What Is a CBE? Commercial Bid Evaluation

A Commercial Bid Evaluation (CBE) is the structured comparison of vendor quotations on commercial terms: price, delivery schedule, payment conditions, warranties, and total landed cost. The CBE follows the Technical Bid Evaluation (TBE)—only vendors that pass the technical screening are included in the commercial comparison.

The CBE produces the bid tabulation (bid tab), which is the primary decision document for purchase order award in EPC procurement.

CBE Evaluation Criteria

Criterion	What Is Compared	Weight (Typical)
Unit price	Price per item, per meter, or per ton	25-35%
Total price	Extended price for full MTO quantity	15-20%
Delivery time	Weeks from PO to ex-works or delivery at port	20-25%
Incoterms basis	FOB, CIF, DAP, DDP—must normalize to same basis	Normalization factor
Payment terms	Advance payment %, milestone payments, credit days	10-15%
Warranty	Duration, scope, exclusions	5-10%
Validity period	How long the quote remains valid	Pass/fail
Currency	USD, EUR, CNY—exchange rate risk	Risk factor

Normalizing Quotes to the Same Basis

Vendors rarely quote on identical commercial terms. The CBE must normalize all bids to a common basis before comparison.

Normalization Item	How to Adjust
Different Incoterms	Convert all to same basis (e.g., CIF destination). Add freight and insurance to FOB quotes, add inland transport to CIF quotes. See Incoterms guide
Different currencies	Convert to project currency at a fixed exchange rate
Different payment terms	Calculate the net present value of payment streams. 30% advance vs net 60 days has a measurable cost difference
Partial quantities	Some vendors quote only part of the MTO. Calculate the cost to cover the shortfall from another source
Excluded items	Identify items excluded from the quote (packaging, testing, documentation) and add estimated costs

Pro Tip

Build the bid tabulation in a spreadsheet with a “normalized total cost” column that includes freight, insurance, customs duties, inspection costs, and financing costs. The vendor with the lowest unit price often does not have the lowest landed cost. A $50/ton freight difference on a 500-ton order is $25,000—enough to change the ranking.

CBE Process Steps

Step	Activity	Responsible
1	Receive TBE report identifying technically acceptable vendors	Engineering
2	Extract commercial data from each quotation	Procurement engineer
3	Build bid tabulation with normalized costs	Procurement engineer
4	Identify commercial deviations (non-standard terms, exclusions)	Procurement / legal
5	Request commercial clarifications from vendors	Buyer
6	Update bid tab with clarified data	Procurement engineer
7	Score and rank vendors	Procurement engineer
8	Issue CBE report with award recommendation	Procurement manager

Typical Bid Tabulation Format

Item	Vendor A	Vendor B	Vendor C
Unit price (USD/ton)	2,150	2,080	2,220
Total price (500 tons)	1,075,000	1,040,000	1,110,000
Incoterms	FOB Shanghai	CIF Jubail	FOB Mumbai
Freight adjustment	+55,000	0	+62,000
Insurance adjustment	+7,500	0	+8,000
Normalized total	1,137,500	1,040,000	1,180,000
Delivery (weeks)	10	14	8
Payment terms	30% advance, 70% on B/L	Net 60 from B/L	20% advance, 80% on B/L
TBE status	Acceptable	Acceptable with conditions	Acceptable

In this example, Vendor B has the lowest normalized cost but the longest delivery. If the project schedule is critical, Vendor C (fastest delivery) may be preferred despite a higher price. The CBE report presents these trade-offs with a recommendation.

The CBE, together with the TBE, forms the basis for the purchase order award. For shipment documentation requirements under each Incoterm, see the common shipping documents guide.

Read the full guide to pipe classes and specifications