Blog: Understanding value and risk in supplier selection

When looking at major infrastructure work (such as oil/gas platform decommissioning), particularly where there is high uncertainty or risk, selecting contractors and subcontractors on price alone can lead to an outcome which gets compromised down the track. It’s really important to use a decision process for selecting suppliers which can deal with all the different dimensions of value and risk that each potential firm brings – so you can be really clear and explicit about the trade-offs. One firm may be very low cost, but not well set up to manage the environmental impacts, whereas another may have a great track-record but not be very flexible and responsive to changing conditions.

A multi-criteria decision process for supplier selection allows you to consider all these trade-offs between potentials very clearly and select the best supplier which meets your overall objectives. Expecting suppliers to build all these trade-offs in to their price means you will have little visibility.