Best Value or Lowest Bid? A Quantitative Perspective
Publication: Journal of Construction Engineering and Management
Volume 138, Issue 1
Abstract
In contrast to traditional price-dominated lowest bid (LB) procurements, best value (BV) procurements select contractors most advantageous to the clients, taking into consideration not only prices but also other factors. Decisions on whether LB or BV approach should be adopted are difficult ones. There is yet to be any objective model developed to back up such decisions. This paper proposes an index named price elasticity of performance (PEP) that may serve as a quantitative measure to reach an objective decision. The theoretical model construction of PEP is also described. Two measures in the individual and market levels of PEP are defined. A design/build construction project is selected as a working example to demonstrate the applicability of the proposed method. Potential applications and limitations of the proposed method are also addressed. It is concluded that the proposed PEP method has the potential to resolve the dilemma of pursuing efficiency and avoiding violation of regulations in traditional procurements.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 138 • Issue 1 • January 2012
Pages: 128 - 134
Copyright
© 2012 American Society of Civil Engineers.
History
Received: Apr 7, 2010
Accepted: May 4, 2011
Published online: May 6, 2011
Published in print: Jan 1, 2012
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