System and method of assessing and rating vendor risk and pricing of technology delivery insurance

• US 6,647,374 B2
• Filed: 08/16/2001
• Issued: 11/11/2003
• Est. Priority Date: 08/24/2000
• Status: Expired due to Fees

• Current Assignee: Namita Kansal
• Original Assignee: Namita Kansal
• Inventors: Kansal, Namita
• Primary Examiner(s): Smith, Jeffrey A.
• Assistant Examiner(s): Fadok, Mark A
• Application Number:
  US09/930,140
• Publication Number:
  US 20020055900A1
• Time in Patent Office: 817 Days
• Field of Search: 705/37, 705/4, 705/8, 705/7, 705/400, 705/26, 705/10
• US Class Current: 705/37
• CPC Class Codes: G06F 16/13 File access structures, e.g. distributed indices arrangements of input from, or output to, record carriers G06F3/06
• CPC Class Codes: G06Q 10/0639 Performance analysis of employees; Performance analysis of enterprise or organisation operations
• CPC Class Codes: G06Q 30/0283 Price estimation or determination
• CPC Class Codes: G06Q 30/04 Billing or invoicing
• CPC Class Codes: G06Q 30/0607 Regulated
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method and system for providing a standardization and commoditizing the process of technology contracts and creating method for assessing, scoring, ranking and rating technology vendors for the purpose of comparing vendor bids on a project and for structuring and pricing insurance/surety contracts. Intrinsic and two-way vendor ratings are established for each of the vendors in a particular project. This two-way rating is used to provide a risk adjustment to the nominal bid of each of the vendors. The two-way rating is also utilized to structure and calculate an insurance premium based upon the probability that the vendor would fail/default on the delivery of a technology project.

Claims

1. A method for comparing bids utilizing a computer platform for the purpose of risk-adjustment received by a customer from a plurality of vendors for a particular technology contract, comprising the steps of utilizing said computer platform for processing information as follows:

calculating an intrinsic rating P(k) for each of the vendors based upon the strength and performance of each of the vendors;

calculating a component Q(x,k) for each vendor which quantifies the ability/suitability of a vendor to deliver on a “

specific”

component of said technology contract or a Request For Proposal (REP) based on the vendor'"'"'s past performance;

calculating a component Q(x) which is the summation of the Q(x,k) and P(k);

determining an extrinsic two-way rating Vendor Rating (VR) of each of the plurality of vendors using the equation;

2. The method in accordance with claim 1, further including the step of altering each of said intrinsic ratings based upon customer preference resulting in a modified intrinsic rating.

3. The method in accordance with claim 1 further including the steps of:

partitioning the technology contract into a series of independent modules/phases; and

receiving nominal bids from said plurality of vendors for each of said independent modules/phases.

4. The method in accordance with claim 1, wherein said adjusting step for each vendor includes the steps of:

determining the average execution time μ

of each of the vendor;

determining the conditional variance σ

_A^BID that a particular vendor'"'"'s time-to-delivery will exceed the mean of a distribution of a plurality of said vendors; and

determining the vendor daily cost index C_A.

5. The method in accordance with claim 4, further including the step of determining said adjusted bid for each of the vendors utilizing the equation:

6. The method in accordance with claim 5, further including the step of adding said adjusted bid for each of said vendors to said respective nominal bid to produce a total risk-adjusted bid.

7. The method in accordance with claim 6, further including the step of comparing a plurality of said total risk-adjusted bids to determine an optimum bid.

8. A method for comparing bids on the computer platform for the purpose of risk adjustment received by a customer from a plurality of vendors for a particular technology contract, comprising the steps of utilizing said computer platform for processing information as follows:

receiving nominal bids from said plurality of vendors for said particular technology contract including cost and time of delivery;

determining a rating for each of the vendors reflecting whether each of the vendor'"'"'s nominal bid will be timely and will not exceed the cost of said nominal bid;

utilizing said rating for each of the vendors to determine an adjusted bid for each of the vendors;

calculating an intrinsic rating P(k) for each of the vendors based upon the general performance of each of the vendors;

calculating a component Q(x,k) for each vendor which quantifies the ability/suitability of a vendor to deliver on a “

specific”

component of the technology contract or Request For Proposal (RFP) based on the vendors past performance;

calculating a component Q(x) which is the summation of the Q(x,k) and P(k);

adjusting for each vendor each of said nominal bids of each of said plurality of vendors utilizing each of said vendors two-way ratings to produce a risk-adjusted bid for each vendor;

determining an extrinsic two-way rating Vendor Rating (VR) of each of the plurality of vendors utilizing the equation;

9. The method in accordance with claim 8, further including the step of adding each of said risk-adjusted bids to its respective nominal bids to produce a total risk-adjusted bid.

10. The method in accordance with claim 9, including the step of comparing all of said total risk-adjusted bids to determine an optimum bid.

11. The method in accordance with claim 8, wherein said adjusting step for each vendor includes the steps of:

determining the average execution time μ

of each of the vendors;

determining the conditional variance σ

_A^BID that a particular vendor'"'"'s time to delivery will exceed the mean of a distribution of a plurality of said vendors; and

determining the vendor daily cost index C_A.

12. The method in accordance with claim 11, further including the step of determining the adjusted bid for each of the vendors utilizing the equation: