Automating Tendering Processes with
Web Services: A Case Study on
Building Construction Tendering in
Hong Kong
Dickson K. W. CHIU
NG, Lick Lun Nick
Lai Sau Chan
Senior Member, IEEE
Dickson Computer Systems
Hong Kong
kwchiu@acm.org,
dicksonchiu@ieee.org
Dept. of Computer Science
Hong Kong University of
Science & Technology
{nickng, chanlaze}@ust.hk
Patrick C. K. HUNG
Faculty of Business and
Information Technology,
University of Ontario Institute of
Technology
Patrick.Hung@uoit.ca
Introduction
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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
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Involves both humans (esp. decision) and systems
Important for
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TPM
enterprises and government
suppliers
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Case Study in Building Construction
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Problems of tendering done by hand
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late submission of the tender booklet
calculation errors by hand / spreadsheet
Benefits of automatic e-tendering
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tenderer
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Client
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easy generation of the tender report after electronic submission
Benefits of web-services
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TPM
make final decision of the price in almost the last minutes
update price of the material from ERP and external sources
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)
Contracting Authority
Tenderer(s)
Prepare RTP Info
Timestamp
RTP
Request
Send RTP
RTP
Response
Receive
Response
Check Digital
Signature
Confirm
Receipt of 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.
TPM
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Invitation to Tender (ITT)
Contracting Authority
Selected Tenderer
Rejected Tenderer(s)
Short-Listing
Inform Selected
Suppliers
Short-Listi
ng Result
Short-Listi
ng Result
Inform Rejected
Suppliers
Invite Selected
Suppliers
Receive
Response
Invitation
To Tender
Receive
Response
Receive
Response
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.
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Tender Submission (TS)
Tenderer(s)
Contracting Authority
Prepare Tender
Digitally Sign &
Encrypt Tender
Timestamp
Tender
Submit Tender
Receipt
Response
Receive
Response
Check Digital
Signature
Check Date
Store Tender
Confirm
Receipt of Tender
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.
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Tender Award Notification (TAN)
Contracting Authority
Complete
Tender
Award
Notice
Comission
Inform Selected
Tenderers
Award Result
Infomed
Rejected
Tenderers
Deliver Tender
Award Notice
Selected Tenderer Rejected Tenderer(s)
Receive
Response
Award Result
Tender Award
Notice
Receive
Response
Receive
Response
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.
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System Architecture
The pricing system can use
e-Negotiation approach
or traditional method
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Data Flow Overview
Database
Supplier
Call quotation
Tenderer
Subcontract
…
Subcontractor
Tender-in
Client
Tenderer
…
Subcontractor
Tenderer
Supplier
Price information
…
…
TPM
Tender-out
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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/1.1
Host: www.tenderserver.com
Content-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 OK
Content-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
Si
Mi
Xi
S1
M1=2,500
M2=INDIA
M3=Enterprise
X=1
X=2
X=3
{3(1)+1(2)+2(3)}/6
=1.83
S2
M1=8,500
M2=US
M3=Enterprise
X=0
X=1
X=3
{3(0)+1(1)+2(3)}/6
=1.17
S3
M1=2,100
M2=CHINA
M3=Middle
X=1
X=3
X=1
{3(1)+1(3)+2(1)}/6
=1.33
S4
M1=1,580
M2=JAPAN
M3=Enterprise
X=2
X=0
X=3
{3(2)+1(0)+2(3)}/6
=2
S5
M1=2,900
M2=UK
M3=Large
X=1
X=0
X=2
{3(1)+1(0)+2(2)}/6
=1.17
TPM
Weighted Average Score
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Example Ranking
Rank R
Tenderer Si
Weighted Average
Score
Top-3
Decision
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
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Tender Addendum
Consistency of the tender document
Bulk discount
Additional information provided by tenderer
Withdraw of tender
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Summary
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Digitalization of the tender document
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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
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TPM
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
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Further integration studies
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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
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