After negotiations are completed a total solution cost analysis can be used. The cost/value ratio determines which supplier is offering the best value solution. Remember although value/cost ratio criteria may be an evaluation criterion it is not applied until after negotiations are complete.
It is essential that the evaluation team understand the complete cost of a technology-based business solution. A total solution cost analysis will fit the project's business plan and identify the best solution to match its goals and budget; for example, adding capabilities in order to improve customer service or expand services.
The intention is to arrive at a final figure that will reflect the effective cost of purchase. For example, the lifetime cost of a PC can be more than five times its acquisition cost. Evaluators should thoroughly consider the complete cost-not only obtaining the PC but operating, supporting and maintaining it during its lifetime including costs of hardware, software, training, maintenance, or other services. The total cost solution analysis is the big picture cost analysis of each supplier's proposal. This includes, but is not limited to, cost elements such as start-up, transition from current, rollout, training, help line support, operating, maintenance and repair, hardware upgrades related outsourcing or consulting and "exit" cost, or, cost to replace this system or solution at the end of its useful life. The analysis may also include lease versus purchase, the benefits, costs, and risks imposed by various contract terms and conditions identified during preliminary negotiations.
The SPOC is responsible for supplementing the evaluation team with the necessary internal resources to gather the data, including the total cost of the solution, required to make a data driven decision. This may include substantial involvement by the SME(s) as well as finance personnel. The SPOC is also responsible for determining the value/cost ratio of each proposal, and access any inordinate risks or ancillary intangible costs associated with each solution, such as supplier’s viability over the life of the solution, quality of the system documentation and its impact on operating costs, etc. (i.e., total cost to the agency or Commonwealth). SMEs and agency personnel should provide input into the total solution cost analysis where needed. The SPOC, working with agency resources and SMEs will document a cost benefit analysis that clearly represents the total value/cost ratio of each short list solution. Without this data the team cannot determine the true value/cost ratio of the proposed solutions.