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 Patrick.Hung@uoit.ca

Dickson K. W. CHIUSenior Member, IEEE

Dickson Computer SystemsHong Kong

kwchiu@acm.org, dicksonchiu@ieee.org

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

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Question and Answer

Thank you!Contact: Patrick.Hung@uoit.ca,

dicksonchiu@ieee.org