Addressing the Fallacy in Lump-Sum Best-Value Procurement for Design–Build Highway Projects

Maria Calahorra-Jimenez, Cristina Torres-Machi and Keith R. Molenaar

Chapter 8 in Building a Body of Knowledge in Construction Project Delivery, Procurement and Contracting, 2023, pp 139-160 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Lump-sum best-value procurements of design–build projects enable the evaluation of technical factors in addition to price when selecting design-builders. This chapter examines procurement results from 347 highway projects in the United States over the last two decades. This analysis shows that price was the deciding factor in more than 80% of the selections. In fact, the weighting and scoring of technical proposals made it unlikely that a superior technical proposal would be awarded the project. This chapter explores how historical trends on scores and weights can be used to understand the current bias of best-value procurement toward lowest price. An illustrative example analyzing the impact of weighting and scoring on procurement outcomes is presented. This analysis leads to somewhat counterintuitive results highlighting the importance of scoring ranges in best-value selection. Indeed, the range used to evaluate technical proposals can have a greater impact on the selection than changes in weights. From these results, practical recommendations are derived to help highway agencies and other owners better understand the impact of scoring on best-value selection and how to adjust weights based on expected bid dispersion. These recommendations will guide agencies in authoring best-value procurement plans and determining weights and ranges of scores to promote best-value selection.

Keywords: Construction; Engineering; Project Delivery; Procurement; Contracting (search for similar items in EconPapers)
JEL-codes: L74 O2 (search for similar items in EconPapers)
Date: 2023
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