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Application of Multi-Criteria Analysis in the Public Procurement Process Optimization

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  • Mimović Predrag

    () (University of Kragujevac, Faculty of Economics, Serbia)

  • Krstić Ana

    () (University of Kragujevac, Faculty of Economics, Serbia)

Abstract

One of the key steps in the implementation of a public procurement process is the criteria selection that are associated with the bidders, which are intended to ensure that bidders will be able to meet the requirements from the contract. Implicitly, the criteria selection includes their evaluation in situations when the criterion of the lowest price is not applied, but instead the criterion of the most economically advantageous tender. The aim of the paper is to show that decision-makers in the public sector can use multi-criteria analysis for the efficient and fair public procurement process implementation and the establishment of objective conditions for the contract awarding in accordance with the general social interests. In this sense, the paper presents a comparative approach to the Analytic Hierarchy Process and Analytic Network Process as the methods of support in decision making, measurement and evaluation criteria for the selection of the best bids in the procurement process. Hierarchical model with five criteria and nine sub-criteria and the network model, which takes into account the mutual influences of criteria, were developed in a hypothetical public procurement selection procedure for the best performers for the construction of the infrastructure facility. Selection of the best bidder, i.e. bids for the realization of the work, is distinctive, multi-criteria problem which includes both qualitative and quantitative factors.

Suggested Citation

  • Mimović Predrag & Krstić Ana, 2016. "Application of Multi-Criteria Analysis in the Public Procurement Process Optimization," Economic Themes, Sciendo, vol. 54(1), pages 103-128, March.
  • Handle: RePEc:vrs:ecothe:v:54:y:2016:i:1:p:103-128:n:6
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    References listed on IDEAS

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    1. Patrick Sik-Wah Fong & Sonia Kit-Yung Choi, 2000. "Final contractor selection using the analytical hierarchy process," Construction Management and Economics, Taylor & Francis Journals, vol. 18(5), pages 547-557.
    2. Paul, Anand & Gutierrez, Genaro, 2005. "Simple probability models for project contracting," European Journal of Operational Research, Elsevier, vol. 165(2), pages 329-338, September.
    3. Vaidya, Omkarprasad S. & Kumar, Sushil, 2006. "Analytic hierarchy process: An overview of applications," European Journal of Operational Research, Elsevier, vol. 169(1), pages 1-29, February.
    4. Yoram Wind & Thomas L. Saaty, 1980. "Marketing Applications of the Analytic Hierarchy Process," Management Science, INFORMS, vol. 26(7), pages 641-658, July.
    5. K. C. Lam & Tiesong Hu & S. Thomas Ng & Martin Skitmore & S. O. Cheung, 2001. "A fuzzy neural network approach for contractor prequalification," Construction Management and Economics, Taylor & Francis Journals, vol. 19(2), pages 175-188.
    6. Chee Wong & Gary Holt & Patricia Cooper, 2000. "Lowest price or value? Investigation of UK construction clients' tender selection process," Construction Management and Economics, Taylor & Francis Journals, vol. 18(7), pages 767-774.
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