What is the price quality method?
An evaluation method published by NZTA (Waka Kotahi) in its procurement manual. Quality attributes (track record, methodology, key people, and the like) are scored and weighted. Price is scored against a formula the manual publishes. The two combine into a total. The structure rewards the balance the buyer set, not the lowest price and not the glossiest methodology alone.
The current manual edition and its exact formulas are the authority. Procurement manuals are revised; weights, price-scoring mechanics, and exceptions change between editions. Open the edition the tender names. This page explains how to read such a method, with a labelled hypothetical below; it does not reproduce NZTA’s current formulas as fact.
How do you read it before pricing?
- Weights first. What share is quality, what share is price, and what share, if any, is economic benefit under Rule 8. Hours follow weight.
- Quality attributes. Which attributes, scored how, with what evidence. An attribute you cannot evidence is a zero you are carrying.
- Price mechanics. How price converts to points: against the lowest conforming price, against a mean, or by bands. Each mechanic rewards a different pricing posture.
- Pre-conditions. The gates that exclude before scoring starts. A failed pre-condition makes the formula irrelevant.
- Exceptions. Alternative methods the manual permits for particular procurements. Confirm which method this tender actually uses.
A labelled hypothetical
Hypothetical. The buyer, weights, scores, and figures are invented to show how a quality-price combination behaves; they are not NZTA’s current formulas and not a client result. Assume quality at 70 percent and price at 30 percent. Two bidders:
| Bidder | Quality (of 100) | Price offered | Price points (assumed) | Total (assumed) |
|---|---|---|---|---|
| Firm A (you) | 82 | $1.15m | 78 | 0.7 × 82 + 0.3 × 78 = 80.8 |
| Firm B (rival) | 74 | $1.02m | 92 | 0.7 × 74 + 0.3 × 92 = 79.4 |
Under these assumed weights, an eight-point quality lead outweighs a materially cheaper rival. Reverse the weights (price at 70) and the cheaper bid wins walking away. The lesson is not the arithmetic. It is the order of operations: extract the weights, score your evidence honestly, model two or three price points, and only then decide what to offer. A price set before the method is read is a guess with a dollar sign.
What does this mean for the bid/no-bid call?
If the method’s weights sit on evidence you do not hold (track record in this exact work, named specialists, local delivery) no price you can deliver fixes the total. That is a no-bid, made before the pricing workshop. If the method rewards what you hold, price to the formula and check the margin survives: price to win versus price to deliver. Where economic benefit carries its own weight, cost the commitment on Rule 8. General scoring mechanics live on evaluation criteria and weightings. And the evidence the quality score needs is on construction procurement guidance; assemble it before the gate, not during review week.