‘Best value’ purchasing to change way county lets construction bids


(12/27/2007)

by Sarah Squires

As the county eyes a potential $13 million to $51 million in new construction, it's breaking ground on a new way to contract for such work.

This new way of selecting construction bids will change the world of construction in Minnesota.

No longer will the company that can dream up the skimpiest bill take the bid. Say goodbye to the construction limbo, how-low-can-you-go dance. No more change orders, no more delays.

It's called best value, or quality-based purchasing. Winona County will be one of at least two counties to participate in a pilot program for this new kind of bidding, and supporters say it will save taxpayers a pretty penny and likely spread across the state.

The state Legislature approved this new way of bidding for Minnesota cities and counties during its last session. Government entities across the state will no longer be bound to accepting the lowest bid for construction, maintenance and repairs. But it won't mean that government officials can pick their buddies for the jobs, rather, the new system has a series of different methods to rate companies and make selections.

The process

With best value purchasing, a contractor or design firm is selected using a database of information, including the bid cost, a firm's history of meeting or breaking deadlines, how often they go over bids with change orders, and customer satisfaction. Selection is then based on the firm's quality of work as well as bid price.

But that's not all. Best value purchasing means that a contractor is responsible for a lot more than today, putting the "risk" and associated costs in the contractor's hands.

Best value bidding eliminates the need for a construction or project manager, a position which typically costs 2.5 to 3 percent of a total project bill. Instead, a county staff person trained in the program will let and collect bids, then organize database information for the selection process.

The project manager position usually oversees construction for a project. With best value purchasing, all of that oversight is the contractor's responsibility.

But the reason that the contractor can be trusted to oversee the job is at the heart of the new program. The contractor is also responsible for all of the risks associated with a project, and they have to pay for those risks. Some risks, like relocating staff people during construction, can be foreseen. Other risks, such as weather or added labor or material costs, can sometimes be harder to predict.

"With best value we say ‘here's the budget, you bid on it, but you are responsible,'" said County Administrator Bob Reinert. "For all of it."

Now, contractors will have to look into their crystal balls a bit harder when they make a bid. Gone will be the days when a firm can go back to Winona County for more money when something comes up during construction. They'll have to foot the bill.

"It's kind of forcing them to police themselves," said Reinert.

Winona County will select a staff person to train with Arizona State University in the pilot program. It will split the $125,000 cost for the training with Carver County, and more counties may join in and help further defray the expense.

Some of the larger companies that will be affected by the new bidding process are already part of a database of contractor information through Arizona State's previous work with the University of Minnesota. But smaller local companies will likely be included as the program moves ahead and the county solicits bids for its first, best value projects.

Reinert said he believes that the program will spread across Minnesota. "I think it's the way that everybody in the state will [contract for work] someday," he said. "We're on the cutting edge of that."

 

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