Approximately a decade ago, the State of Ohio and its public authorities cast aside the multiple-prime contractor bidding system that had delivered low-bid pricing from MEP and other prime (sub) contractors, but often led to coordination problems and disputes at the end of a difficult job.
As part of the “Construction Reform” effort, the State authorized long-needed procurement methods like “design-build” and authorized public authorities to hire construction managers at risk and contractors on a “best value” basis. Contractors would be chosen based on subjective criteria, including past performance, as well as price, rather than just awarding to the low bidder.
After about a decade of moving in the “best value” direction, the results are in. One result is that delay claims and disputes, arising at least in part from the multiple-prime contractor delivery method, are down- way down. As a result, public authorities may be saving the cost of such claims, sometimes estimated at less than 1% of project cost. This has also saved administrative and legal time for public agencies and bureaucrats.
Many public owners enjoy the benefits of soliciting their favorite contactors on a subjective basis and the ability to tell them – in the event of a problem – to solve the dispute or forget about getting the next job.
But “best value” contracting is not without significant costs for taxpayers. The State of Ohio has basically traded less than 1% of project costs for claims for another tier of project overhead – where contractors on bid day are charging an additional 3-10% more to hold the subcontracts and coordinate the work. Therefore, many believe that the net construction cost of “Construction Reform” has increased significantly. Yet few are complaining, and it is expected that this contract delivery method will continue for the foreseeable future, or at least until a serious scandal rocks the subjective selection process.