We have all seen and experienced it. When the economy is good, the number of available subcontractors increases dramatically due to new ‘start-up companies’ wanting to get a piece of the pie. The subcontractors who have been in business for many years are typically set up as full-service companies with multiple departments – such as business development, marketing, sales, estimating, engineering, drafting and project management. These internal resources allow subcontractors to help improve the overall process and quality of the construction project for everyone involved. These intangible values consistently get lost when the only factor considered for determining success is the low bid. Again, in one way or another, we all have experienced that old adage ‘You get what you pay for.’ Unfortunately not all customers appreciate the long term value provided by a quality subcontractor because their only focus is on the initial cost – without much thought in regards to what happens after bid day.
So, how are the experienced subcontractors able to help educate customers about the added value that they bring to a project? Best value procurement has been successfully used in both the private and public sectors to show how “Value Added” bids provide the best solution, and ultimately at a lower cost.
Best value procurement (BVP) is a procurement system that looks at factors other than price when selecting vendors (contractors/subcontractors). BVP makes the selection process clear and simple through the use of specific assessments, and clearly identifies the BVP vendor through a series of metrics like expertise, past proven-performance, risk mitigation plans, value added plans, schedule, and price. BVP has a vision and method for procurement in which the main focus is not only price, but the overall performance of a vendor. It identifies the vendor with the most expertise, and allows the vendor to use that expertise to increase the value and lower the project cost. The expert vendors are also able to prove that they are uniquely qualified for the specific project being requested by providing how many times they have done that specific type of project. If a client is looking to build a multi-million dollar building within a set budget and schedule, it is important to see if potential vendors have completed past projects on such a scale and what the outcome was – final budget, schedule, and customer satisfaction.
Lowest-Bid Procurement does not consider the quality and the reliability of the services provided by the lowest bidder. This has the potential to result in higher risk, which will lead to bigger losses for not only the General Contractor but the Design Team and Owner as well.
Winning projects as a designer or contractor has become increasingly challenging. You not only have to acquire in-depth knowledge about the project and the owner’s intentions so you can accurately bid, but you also have to come up with creative solutions that will set you apart. So, why not engage with expert partners like Wells Concrete? We have proven past-performance results, can decrease or eliminate risk, bring additional value, and have a history of being on time or ahead of schedule, all of which ultimately leads to lower cost.
Spencer Kubat, Ed Muehlberg, Dan Stenzel
- “Best-Value Procurement Manual.” Minnesota Department of Transportation”. N.p., n.d. Web. 2 May 2013
- “The promise of Best Value Procurement: Governance and (in)stability of specifications within an innovative biogas project”. Cleaner Production. October 2017 – via Science Direct.
- Storteboom, Arnoud; Wondimu, Paulos; Lohne, Jardar; Lædre, Ola (2017-01-01). “Best Value Procurement – The Practical Approach In The Netherlands”. Procedia Computer Science. 121: 398–406. doi:10.1016/j.procs.2017.11.054. ISSN 1877-0509.
- “PBSRG | Performance Based Studies Research Group”. pbsrg.com. Retrieved 2018-05-11.
- “Journal for the Advancement of Performance Information & Value (JAPIV).” New CIB Encouraged Journal, n.d. Web. 30 Apr. 2013.
- “Add Value to Your Proposal and Win the Project: How Working with a Product Manufacturer Can Separate General Contractors from the Competition” 9 July 2019