A Quantitative Analysis of Architectural and Engineering Procurement: Effects of Cost Inclusion on Procurement Outcomes Compared to Qualifications- Based Selection

Abstract

In 1972, the Brooks Act established Qualifications-Based Selection (QBS) at the federal level, requiring the U.S. Federal Government to procure architectural and engineering (A/E) consultants based upon their experience and capability rather than cost. Yet at the state, municipal, and local levels, and as well as in the private sector, best value procurement (BV) of A/E services has become prevalent as owners have utilized price evaluations with increasing regularity. A/E professionals have widely viewed this as a trend that carries threatening implications for their profession. In instances where owners insist on evaluating price, professional associations in the A/E community have responded by establishing guidelines for how price should be treated to ensure an effective, fair, and transparent selection process. The two most widespread recommendations are that (1) owners should limit the weight of pricing such that it does not dominate the selection outcome, and (2) a two-envelope system should be used to ensure the evaluation process is not unduly biased towards lowest price. Yet little research has investigated the application of these guidelines within the industry. This paper aims to address this gap by analyzing the characteristics of selected bidders from a dataset of 122 publically-procured A/E projects across North America, where the owners’ evaluation process followed the guidelines of limited price weighting and a two-envelope system. Results showed that half the time, the consultant selected within the best value (BV) procurement system was the lowest bid. In the cases where the lowest bid was selected, results showed that the consultant was nearly always ranked within the top three qualifications scores among all consultants. In a quarter of the projects, the lowest bidder also had the highest qualifications. The range of owner evaluation scores for each competing consultant were also analyzed in order to identify which evaluation criteria achieved the greatest differentiation among consultants. Results indicated that cost submissions, schedule proposals, and interviews achieved greater differentiation than technical proposals, past performance or related experience criteria. Lastly, interrelationship of evaluation criteria showed that, no direct relationship existed between cost and other qualifications criteria. The results of this study can help owners in terms of how to optimize the inclusion and weighting of their evaluation criteria. Implications for A/E professionals include recommendations for how to strategize proposal plans to emphasize evaluation criteria that achieve greater differentiation in order to stand out from their competition. Furthermore, the approach of analyzing the evaluation scores for all bidders is novel, and can help researchers in future utilize similar approach.