LTA TENDER GIVES UNFAIR ADVANTAGE TO LOW COST CONTRACTORS, MAY ENDANGER S’PORE INFRASTRUCTURE

I refer to the viaduct structure collapse at PIE. It is noted that LTA awarded the project to OKP which submitted the lowest bid.

LTA uses the two envelope system in awarding projects during tender evaluation. The first envelope (first round) consist of scoring of tender proposal, usually by independent party, based on a set criteria. The score is given 50% weightage.

Contractors passing the first round is then evaluated based on tender price. This is the second envelope, and is given 50% weightage. Therein lies the problem.

Any contractor who scores badly but passes the first round can still be awarded the project if it does a low ball.

Example:
Round 1
Contractor A – 25 (barely passing)
Contractor B – 45 (superb quality)

Round 2
Contractor A – 50 ($90 million)
Contractor B – 25 ($180 million)

Total
Contractor A – 75 (awarded contract)
Contractor B – 70

Infrastructures are designed to last 120 years. This system of awarding projects is detrimental to our society. The overall cost of maintaining a poorly constructed structure can even exceed the cost to build them.

The significant weightage given to tender price would encourage contractors to submit low prices using lousy proposals. Why waste time on developing brilliant proposals if you can’t beat the price.

This has to stop. In Olympics games such as figure skating, extreme scores awarded by judges are discarded. The LTA can adopt similar stance by encouraging quality design via higher weightage of 66% for first envelope. Unreasonable bids, 40% lower than median bid price should not be even considered as such contractors either underestimate project cost or too desperate for project, will try to undercut in some areas to squeeze out some profits to avoid going bankrupt.

Beh Chia Loh
A.S.S. Contributor

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