From Our Members: Can We Stop the “Race to the Bottom”?

Rebecca Rees – @BecsRees, Partner at Trowers & Hamlins LLP,  shares their latest White Paper Price Evaluation Models for the Housing Sector.

Over the past two years Stuart Brown and I have been working with some fantastic procurement people in the housing sector to focus on price evaluation models…

Not very exciting, you might say. But I believe that they are at the root of the quality and safety epidemic the sector is currently experiencing. They cause the “race to the bottom” all of us in the housing and construction sectors lament. If we don’t want contractors to submit artificially low prices to win a bid – why do we ask them to do it in the first place. By using a relative price evaluation model that awards the lowest price with the highest marks you ask the bidder to create a fiction from which the job never recovers. Why do we all suspend disbelief at the procurement stage to bag ourselves a bargain?

Dame Judith Hackitt spotted it in her 2018 Building a Safer Future Report and we all know it from experience and practice – but why haven’t we fixed the problem? Procurement sets the tone of the entire contractual relationship: why can’t we get the message right from the outset?

Yes, you might argue we have bigger fish to fry in the world of public procurement: culture, the evaluation of quality proposals, navigating those pesky public procurement rules (are we really waiting for Boris’ bonfire of red tape?!), competence and up-skilling, gold-plating, vexatious threats of litigation, but price evaluation is on the list too – and get that wrong in a highly competitive, low margin market and we end up in the mess we are in.

 

I have always said that evaluation is a science masquerading as an art. There is no reason why a lawyer should be leading this conversation. Having helped produce this White Paper, I am the first to acknowledge the need for sector commitment and buy-in to this conversation. So PLEASE –

  • If you are a client or a procurement consultant: download the White Paper, read it, use it and report back on the results, are there any better models out there already in use?
  • If you are a bidder: feedback with your experience, tell us your secrets: how would you create a fairer competition?
  • Friends in the procurement law community: solicitors, barristers, academics, fellow students: rip the paper apart! What is wrong with the assumptions we have made? What case or arcane piece of law have we forgotten? How would you challenge one of these models? How can they be made better/more robust?
  • Economists/game theorists/generally clever people: have we got it right? Are we even in the correct ball-park? What more could we do to find solutions to the race to the bottom?

 

Download the White Paper: Price evaluation models for the housing sector – Trowers & Hamlins.

I fundamentally believe that price evaluation models set the course for the entire procurement. Get the price wrong and no subsequent intervention will fix it: we end up with poor quality and safety outcomes, disputes and worse.

It has taken generations to get to where we are now in the construction sector: it may well take us as long to source and agree on the solution(s) – but why don’t we work together to try and fix it? No sniping from the sidelines please – we need you in the conversation – so please join us to start it on Tuesday 1 December 2020.

I hope Constructing Excellence members will be able to join in the conversation – and hope to speak to you about this in due course in any event!

Rebecca Rees
Partner @ Trowers & Hamlins LLP

As always, we are happy to share our members’ opinions, innovations and new approaches through the Constructing Excellence network.

Contact us to find out more.