7.1 Summary
The proposed model includes the relevant parameters and associated weighting for specific project needs. Best-Value contracting aims at using factors other than only price in the evaluation of contractors. Doing so enhances the long-term performance of projects. The inclusion of key factors that match certain needs of a specific project guarantees that the selected contractor is the best to construct the facility. Previous attempts to implement Best-Value contracting did not consider the unique characteristics of each construction project. The current Best-Value model, unlike previous models, considers each project as unique. The aim was to establish a flexible model capable of being tailored to certain project needs. The inclusion and exclusion of parameters and different weights give owners flexibility. Historical records of contractor performance act as inputs to the Best-Value system. These records are an indication of the contractor’s qualification trend. Two pilot projects were used during model implementation to show the impact of the Best-Value system in the contractor selection process. Results of model implementation show significant differences from the Lowest Bid strategy. Bid Price constituted only 13 to 17 percent of the total weight for the two projects. As a result, the lowest bid did not decide the award, but rather the degree to which project priorities were accommodated. Assigning an initial fixed weight for bid price (80%) for both projects did not affect the selection as Contractor C prevailed in both cases. A trade-off analysis for the lowest and chosen contractors is shown below.
7.2 Summary of Part-1
The Best-Value contracting strategy aims at using price and other key factors in the evaluation and selection process to enhance the long term performance of projects. The inclusion of model parameter as key factors that match the very specific needs of a specific project guarantees that the selected contractor is the best to construct the facility. Previous attempts to implement Best- Value contracting strategy did not consider the unique characteristics of each construction project in which they based the selection criteria on subjective methods. Unlike previous studies, this study deals with each project as a unique case and includes the appropriate parameters in the contractor selection process. The study uses a rational approach in calculating the scores based on the agency expected performance. The aim is to establish a flexible but rational model capable of being tailored to specific needs of the project. This flexibility is obvious in the selection of parameters, to be included in the contractor selection process, and in the determination of parameter’s weights. The model rationality is achieved through relating all awarded scores to the agency’s expected performance. The establishment of the Best-Value model uses the past record of the contractor work for the agency as an indicator of the contractor’s qualification trend. This research incorporates pre-qualification as a first level screening technique in selecting top contractor bids in Best-Value procurement and then applies a rational scoring system in the final selection. Data are collected from groups of experts in the Minnesota Department of Transportation and processed through the analytic hierarchy process (AHP) to establish the parameter weights. A sensitivity analysis is conducted to verify the model scale and calculation methods. The analysis shows reasonable differences in the parameter scores reflecting the differences in the contractor qualifications.
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Pilot projects are used during model implementation to clarify the impact of the Best-Value system in the contractor selection process. Results of model implementation shows the significant turnover from the lowest bid strategy to the choice of the best contractor based on past contractor performance. The maximum value of Best-Value for pilot projects has gone to a contractor other than the lowest bidder. This happens as an impact of including parameters more than just the lowest bid.
7.3 Summary of Part-2:
The inference of sensitivity analysis results clearly show that a better selection would be more reliable and significant if the following condition occurs:
• More data records are used for the contractors such as data record for work done in other districts.
• The implementation of the Best-value system would start with a higher weight assigned to bid price, between 80-90% of the total weight, at which the selection will depend on the lowest bidder and considering other performance parameters. The opposite case would be for the weight of bid price ranges between 20-30% of the total weight leaving a higher weight value of 70-80% for the performance parameters at which the selection will be based heavily on the contractor with better performance. Reliable documentation of the contractor performance is necessary in this case.
• “0-reference limit” for bid price set as equal to max. Bid. Part-1 of this report discusses an alternative of setting a lower-reference-limit and the use of prescreening steps.
• The use of “0-reference limit” for performance parameters as equal to a specific percentile, the 60th to the 75th percentile of the contractor’s population in this case, is arbitrary and depends on available records to support the selected value.
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