What criteria should be used when awarding a contract?

When awarding a contract, considering total life cycle costs is crucial because it provides a comprehensive view of the financial implications associated with a product or service throughout its entire lifespan. This approach goes beyond merely evaluating the initial purchase price and includes ongoing expenses such as maintenance, operational costs, disposal, and potential savings from efficiencies or sustainability measures. By focusing on total life cycle costs, organizations can make more informed decisions that align with their long-term financial goals and sustainable sourcing commitments.

In contrast, factors such as supplier popularity, office location, and the supplier's ownership structure may not provide a clear indication of quality, reliability, or overall value. Popularity can often be influenced by marketing rather than actual performance, while office location might not necessarily correlate with the supplier’s capability or efficiency. The ownership structure, while relevant in some contexts, does not usually impact the pricing or quality of goods and services directly. Therefore, total life cycle costs serve as the most relevant and effective criterion for contract awarding.