PRICE QUALITY METHOD IN TENDER EVALUATION

Abstract

Prevalence in the widespread practice of awarding projects to the lowest bid tender in construction procurement has resulted in compromised quality and performance of Contractors who win such bids. This ‘lowest-price wins’ phenomenon has highlighted the need to review the methods of Contractor selection adopted in the construction industry. Since tender evaluation is one of the critical components in the process of Contractor selection, it is important to examine these methods of evaluation used.

With an increased level of government spending on public projects locally, the need for a particular model or standard criteria to serve as a benchmark in the tender evaluation process arises, and has materialized in the implementation of the Price Quality Method in Singapore. The introduction of every scheme brings about its beneficial aspects, but also entails problems due to its inherent shortcomings. Although the PQM framework takes into consideration both the price and quality aspects of a tender, some of its features tend to be subjective, and have caused discrepancies which affect the evaluation process and overall tender outcome. This raises doubts in the effectiveness of the PQM in its purpose of evaluating public tenders. There is thus a need to assess the effectiveness of the PQM for tender evaluation in the long run. It is for this purpose that a study of the PQM is undertaken. The author seeks to analyze the salient aspects of the PQM used in the evaluation of public sector tenders through a qualitative study using case studies. The project cases aim to illustrate the benefits as well as shortcomings within the PQM framework, and further suggest possible improvements to fine-tune the system.

This study serves as a platform for feedback to further improve the current PQM framework and encourage professional bodies and government agencies to critically question schemes at hand so as to enhance the tender evaluation process locally. The author also hopes that this study can contribute knowledge and complement other studies on various aspects of tender evaluation to constantly better the performance of the construction industry.