Source selection criteria is a set of attributes desired by the buyer which a seller is required to meet or exceed to be selected for a contract. Under project management, source selection criteria are often included as part of the procurement documents. Selection criteria can be identified and documented to support an assessment for more complex products, services, or results. Some possible source selection criteria are:
- Understanding of need. How well does the seller’s proposal address the procurement statement of work?
- Overall or life-cycle cost. Will the selected seller produce the lowest total cost of ownership (purchase cost plus operating cost)?
- Risk. How much risk is embedded in the statement of work, how much risk will be assigned to be selected seller and how does the seller mitigate risk?
- Management approach. Does the seller have, or can the seller be reasonably expected to develop, management processes and procedures to ensure a successful project?
- Technical approach. Do the seller’s proposed technical methodologies, techniques, solutions, and services meet the procurement documents requirements or are they likely to provide more or less than the expected results?
Source selection criteria can include information on the supplier’s required capabilities, capacity, delivery dates, product cost, life-cycle cost, technical expertise and the approach to the contract in a project management. This term is defined in the 5th edition of the PMBOK.