For an overview on how the QBS process works, view the YES2QBS Video HERE.
With QBS, firms are selected based upon their qualifications to do a project, instead of their low bid.
A QBS, Request for Qualifications (RFQ) process is almost identical to a Price-Based Request for Proposal process except that it does not a request a price from the vendor. And in some instances, clients may choose to disclose an approximate budget to proponents so that they can provide more detailed information in their proposals about things such as team members, process and timelines.
Once the most qualified firm has been identified through the RFQ process, then price and detailed scope negotiations are undertaken with only the most qualified firm.
In this regard, QBS is also unique in that during the pre-award scoping and budgeting negotiations with the most qualified firm, cost drivers and cost-reduction opportunities such as Construction Contract Administration can be appropriately discussed and dealt with before the project is awarded instead of using change orders part-way through the construction when it is most difficult to address.
Having already invested substantially in the selection process, the most qualified firm has a significant incentive to provide a fair price – otherwise their negotiations will be terminated, and the client will engage with the second most qualified firm.
In this way price is kept fair, while quality is kept high.
Does the QBS process sound familiar? It should, as it’s the same process most firms use when hiring staff. So, if your human resources department can use it to make million dollar hiring decisions for staff architects ($100,000 annual salary x 10 years of service = $1,000,000) why do contract architects require a low bid to be selected?
When price is even a small part of the evaluation process vendors perceive that if they aren’t one of the lowest prices – regardless of how qualified they may be – they are unlikely to win the project.
This forces vendors to propose stripped down pricing for the least viable, least innovative version of the project knowing that the real cost of the project is likely higher, and that unevaluated criteria like reducing long-term operating costs will be overlooked in order to reduce the price of the proposal. You can start to see how short-term cost-reductions at the proposal stage can exponentially multiply long-term costs to the client.
Especially when you recognize that the design fees on a project are only a very small percentage of the total construction cost but those design fees determine how cost-effective the rest of the project, including its long-term operating and maintenance costs, will be.
Of course, low-cost proposals are a key driver of change-orders during the project – a situation that creates project cost overruns and turns buyers and vendors into adversaries instead of partners.
This does not mean that vendors are being deceptive with their proposals – it is simply a consequence of having price as a part of the evaluation.
QBS has been recognized globally as the procurement process that results in clients hiring the most appropriately qualified architecture firm, at the fairest price, with the least project cost over-runs.
You can read the Maryland (price) versus Florida (qualifications) case study here