Lowest Bidder? No Wonder There Are Problems

Marketplace: Road construction paved with problems

Dr. Deming always preached to not choose suppliers based on price alone. Many companies and industries have never learned that lesson, so why should we expect governments to do any better?

This Marketplace story highlights how manyroad construction or improvement projects are beset with delays. The systemic culprit? Policies that mandate choosing the lowest bidder. Marketplace explains:

“Thousands of roads and bridges across the country are in this predicament. In Massachusetts alone, 43 percent of the road and highway projects under construction aren’t finished on time.”

The low bidders often don’t have the resources to get the job done, or they won’t go above and beyond to finish a job that might not be very profitable.

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Another systemic dysfunction that’s highlighted in the story is the practice of beginning work before the design is finalized and has been signed off on by the contractor. This, not surprisingly, leads to rework and additional delays. The governmental body is just chucking the design “over the wall” to the contractor.

Is there any hope that we can get government to focus on being effective instead of just focusing on trying to be cheap?

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an book titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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2 Comments

  1. Duane Craig says

    Very good points. I have seen this preoccupation with price in the private sector lead to all sorts of troubles. As the one who had to manage subcontractors who weren’t up-to-the-job it also made my life a lot more stressful. Rushing to build is just as troubling. When will we learn to think ahead?

  2. curiouscat says

    yes there is hope. The federal government requires the best overall long term benefit to government. Many then just use lowest price claiming that is what the law or regulations say. That claim is just false. It is poor management that takes the easy way of using lowest price not some law or regulation.

    Of course the federal government has now been awarding all sorts of contracts with no analysis of best value (no bids for far more contracts than seems reasonable). That is another problem.

    And there is the big problem of awarding contracts for things noone actually wants but politicians want to send money to donors or their districts. That again is another problem.

    Federal government management should be held to the same expectations of anyone else for selecting contractors based on the long term benefits. Do not accept some claim that they are required to use lowest cost. And my guess is that is true for most all state and local contracts too. People just are willing to accept excuse that seem lame because we figure yeah the government probably would be so lame…

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