Automating Tendering Processes with Web Services: A Case Study
on Building Construction Tendering in Hong Kong
Patrick C. K. HUNGFaculty of Business and Information Technology,
University of Ontario Institute of Technology [email protected]
Dickson K. W. CHIUSenior Member, IEEE
Dickson Computer SystemsHong Kong
[email protected], [email protected]
NG, Lick Lun Nick Lai Sau Chan
Dept. of Computer Science Hong Kong University of
Science & Technology{nickng, chanlaze}@ust.hk
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Introduction Tendering processes involves lots of business
procedures Internal integration: communicate with other
systems such as supply, order, purchase, procurement, account, …
External integration: need a framework for all stakeholders to follow to enable application-to-application communication over Internet
Current manual or only semi-automated Involves both humans (esp. decision) and systems
Important for enterprises and government suppliers
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Case Study in Building Construction
Problems of tendering done by hand late submission of the tender booklet calculation errors by hand / spreadsheet
Benefits of automatic e-tendering tenderer
make final decision of the price in almost the last minutes update price of the material from ERP and external sources
Client easy generation of the tender report after electronic submission
Benefits of web-services Different tenderer may have different database and system need to use an open standard for the data exchange
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Typical e-tendering system
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Typical tendering process for building construction
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Tendering Business Processes
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Request to Participate (RTP)
Messages Description
Request to participate
Sent by a supplier to the CA to request participation. Contains all required information.
RTP Response Sent by the CA to a supplier in response to a previous request to participate to acknowledge receipt of RTP.
Contracting Authority Tenderer(s)
Timestamp
Check DigitalSignature
ConfirmReceipt of RTP
Send RTP
ReceiveResponse
R TPR eques t
R TPR esponse
Prepare RTP Info
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Invitation to Tender (ITT)
Messages Description
Short-listing Result Notification of rejected suppliers by the CA of the result of the short-listing process.
Invitation to tender Sent by the CA to a supplier in order to invite it to submit a tender, after a previous request to participate.
Contracting Authority Selected Tenderer Rejected Tenderer(s)
Short-Listing
Inform SelectedSuppliers
Inform RejectedSuppliers
Inv ite SelectedSuppliers
ReceiveResponse
ReceiveResponse
ReceiveResponse
S hort-L is ting R esu lt
S hort-L is ting R esu lt
Invita tionTo Tender
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Tender Submission (TS)
Messages Description
Tender Offer sent by the supplier to the CA. A tender may take the form of an electronic catalogue.
Reception Response Sent by the CA to a supplier in response to a tender submitted. It acknowledges the receipt of the tender submitted.
Contracting Authority Tenderer(s)
T imestamp
Check DigitalS ignature
ConfirmReceipt of T ender
Submit T ender
ReceiveResponse
T ender
R e ce ip tR e sp o nse
Digitally S ign &Encrypt T ender
Check Date
Store T ender
Prepare T ender
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Tender Award Notification (TAN)
Messages Description
Award Notice Sent by the CA for official publication using the corresponding standard form.
Award Result Notification of the tenders by the CA of the result of the awarding process.
Contracting Authority Selected Tenderer Rejected Tenderer(s)
CompleteTenderAwardNotice
Inform SelectedTenderers
InfomedRejected
Tenderers
Deliver TenderAward Notice
ReceiveResponse
ReceiveResponse
ReceiveResponse
Comission
Aw ard Resu lt
Aw ard Resu lt
Tende r AwardNo tice
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System Architecture
The pricing system can use e-Negotiation approach or traditional method
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Data Flow Overview
Client
Tenderer
Tenderer
Tenderer
Tender-out
Supplier
Sub-contractor
Database
Call quotation
Subcontract
Tender-in
……
…
Sub-contractor
Supplier
…
Price information
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Data Conceptual Model
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Web Service Implementation Overview
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SOAP Message Embedded in HTTP Request
POST /Tender HTTP/1.1Host: www.tenderserver.comContent-Type: text/xml; charset="utf-8"Content-Length: nnnn<SOAP-ENV:Envelope xmlns:SOAP-ENV="http://schemas.xmlsoap.org/soap/envelope/" SOAP-ENV:encodingStyle="http://schemas.xmlsoap.org/soap/encoding/"><SOAP-ENV:Body> <SendMessage xmlns="http://www.tender.com/Webservices"> <InvitationToTender> <tenderReceptionDeadline>6-12-2005</tenderReceptionDeadline> <tenderSendingAddress>HKUST</tenderSendingAddress> <tenderLanguages>English</tenderLanguages> <documentsRequestDeadline>6-10-2006 </documentsRequestDeadline> <documentsPrice>500</documentsPrice> <paymentProcedure>Cash</paymentProcedure> </InvitationToTender> </SendMessage></SOAP-ENV:Body></SOAP-ENV:Envelope>
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SOAP Message Embedded in HTTP Response
HTTP/1.1 200 OKContent-Type: text/xml; charset="utf-8"Content-Length: nnnn<SOAP-ENV:Envelope xmlns:SOAP-ENV="http://schemas.xmlsoap.org/soap/envelope/" SOAP-ENV:encodingStyle="http://schemas.xmlsoap.org/soap/encoding/"/><SOAP-ENV:Body> <SendMessageResponse xmlns="http://www.tender.com/Webservices"> <SendMessageResult>true</SendMessageResult> </SendMessageResponse></SOAP-ENV:Body></SOAP-ENV:Envelope>
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Example Decision Metrics
Metrics Mi Score Xi Weight Wi
M1: Cost X=0: >=3000 X=1: 2000<=M1<3000 X=2: 1000<=M1<2000 X=3: 0<=M1<1000
3
M2: Location X=0: Other Countries X=1: US-Based X=2: INDIA-Based X=3: CHINA-Based
1
M3: Scale X=0: Small-Scaled X=1: Middle-Scaled X=2: Large-Scaled X=3: Enterprise-Scaled
2
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Example Weighted Average Score
Tenderer Metrics Status Score Weighted Average Score
Si Mi Xi
S1 M1=2,500
M2=INDIA
M3=Enterprise
X=1X=2X=3
{3(1)+1(2)+2(3)}/6=1.83
S2 M1=8,500
M2=US
M3=Enterprise
X=0X=1X=3
{3(0)+1(1)+2(3)}/6=1.17
S3 M1=2,100
M2=CHINA
M3=Middle
X=1X=3X=1
{3(1)+1(3)+2(1)}/6=1.33
S4 M1=1,580
M2=JAPAN
M3=Enterprise
X=2X=0X=3
{3(2)+1(0)+2(3)}/6=2
S5 M1=2,900
M2=UK
M3=Large
X=1X=0X=2
{3(1)+1(0)+2(2)}/6=1.17
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Example Ranking
Rank R Tenderer Si Weighted Average Score
Top-3Decision
1st S4 2 Accept
2nd S1 1.83 Accept
3rd S3 1.33 Accept
4th S2, S5 1.17 Reject
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Exception Handling Web Services
Tender Addendum Consistency of the tender document Bulk discount Additional information provided by tenderer Withdraw of tender
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Summary
Digitalization of the tender document Process and data integration Timely actions Reduced human effort
Web service based architecture with the SOAP messages exchange during tendering processes
Typical example application scenario and data model
Establish cross-organizational collaboration via existing Internet standards
supporting both human Web-based and application programmatic interactions
smaller business partners with varies degree of automation event passing with the publish-and-subscribe paradigm facilitate exception handling
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Future Work
Further integration studies internal integration of tendering processes with ERP / DSS external integration with e-marketplaces and brokers sub-contracting
Similar integration work can be done for other related business processes in enterprises
Managing the complexity of Web service composition
Further development methodologies Monitoring and alerts Further decision models