Expertise Not Cost How to Change Bids for Work

QBS and Best Value Processes

The choice between Qualifications-Based Selection (QBS) and Best-Value (BV) procurement methods is an important one to make when considering cost. Both processes are meant to help secure the most suitable contractor, but they do so through different approaches. Drawing on Hegarty's (2011) guide on developing engineering proposals, Harrison's (2015) discussion of procurement pitfalls, and Alleman et al.'s (2017) comparative study on QBS and BV procurement, this paper discusses the methods and explains why QBS is the better approach.

Qualifications-Based Selection (QBS)

QBS is a procurement process where the focus is on the qualifications, expertise, and past performance of the bidders rather than the price. Hegarty (2011) advocates for QBS as the preferred approach because it focuses on long-term project success; it looks at the most qualified professionals for the job?. Price-focused decisions can lead to inferior outcomes; for example, cutting corners during the planning phase can later lead to problems that end up needing more capital to solve, thus inflating overall project costs. Hegarty’s (2011) argument against price-based selections stems from the notion that it ends up with a kind of "hit-and-run" engineering, where immediate savings hide longer-term expenses. Likewise, Harrison (2015) argues for QBS because it offers better fraud protection (bidders have to prove their worth) and it is simply an easier approach (experience speaks for itself and streamlines the process).

In contrast to Hegarty’s clear preference for QBS, Alleman et al. (2017) approach the subject by looking at 29 CM-GC highway projects. They note no statistically significant difference in the performance outcomes between QBS and BV?. However, they emphasize that QBS is more commonly used in complex projects with a low level of design completion at the time of procurement because, again, it focuses on the contractor’s qualifications, rather than their price estimate. Alleman et al. (2017) also point out that agencies with more experience in Construction Manager-General Contractor projects tend to prefer QBS, because it supports better risk management during pre-construction.

Best-Value (BV) Procurement

On the other hand, Best-Value procurement integrates both qualifications and pricing so as to balance between cost efficiency and expertise. However, Harrison (2015) discusses some of the dangers of focusing solely on price. Instead of a request for proposal, which is costly to write, Harrison (2015) recommends a request for qualifications. This keeps the frauds at bay and helps keep costs of writing proposals down. At the same time, it does not open the door to newer contractors who may lack experience—which means it is not necessarily fair to all.

Alleman et al. (2017) points out that the main point of BV is that it gives upfront pricing. However, initial cost estimates in BV procurement may not always be reliable?. One of the challenges with BV is that it opens the door to incomplete designs and people may make pricing decisions based on assumptions.

My Position

I lean towards supporting QBS as the more effective process for engineering and construction projects. BV may mean newer contractors get a chance to bid, particularly in more straightforward or well-defined projects, but its focus on pricing instead of qualifications means CM-GC projects may not be going into the best hands.

Overall, Hegarty (2011) and Alleman et al. (2017) both note the risks associated with price-driven decisions in engineering projects, with Hegarty providing practical advice on how to avoid the pitfalls of poorly designed RFP/Q processes??. Although BV procurement may offer the allure of cost savings, its potential for cost overruns and lack of innovation makes it a less desirable option for projects that require contractor input during the design phase. The emphasis on qualifications, as seen in QBS, and as noted by Harrison (2015) helps agencies select contractors based on their expertise—which should be what matters. Is it fair to new players? No—but maybe new players should not be bidding on government contracts until they get experience to work at that level.