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Correcting the fee-technical score variability imbalance in two-envelope fee tendering

Author

Listed:
  • Derek Drew
  • Po Yin Lai
  • Heng Li
  • H. P. Lo

Abstract

Consultants' fees and technical submissions in two-envelope fee tendering are usually converted to scores. The fee scores and technical (quality) scores are then multiplied by predetermined weightings and aggregated. To preserve the desired influence of the predetermined weightings, the fee score and technical score variability differences need to be balanced, otherwise, when aggregated, one variable will end up dominating the other variable. Currently, such adjustments are not undertaken in the popular two-envelope fee tendering models. It seems that in many cases the consultant selection becomes biased in favour of the lowest fee rather than the quality. Important influences that contribute to the fee-technical score variability imbalance include suicidal fees and non-serious fees (which increases fee variability) and similar size consultant firms with similar experience and workload levels offering similar, if not identical, services (which reduces technical score variability). This paper offers four alternative approaches to the correction of the fee-technical score variability imbalance. If the client is able to distinguish between suicidal, serious and non-serious fees, then it is suggested that first the consultants submitting suicidal and non-serious fees should be disregarded. A normalization approach (in which the consultant's technical and fee scores are re-scaled to fall between unity and zero) should then be applied. If the client is unable or unwilling to distinguish between suicidal, serious and non-serious fees then aggregating on the basis of the consultants fee and technical score rankings appears to be the best method out of the three remaining approaches.

Suggested Citation

  • Derek Drew & Po Yin Lai & Heng Li & H. P. Lo, 2002. "Correcting the fee-technical score variability imbalance in two-envelope fee tendering," Construction Management and Economics, Taylor & Francis Journals, vol. 20(2), pages 157-166.
    • Handle: RePEc:taf:conmgt:v:20:y:2002:i:2:p:157-166
    DOI: 10.1080/01446190110098970
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    References listed on IDEAS

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    1. Derek Drew & Martin Skitmore, 1997. "The effect of contract type and size on competitiveness in bidding," Construction Management and Economics, Taylor & Francis Journals, vol. 15(5), pages 469-489.
    2. Michael Hoxley, 2000. "Are competitive fee tendering and construction professional service quality mutually exclusive?," Construction Management and Economics, Taylor & Francis Journals, vol. 18(5), pages 599-605.
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    Cited by:

    1. Florence Phua, 2005. "Determining the relationship between fee structure and project performance between firms: an empirical study based on institutional and task environment perspectives," Construction Management and Economics, Taylor & Francis Journals, vol. 23(1), pages 45-56.

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