Linking Best-Value Procurement with Project Performance Outcomes in Design-Bid-Build Vertical Construction Projects

Abstract

Construction is a dynamic process in which the outcomes depend on the quality of the project team; therefore, awarding the project to the best-suited contractor an important decision for owners. One method of contractor procurement is the best-value (BV) approach. When using this approach, the owner considers contractors’ qualifications in addition to their proposed prices; in contrast, price is the sole criterion in traditional low-bid procurement. BV has been used extensively by owners in the past few decades, with the goal of selecting the best-suited contractor for a specific project. But little research has been conducted that justifies the use of BV procurement within the Design-Bid-Build (DBB) system. This study aimed to fill the gap in the literature by statistically identifying whether BV procurement leads to owner’s benefits. Data were collected from 118 construction projects that were BV procured and D-B-B delivered. The data included the information such as the contractors’ price proposals and qualifications (as assessed through technical proposals, interviews, and past performance). The data also included performance indicators such as owner satisfaction scores and cost and schedule overruns. All the projects selected for this study were public vertical projects; most were renovation projects. The data were analyzed through using descriptive statistics and inferential statistics. The results indicate that employing a BV-procured contractor can be beneficial to owners in terms of cost and schedule performance. The findings also indicate that groups of contractors that receive high scores for technical proposals and interviews also achieve better project performance. Because BV involves potentially selecting an expensive contractor compared to the lowest bidder, an attempt was made to measure the cost of the selected contractor. To measure the cost, the concept of total BV cost was developed. The results indicate that BV-selected contractors have lower overall costs than do average bidders.