The only good thing that can be said about the low bid method of procuring work is that it is the simplest and therefore it requires the least effort from the owner. The misconception of it being the cheapest is belied by the fact that private owners (more concerned about the price/value ratio than public ones) rarely, if ever, use it in their procurements in its most stringent form. While private owners receive bids from selected contractors and often involve them in the design process, negotiate with a limited number, continuously solicit value enhancing or cost saving solutions, public owners are by and large restricted by law to accept "the lowest responsive bid". The difficulty of considering a low bidder non-responsive is evidenced by the rarity of cases in which an award to a low bidder was denied and the subsequent protest was not successful in reversing the decision. What are the plusses and minuses of this procurement method, and when is it proper to apply it? Very clearly, if you can specify exactly a product and have reasonable expectations of the capacity of the provider of goods or services to deliver it, a low bid procurement system will give the most value for the money. Unfortunately, in the construction industry, while you can reasonably satisfy yourself on the financial wherewithal of the bidder by requiring payment and performance bonds, this is all the comfort you can get in most public procurements. By using this method, you delegate the responsibility of evaluating the competence of the bidder to perform the work to the bonding company that, historically, has been more capable of analyzing financial statements than construction records and job experiences. Furthermore, while specifying dimensions, tolerances, material properties and delivery schedule of an order of widgets is relatively simple, the opposite is true when you are procuring a construction project. The all too frequent changes in job conditions, design and schedule, be it caused by the owner or by external factors, will be handled differently by different contractors, and the resulting total cost would vary greatly. Lastly and most importantly, the low bid format does not allow contractors to input their experience into the design process during its initial stages. It is true that value engineering proposals can be submitted after the bid but they usually bump against resistance from the designer, inertia from the owner and generally can be implemented only in large projects with sufficient time for the process to take place. Let us examine how the private and the public sectors are procuring work in the U.S. and abroad; and then try to draw some conclusions on how the industry should develop to the betterment of all parties.
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