The public perception of the international consulting engineering community is heavily influenced by the performance of the world’s built infrastructure. Critical to achieving success is the method used to select and award construction contracts.
The current Low Bid method that prevails through most of the world, is to select the construction contractor with the lowest price, provided that the bid complies with basic documentary and statutory requirements. FIDIC has conducted a world-wide survey of engineering associations and multilateral development banks, and concluded that this Low Bid method is not providing client/owners with ultimate best value. As a result, there is a growing recognition that alternative selection processes which include qualifications criteria are required.
Under the Low Bid method, the client/owner runs the significant risk of selecting a construction contractor that has either accidentally or deliberately submitted an unrealistically low price. Client/owners cannot expect construction contractors to adhere to such a price while completing projects in accordance with the plans and specifications and making sufficient profit to remain in business. This often results in compromised quality, excessive disputes, claims, delays, litigation, increased costs and sometimes defaults. The consulting engineers responsible for certifying that the construction work has been completed to a satisfactory standard finds themselves in an adversarial relationship with the construction contractor, resulting in substantial increased effort and costs to the consulting engineer, for which owner/clients are often unwilling to pay.
To address this challenge, FIDIC has developed this Best Practice Guideline entitled “Alternative Mechanisms to Award Construction Works Contracts”. This document describes a range of best practices that clients can consider implementing according to their individual circumstances and national regulations, including; Prequalification and Shortlisting, Lowest Workable Cost Approach, Cost and Quality Approach, and Quality Approach. The Guideline concludes with a brief analysis of the Pros and Cons of the various alternatives.
In recent years, progressive owner/clients throughout the world have increasingly adopted methodologies for selecting engineering consultants that de-emphasize price, and focus on quality and qualifications. Owner/clients have started to appreciate the benefits of higher quality project life-cycle engineering, resulting in lower construction, operations and maintenance costs. Elements of this philosophy are being integrated into Design-Build and Public-Private-Partnership delivery models that encourage consulting engineers and construction contractors to collaborate to provide best-value solutions to owner/clients. FIDIC hopes that the introduction of this Best Practice Guideline “Alternative Mechanisms to Award Construction Works Contracts” will also contribute to the process of offering better outcomes to owner/clients.