Unless things change, Government Owners (in all fairness most real property Owners) will continue on a path of actually perpetuating an atmosphere of poor construction productivity, lack of collaboration, and continued degradation of the Federal Real Property Portfolio.
We all know that low productivity is endemic to the construction sector.
Many/most of us are also aware that the traditional ” low bid ” and ” lowest price ” design-bid-build ( DBB) construction delivery methods are largely responsible for the AEC industry’s ( Architecture, Engineering, and Construction) disproportionately poor productivity and associated high number of legal disputes.
Most of us, however, are not aware of how to implement ” best value ” solutions that provide the true cost savings to Owners, Contractors, and AEs.
Collaborative construction delivery methods such as Job Order Contracting (JOC) and Integrated Project Delivery (IPD) have been proven for decades to deliver higher quality construction at an overall lower total cost of ownership. Despite this fact, they and other “best value” construction delivery methods, remain a fraction of Federal Government Solicitations vs. traditional design-bid-build. low bid, and/or lowest price technically acceptable (LPTA) methods.
‘Best Value’ and ‘Lowest Price Technically Acceptable” are NOT the same thing, yet many/most Federal procurement and engineering personnel are unaware of the difference.
Best Value – Best Value is procurement and evaluation process where the most advantageous offer is selected based upon full consideratoin of direct cost and non direct cost factors. “Best Value” is not the lowest priced technically acceptable, however LPTA evaluation criteria are more often than not applied to best value situations.
“Past performance”, “technical” / specific approaches to problems/requirements, and ” management” / implementation of best management practices are critically important for construction projects. Construction is NOT a commodity and while there are certainly similarities, each construction project has its unique aspects.
Surveys show that up to 60% of contractors are not likely to respond to LPTA Solicitations: 20% of contractors will NOT respond to LPTA solicitations, and only 40% are “very likely to respond. Reasons for not responding include the inability to be competitive on price alone, and the lack of long term opportunity/relationships.
On the other hand 64% of federal employees are likely to issue LPTA Solicitations. The reasons given is that they expect “to save money” (50%), its mandated and/or standard practice (17%).
LPTA and low price construction projects are cumbersome and costly to award and very problematic to fulfill. While contractors understand this fact, the many federal employees disproportionately do not. Furthermore despite that fact that only 25% of Owners are very satisfied with LPTA/low bid outcomes, 60%+ see their usage increasing or staying the same!
The drawbacks to LPTA/low bid are obvious:
- Higher number of Solicitations awarded to unqualified and under-performing Contractors
- Perceived short term savings vs. long term savings
- Actually lowers Contractors standard of performance
- Lessens Contractors incentive for innovation
- Owner and Contractor dissatisfaction
- Higher total cost and poor quality
We need JOC, IPD and other collaborative LEAN construction delivery methods to rapidly accelerate or a reputation for very good work but at a reasonable price will no longer carry the day.
via http://www.4Clicks.com – premier construction cost estimating and project management technology and training for JOC, SABER, IDIQ, SATOC, MATOC, MACC, POCA, BOS, BOA.
Also see – jocexcellence.net
LEAN Construction Project Delivery Methods - Job Order Contracting, IPD, 5D BIM 
OUTSTANDING POST ! I agree with your findings and analysis of the data. I as a contractor much prefer a design build project over a Design Bid Build project. it allows us to work with the team and the client as a whole to achieve a project that our client is happy with and at a price that is acceptable to all. There is a lot of truth to the old adage “you get what you pay for” . In the LPTA market contractors have to cut corners and give the least that is barely acceptable to be competitive in the market. This analogy gives the client a cheap project that may not be up to their expectations leaving a bad taste in their mouth when all is said and done. Even when I bid the LPTA type projects I bid to give a quality product so my client is happy and I am proud of our work. Needless to say that I am not very competitive with the low ball bidders, but I will not lower my standards to the point of cutting corners, using cheap material and unqualified labor force. People should look at best value not lowest price. Look at what your project will look like in 20 years doing a life cycle costing analysis and then compare all of your bids to see who is giving you a better over all project that will meet your needs. Also make sure that you have people who know construction when reviewing your bids and not just accountants who are only watching the dollars for the bottom line.