On the other hand, in least cost selection (LCS), low price matters. So, while bidding, you need to participate accordingly to understand whether it’s beneficial for you or not. However, if you don’t know where to find tenders or know more about the LCS supplier or QCBS tenders, then feel free to reach out to TenderShark. It’s your partner to search for the most suitable contractor for you in your nearby location.