Towards the Best Value vendor: A study to BVP tenders from a private party’s perspective

This master thesis contains a graduation research to projects in which Best Value Procurement (BVP) is implemented as the award mechanism. The report has been composed during an internship at Royal HaskoningDHV which contributes to the completion of the master Construction Management and Engineering at the Delft University of Technology. The incentive for this master thesis research lies within the fact that currently there is insufficient knowledge of BVP from the perspective of the vendor. Engineering companies have the desire to learn how to anticipate on this new development in the procurement of the Dutch construction industry. In response to this, the following research question of engineering companies to investigate opportunities to improve their performance projects that are tendered with the BVP award mechanism. In respond to this, the main research question of this master thesis is formulated below. “What are the opportunities for vendors to increase the scores on the award criteria in BVP tender procedures in order to structurally improve the success rate in tender procedures procured with the BVP award mechanism? ” First, a closer look is taken at the BVP award mechanism and the BV philosophy. In the theoretical framework the fundamental underlying theories are investigated, i.e. the Information Measurement Theory (IMT) and the Kashiwagi Solution Model (KSM). Besides the practical implementation of the BV philosophy from the client’s point of view (BVP), also insight is provided from the vendor’s point of view, i.e. Best Value Sales (BVS). In the figure below the number of projects that are tendered with the BVP award mechanism are shown. These prospects seem to predict a bright future. With the theories about BV in mind, there is moved on to the practical component of the research. In the case study three projects are investigated that have been tendered with the BVP award mechanism. All three projects are concerned with plan studies in the field of hydraulic engineering and in every one of them Royal Haskoning and DHV have participated. Here, the performances of both vendors are put under the microscope and it is investigated how these performances have come about. This is done based on an evaluation on the tender assessments of Rijkswaterstaat and on the interviews with employees that have participated in these projects. From the tender assessments and the interviews points of attention are retrieved that have the potential to contribute to increase the scores on the award criteria. These suggested opportunities are related to both context improvements and organisational improvements. Two examples of these points of attention are (1) coupling risks and opportunities to the project objectives and (2) developing internal BV standards. Most important point of attention that has been indicated by both client and vendor is the SMART formulation of the tender documents and the answers during the interviews. Therefore, this opportunity is worked out more extensively during the design phase. In the figure above, the developed SMART assessment tool is shown, with which the formulation of tender documents or interviews can be assessed. SMART is an acronym for Specific, Measurable, Attainable, Relevant and Time-bound and the tool assesses every formulation based on these five conditions. For every single condition two points can be earned, as indicated for the condition ‘specific’ in the table below. This way, the maximum score for the five conditions together is ten points, which is visualised in figure S2. The SMART assessment tool has been applied on the tender documents of one of the projects in the case study and suggestions for improvement have been put forward. During the SMART assessment the condition ‘measurable’ is indicated as the condition with the most potential for improvement. Finally, this report concludes with the establishment of the BV organisation in order to move towards the BV vendor. Therefore, there is zoomed in on three levels in the organisation, i.e. the BV support team, the BV tender team and the BV individual. This part is concluded with the notion that it is most important to be aware of the personalities within these teams in order to utilise the capabilities of each BV individual and optimise the performances of the teams.