Best-Value Procurement in Design-Bid-Build Construction Projects: Empirical Analysis of Selection Outcomes

Abstract

The construction industry has used best-value (BV) in traditional design-bid-build (D-B-B) projects, and this raises questions regarding the influence of qualifications-based evaluation criteria on the outcomes of BV awarded contractors. The main objective of this study was to examine the consequences of contractor selections using BV for D-B-B projects. This study focused on the characteristics of selected contractors and identification of which evaluation criteria (cost, schedule, and several qualifications-based criteria) that have the greatest differentiation among competing bidders. The data sample consists of 171 D-B-B projects procured using BV; the majority of projects are vertical construction projects located in the institutional sector. The owner’s evaluation matrix was compiled for each project, including the owner evaluation committee’s scoring for each competing contractor. Descriptive statistics were used to identify the characteristics of selected contractors in terms of their ranking relative to competing bidders on both cost and qualifications-based evaluation criteria. Results show that in BV procurement, the lowest bidders were selected 42% of the time with 14.8% in the average cost differential versus low-bid options. Certain qualifications-based criteria, such as technical proposal, interview, past performance, and safety, were found to have a greater variance than cost submission among competing contractors. The finding from this study refutes the perception that there is minimal variation in contractor qualifications. It also contributes to the body of knowledge by providing an empirical data set across numerous BV D-B-B projects and considering all competing bids for each project.