How the city should choose consultants
City staff have stressed that the company picked for the Airport Parkway bridge project was based on 80 per cent technical score and only 20 per cent on price. This is how municipal and provincial governments often trick themselves into thinking they’re picking a consulting firm based mostly on their technical abilities. Here’s how they’re deceiving themselves and how they could do a better job.
Let’s say the city wants to build a new community centre: they issue a request for proposals or RFP. This usually gives a description of the scope of work, building area, objectives and such.
It is typically pretty general and there is emphasis on the proposal format and what has to be submitted, such as staff resumés and examples of work. On a typical RFP, the city will review and score the submission along the lines of a team’s experience and qualifications, understanding of the scope, quality of approach, ability to be creative and innovative, and schedule/ overall level of effort — adding up to 80 per cent of the score. The remaining 20 per cent goes to the financial proposal.
Sounds like a good plan, but here’s where it goes wrong:
Let’s say 10 firms respond; the city reviews the responses and selects the top five. It is a pretty sure bet that each of these firms has pretty similar levels of experience, with only marginal differences between them. Let’s say that these scores (out of 80) are 76, 75, 74, 72 and 70. Looking at this range, any of them could probably do a good job.
Now the city looks at the financial proposal. They score this based on giving the full 20 points to the lowest fee and the rest lose points in descending order.
Let’s say that the team that was the weakest technically submits the lowest cost; they do this because they figure that the lower fee will give them an edge. They’re right; they get the full 20 points. The result, low price wins out of a field of equally qualified firms.
Consider this though: the firm with the best technical score might just have a reason for that high score; it might mean they have more experience, better people or some experience with this type of project that means they know what is involved and have carried reasonable fees to do the job. But, in order to win the project, they have to beat the lowest team by trying to lower their fee from where it should be in order to be sure they win the project. This inevitably means lower fees for the same quality work; good teams have to do work, eventually, below cost, in order to keep the lights on. Is there a better way? You bet. Lets take the same example: The city issues a request for expressions of interest, and scores the respondents based on things like technical ability, creativity and team makeup, then produces a short list of qualified firms. Previous experience might be left off this list so that newer firms can try for the work if their technical skills from a related field are applicable.
With this short list, the city gives each firm a copy of the building objectives and a reasonable time frame and fee to come up with some ideas. This gives those firms a chance to do some sketches/designs and concepts to show their creativity and skills and they get paid to do so. This might be a month of work and result in some creative ideas; for projects like a community centre, these might get posted for the public to view and comment on.
The reviewing panel then meets with the best technically scored firm and offers them the work; the panel can tell the firm what they liked about their design or, if another firm produced a better concept, what they liked about that one, or any of the others. The two then negotiate what a fair price would be, the detailed understanding of the scope of work based on a task analysis and a fair and open discussion on what is actually involved the project. If the two can’t agree, then the client moves on to the second-highest-scoring team and restarts the negotiation.
At the end, the city might spend a few bucks to get a bunch of ideas from qualified firms, but isn’t that worth the effort to get a better outcome? That amount is probably less than one per cent of the project cost. When the team wins based on price only, they’ve committed based on a fixed amount of time for an unknown amount of work and have no choice but to work as efficiently as possible, with no room for extras like design resolution or creativity. The result: change orders during construction, lower services and litigation.
Let’s start picking firms based on their skills and their abilities and pay them a reasonable fee to do a good job. It is called quality-based selection and it’s been around for years. Let’s start using it to build better and smarter.