Risk assessment as an explicit dimension for tender evaluation

Abstract

Tendering plays a very important role in a project’s life cycle and the outcome of the tendering process will have a direct impact on the overall project cost. It should be clear that in evaluating tenders, it is not just the bid price that counts. The quality of the selected contractor will in many ways affect the success of the project; that is delivery on time, within budget and to the required quality. The selection of a ‘wrong’ contractor could easily lead to late completion or over expenditure. Unfortunately, uncertainties of events and unpredictability of their outcome do exist at the tendering stage, the effect of which could be costly in some circumstances. To manage the risks associated with such uncertainties, the introduction of risk assessment as an explicit dimension in the tender evaluation process is proposed. In this approach, decision makers will be made aware of high-risk elements upfront so that more informed decisions can be made. With more supportive information in a complex decision-making process, it is hoped that project risks and, in turn, costs can be lowered as far as practicable.