ISME Expresses Concern With Lowest Price Bid Tendering
Following the award of school building contracts to Western Building Services after fire defects had been identified, ISME, the Irish SME association, has expressed concern with how public works contracts are granted to the lowest cost tenderers.
Commenting on Western Building Services investigation, ISME Vice Chair Ross McCarthy noted: “While we do not know the details surrounding structural safety concerns with recently completed schools, the issue highlights the importance of carefully managing construction projects in the public sector. There is a concern that public works are rewarding lowest cost bidding behaviour. The issue has highlighted the importance of carefully managing the award and then delivery of construction projects in the public sector. Lowest price bid tendering does not necessarily mean cost-effectiveness. The technical and value-for-money merits of competing bids in the tendering process are being ignored. Contract management is also key.”
Regarding excessive costs, Ross McCarthy added: “It is likely that the remediation costs associated with the schools, and potentially hospitals,involved in the current investigation will run into the many tens of millions. When this remediation cost is added to the initial tender cost, it may well exceed many of the competitive bids that lost out on a cost basis.”
ISME does not believe that the current lowest cost driven method is the most appropriate one to apply in the procurement of fixed assets with a 40-plus year life-cycle.