Lowest price or value? Investigation of UK construction clients' tender selection process

Abstract

There is a growing urge for a shift from ‘lowest-price wins’ to ‘multi-criteria selection’ practices in the contractor selection process. The rationale is to achieve best value (for money) for the client. Earlier investigations have found that the tender price (i.e. capital cost) still dominates the final selection decision despite increased emphases on the need for contractor selection based on ‘value’. This paper provides insights into the evaluation of contractors' attributes, particularly for project-specific criteria (PSC), that is, criteria against which tendering contractors may be considered. The importance attached by clients to the ‘lowestprice wins’ philosophy is also reported. The perceived importance of PSC (i.e. their influence on final selection choice) is determined through a structured questionnaire survey of UK construction clients. The results show an increasing use of PSC. It is also found that ‘lowest-price’ is not now necessarily the client's principal selection criterion, but rather, the realization that cost has to be tempered with evaluation of PSC in any attempt to identify value for money.