W10_Austin_Competitive Bidding for Construction Projects

Competitive Bidding Analysis from Engineering Economy, 15^th Edition.

[Chapter 2, PP51 – PP88].

1.   Problem recognition, definition and evaluation

Bidding Analysis is the process by which tenders are invited from interested contractors and the procedure by which contracting decisions are reached. It is based on the key values of fairness, clarity, simplicity and accountability. Hence, the problem statement is to determine the best bidding method for selecting quality bidders.

2.   Development of the feasible alternatives

a.    Competitive Bidding: The use of a large number of vendors based on pre-qualification criteria.

b.    Selective Bidding:  Contractors chosen from pre-qualification register.

c.    Open Bidding:  Through advertisement in daily newspapers, without pre-qualification restriction.

d.   Negotiated Bidding: Adopted when the client and a preferred contractor will enter a contract through direct negotiation.

e.    Single source Bidding (Sole or direct): Invitation of sole bid without competitive bidding process.

3.   Development of the outcomes and cash flows for each Alternative

4.   Selection of the acceptable criteria

Bidding process is based on attributes of transparency, cost savings, quality, equity, probity and accountability as illustrated in multi-attributes table below:

5. Analysis and Comparison of the alternatives

The competition element of the bidding analysis is provided on the basis of price and quality and evaluated with the conditions of perfect competition based on the key values of fairness, clarity, simplicity and accountability.

6.   Selection of the preferred alternative

A critical evaluation of the bidding process and procedure against possible alternatives using the multi-attributes table above; proves that competitive bidding with the highest scoring attributes, is the best bidding method for selecting quality bidders and achieving best contracting decisions.

7.   Performance Monitoring and Post Evaluation of Results

The principle of competitive bidding is to ensure that true competition is achieved, as it is evaluated by applying chosen criteria. These criteria may be expressed in terms of financial evaluation, including consideration of projected costs over the life cycle of the completed project. It could also address other non-financial factors such as time and proposed methods or levels of capability; or sometimes a mixture of both – collectively referred to as a 'quality/price balance' or 'matrix'.

8.   References/Bibliography

1.   Sullivan, W. G. Wicks, E.M., & Koelling, C.P. (2012). Engineering Economy, (15th ed.)  [Chap. 2, PP51 – PP88]. Retrieved from: http://www.amazon.com/Engineering-Economy-15th-William-Sullivan/dp/0132554909

2.   Purdue OWL APA style. (2011). APA formatting and style guide, pg (10). Retrieved from http://owl.english.purdue.edu/owl/resource/560/19

3.   Roland, F. R. (2011). NBS Guide to Tendering for construction projects RIBA Retrieved from: http://www.ribabookshops.com/item/nbs-guide-to-tendering-for-construction-projects/74338/