“Penny wise and pound foolish.” It’s an old adage warning of the folly of short-term, up-front savings at the expense of long-term benefits, such as quality, durability and safety.
One would assume that such a lesson would be respected when it comes to public infrastructure projects, such as roads, that are relied upon by millions of Canadians to get themselves and their families safely from A to B.
Unfortunately, the construction and engineering community in B.C. has uncovered a troubling trend in requests for proposals issued by municipalities that put a disproportionate bias, or “weight” on which company wins a construction contract. That factor? You guessed it: price.
When it comes to a piece of infrastructure, be it a road, a bridge or a building, it’s hard to argue that that piece of infrastructure is “only as good as its design.” The critical importance of getting the design stage right is immeasurable. Although the costs associated with design account for only one to two per cent of the life-cycle costs of a project, decisions made here can ripple through the project for years to come. Measure twice, cut once.
Now, consider the example of a recent RFP issued by a Vancouver Island municipality developing road-design guidelines. According to the document, the guidelines will be a “foundational document” that will inform the official community plan, and “form a statutory framework from which council will make decisions on everything” from public works to rezoning and development-permit applications.
Clearly, this is a project that will have generational impact on the community.
The initial RFP weighted the evaluation criteria on a reasonable mix of team depth and experience, degree of public engagement, proposed deliverables, innovation and references. However, the industry was disappointed when a modification was issued to include a 40 per cent weighting for price. Although the RFP indicates a critical importance of streets to the community, the underlying message of the modification is that the quality of the work is not nearly as important as the price for which it will be done.
In fact, out of all the criteria defined as being essential, price is by far the most important. It is four times more valuable than the depth of the team, four times more valuable than innovation, four times more valuable than public engagement, eight times more valuable than what a reference might say, and almost twice as valuable as the actual proposed deliverables.
In this instance, many, if not most, consulting engineering firms would not participate, because they know if they propose a budget adequate to do the job properly, it will be significantly higher than the low price, and their chances of winning will be small.
Those who would participate would likely assume a minimum scope of services and short innovation or creative solutions; not use the firm’s “A Team,” which, while having the most experience and knowledge, would have the highest charge-out rate; and assume the client is not interested in multiple site visits or meaningful engagement with the public, municipal staff and contractors.
Engineers have a duty to serve the public interest and a professional obligation to ensure that duty is fulfilled. However, consulting engineers are also businesses that must run astutely and profitably. Municipalities that issue priced-based RFPs send a clear message that they are not interested in getting the most innovative projects prepared by the most qualified design professional, but instead are interested in justifying decisions on the basis of price because it is easier.
Is this the type of municipality in which you would want to invest your family’s future?
Keith Sashaw is president and CEO of the Association of Consulting Engineering Companies British Columbia.
