Cost focus a concern

PROJECT proponents, particularly in the government sector, have been criticised for awarding engineering contracts based on the lowest price rather than taking a ‘whole-of-life’ view.

“The problem with intellectual services in Australia today, and in many other parts of the world, is that they have become commoditised,” Austconsult managing director John Foster said.

“You buy engineering services not on the performance of the structure, but on the cheapest price.”

Mr Foster said the short-term focus on price effectively meant “the job goes to the most irresponsible proposal”.

Wood & Grieve director Matt Davis said this trend presented a challenge for many professions.

“An increasing number of educated clients do seem to be choosing the people who are best qualified,” he said.

“Unfortunately, government seems to be going in another direction, increasing the focus on lowest price as opposed to who is best equipped to do the job that will deliver best value for money over the life of the job.”

Mr Davis said price-driven procurement was short sighted, as it focused on the up-front cost rather than the whole-of-life cost.

SKM senior associate Gil Alexander said part of the problem was the tendering rules in the public sector.

“If you don’t accept the lowest price you have to justify it,” he said. “That’s the problem. The easiest option is to accept the lowest price.”

ARUP senior engineer Ken McDonald said engineers were partly to blame for failing to properly explain the value of their services.

“The true value that good engineering gives you is very hard to quantify unless you get an extreme event where something goes wrong, and then you get a great deal of scrutiny,” he said.

Pritchard Francis Associates managing director Arthur Psaltis was more supportive of government procurement policies, especially in the building industry.

“We still find the work we do for government to be procured in a fair and value assessed way,” Mr Psaltis told the forum.

He said his business had made a substantial investment to ensure it could bid for government contracts.

“It was one of the best moves we made because a large portion of our business is government based.”

Consulting engineer David Porter called for more clarity on the bidding process.

“The instructions on which you bid need to be clearer and more concise so that people can compete on a level playing field,” Mr Porter said.

He also acknowledged the reality facing bidders, who draw on past experience when preparing bids.

He said this could explain wide variations in bid prices.

Connell Wagner managing director Charles Milazzo agreed that standardised contracts and procurement methods across all government agencies would be helpful.