March 13, 2013

Why qualification based selection makes sense

View from the Board | Keith Sashaw

For most clients, selecting an engineering firm may be the most important decision in ensuring the success of their projects. For that reason, the procurement process is of specific interest to members of the Association of Consulting Engineering Companies of B.C.

Many ACEC-BC members express concerns about the procurement process used by government clients.

Most federal, provincial and municipal departments hire consulting engineers based on “best value” to the taxpayer.

In most cases, firms must submit proposals that list their qualifications and technical expertise, their proposed approach and the price for their services.

However, typically, clients’ evaluations of proposals are biased toward the price aspect, rather than giving due weight to expertise and approach.

This often results in situations where engineering firms tend to interpret the scope of work narrowly, in order to provide the lowest price and win the job.

Such a process effectively penalizes firms that have the foresight to anticipate complications, that propose innovations or that have a clearer understanding of the client’s needs.

In addition, we are increasingly finding instances whereby procurement officials either choose not to use or are unaware of the fact that there are standard documents and processes available that clearly delineate roles and responsibilities and effectively allocate risk to the parties to the agreement.

The ideal procurement practice will result in:

Obtaining the right team for the right job; establishing and adhering to realistic schedules and budgets; having a project with few change orders and disputes; promoting better business relationships between parties; and providing better service, quality and value for taxpayers

ACEC-BC suggests that a good procurement system that: clearly defines objectives and scope; evaluates what distinguishes proponents; meaningfully delineates scores; rewards proposals that add value; and uses a short list where necessary as proposals are expensive to prepare and can be time consuming on the part of clients to review.

Procurement must consider the project life-cycle. “Engineering design” constitutes about 1 to 2 percent of the overall lifecycle cost of a project. The appeal of the lowest-price design solution overrides the value that can be gained from considering lifecycle costs.

It must focus on best value – not lowest price.

The internationally recognized best practice for the procurement of professional engineering services is commonly known as Qualifications Based Selection (QBS). This best practice has been mandated by law in the U.S. since the 1970s, and more recently in the province of Quebec.

QBS is recommended by the International Federation of Consulting Engineers (FIDIC).

As mentioned, it is also the best practice recommended by the National Guide for Sustainable Municipal Infrastructure (InfraGuide) – a collaboration between Infrastructure Canada, the National Research Council, and the Federation of Canadian Municipalities.

Simply put, QBS is a systematic and transparent process for selecting the most appropriate engineering firm for a project, and then negotiating a reasonable fee that will protect the public interest over the life-cycle of the project, including design, construction, operations, maintenance and eventual upgrading or de-commissioning.

QBS was developed as a response to the alternative of auctioning professional engineering assignments to the lowest bidder, resulting in sub-optimal designs, inadequate construction supervision, increased life-cycle costs, poor value for the taxpayer, and in extreme cases to compromised public safety such as occurred in the Save-On Foods disaster in Vancouver (1988) and the Laval Bridge disaster in Montreal (2006).

It is no coincidence that the government of Quebec introduced QBS shortly after the Laval Bridge disaster.

Keith Sashaw is the president and CEO of the Association of Consulting Engineering Companies of B.C. Direct comments or question to editor@journalofcommerce.com.

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