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News & opinion

17 SEP 2018

Impact of method of contractor selection on pricing levels

Projects procured by selected competition tend to produce the lowest price levels, while price levels in negotiated contracts are on average 13% higher.

These results are from the BCIS Tender Price Studies, which are based on the comparison of rates within accepted contracts. Price levels within a contract are not necessarily indicative of the overall cost and different procurement selection practices may produce other advantages (such as earlier delivery). However, the price level does provide a basis for judging these.

Sample sizes are small for some contractor selection routes and the projects included in the study are not necessarily typical – for example, Design and Build schemes will have included priced bills of quantity. However, the results would indicate that price levels in Design and Build contracts are around 5% higher than traditional Design and Bid contracts.

Price levels in negotiated contracts within a framework agreement are generally lower than negotiated contracts.

The vast majority of projects in the study were let on a competitive basis (94%), with selected competition being the most common (74%).

Pricing level (percentage relative to mean of all schemes in the study)

Source: BCIS

The Tender Price Studies are published in BCIS online and explore pricing level differences by:

  • Location
  • Contract sum
  • Building function
  • Selection of contractor
  • Building height
  • Site working space
  • Site access
  • Type of work

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