Technical and Gee Assessment CTFA literature review

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Please, write a two page literature review which includes summary, objective, definition, & key results of the attached paper. Please, assure to explain the method used brefily.....

SELECTING CONSULTANTS THROUGH COMBINED TECHNICAL AND FEE ASSESSMENT: A HONG KONG STUDY S. Thomas Ng, Mohan Kumaraswamy and Lai Kit Chow Department of Civil Engineering, The University of Hong Kong, Pokfulam Road, Hong Kong Many clients increasingly employ a competitive bidding approach for recruiting construction consultants. However, the concept of relying on the bid price alone is problematic as a consultant submitting the lowest bid may not necessarily be able to complete the work satisfactorily, and any errors in design or supervision may in turn cost the client many times the savings accrued from a low consultant fee. A proper consultant selection process, which takes into account other quality-based criteria, is therefore necessary to ensure the quality of the consultants appointed. This paper examines a Combined Technical and Fee Assessment (CTFA) approach being used in Hong Kong (HK), and discusses the weaknesses of the current CTFA approach. The initial results indicate that the disparity in the usage and relative importance of assessment criteria between various clients and the over-reliance on expert judgement in assigning the weightings are the major concerns of the current CTFA approach. Keywords: consultant, fee, quality, pre-qualification, selection. INTRODUCTION Construction projects are largely complex, costly and at times risky. Most clients would entrust consultants1 to provide professional advice and services so as to safeguard their interests. Cooley (1994) advocated that good consultants should bring genuine and lasting values to the organizations they serve. Consultants therefore play a very significant role in the success of a project. Employing incompetent consultants may lead to problems in design, planning, cost control and supervision, which could in turn affect the time, cost, quality and risk levels of a project. It is crucial that suitable and capable consultants are selected for a project. Despite that, fee competitiveness is a commonly used factor, and in many cases the key dimension, for consultant selection. Clients should however realize that the most qualified consultant firms may not necessarily offer the lowest price (Hattan and Lalani, 1997), and there is a possibility that the lowest bid is indeed from a newly established consultant or one who does not have adequate experience or resources to handle the project. Kasma (1987) argues that an error in the contract documents or inferior project supervision could cost many times the savings accrued from a low bid price. Therefore, the value of professional services should not be merely measured in monetary terms, but also consider consultants’ experiences and resources that best suit a project (Parks and McBride, 1987). 1 The consultants involved in a construction project may consist of architects, civil/structural engineers, building services engineers, quantity surveyors, etc. Ng, S T, Kumaraswamy, M and Chow, L K (2001) Selecting consultants through combined technical and fee assessment: a Hong Kong study. In: Akintoye, A (Ed.), 17th Annual ARCOM Conference, 5-7 September 2001, University of Salford. Association of Researchers in Construction Management, Vol. 1, 639-47. Ng, Kumaraswamy and Chow Many public clients in advanced countries, such as the United Kingdom (Construction Industry Board, 1997; UK Government Procurement Group, 1997), United States (WSDOT, 1996), Australia (CIDA, 1993; Queensland Government, 1997a,b) and Hong Kong (HK), have specific procedures for assessing consultants’ qualifications. This paper introduces the methods of consultant selection being used in HK – a Combined Technical and Fee Assessment (CTFA) approach. The weaknesses of the current CTFA practices are also examined in this paper. METHODS OF CONSULTANT SELECTION The methods of consultant selection can be broadly classified into two categories: (i) cost-oriented, and (ii) quality-oriented. Cost-oriented methods Cost-oriented methods emphasize the competitiveness of consultancy fees rather than other non-price factors. These methods are commonly used by both private and public clients for selecting consultants, as they have to maximize their profit and satisfy the requirements of public accountability respectively. Limited competitive bidding: A limited number of consultants, usually 3-5, are selected and invited to bid for the consultancy services. The short-list may be compiled through a formal pre-qualification process or through previous experience and/or ‘contacts’ of the client. Final selection is normally based on the competitiveness of bid price alone. Compulsory competitive tendering (CCT): CCT method requires the public authorities to compete with other consultant firms for professional services, such as design and supervision, even for projects within their own organization (Sparke, 1993). The aim is to improve the competitiveness of consultancy services and to enhance the efficiency of public services. Negotiation: Client may negotiate with a single candidate or several consultants (competitive negotiation). Standard professional fee scales might be used as a basis for negotiation with percentage discounts being offered by the consultant. Budget system: Client would establish a budget for the consultancy services, and the consultant are then required to submit technical proposals according to the services outlined by the client. Selection is based on the best technical proposal. The budget system is suitable for projects with a fixed budget on consultancy services or when it is difficult to identify the extent of services required, e.g. for feasibility study, claims evaluation and negotiation. Quality-oriented methods Quality-oriented methods however stress more on the quality standard, suitability and capabilities of consultants than on fee competitiveness. These methods are particularly suitable for complex and prestigious projects where high quality services are essential, or when innovative solutions are needed for solving special problems. Non-price competition – usage of fee scale: Consultant is selected entirely on the likely quality of services provided, and the assessment is simply based on the technical proposals submitted. Remuneration may be calculated according to the fee scale published by the relevant professional institution(s) with or without any adjustments. 640 Consultants selection Design competition: Usually used on large, complex and/or prestigious projects where innovative design solutions are crucial. Proposals are evaluated and the consultants are then required to submit technical and fee proposals, and the selection is based on the merit and feasibility of each design solution. Quality-based system: Consultants are pre-qualified and invited to submit technical proposals. Consultant submitting the best proposal is invited to negotiate the scope of services and consultancy fees. If agreement cannot be reached, the consultant ranked second will be considered (FIDIC, 1997). Two-envelope system: Competing tenderers are required to submit their offers in two separate envelopes; the first envelope contains the technical proposal for the services while the second envelope contains the fee tender for the services (Leung, 1999). The first envelope is opened first and technical proposals of all consultants are compared. The fee proposal of the one with the most favourable technical proposal is then opened, and an offer will be made if the fee is satisfactory. Otherwise, the fee tender of the second choice will be opened until a satisfactory offer can be made. RESEARCH METHOD To understand the current practices of consultant selection, guidelines and procedures on consultant selection were collected from clients in HK and overseas. Initial discussions with experts in this field revealed that the public and quasi-governmental clients have more rigorous standards on consultant selection than the private sector, and hence these two types of clients were the focus of this study. The consultant selection procedures in HK were collected through the Internet and interviews. Almost all government departments in HK follow the consultant selection procedures set out by the Works Bureau, and their procedures are publicized on the Internet. The authors also collected the information on consultant selection procedures of a major quasi-governmental client2 in HK through interviews and discussions. This was used to carry out a comparison case study with the standard governmental procedures, in terms of approvals and weightings used for prequalification and tender evaluation. COMBINED TECHNICAL AND FEE ASSESSMENT APPROACH As mentioned earlier, good consultants should bring ‘better value’ to the client. ‘Value’ to clients is derived from providing quality consultancy services at a low cost. To take into account both the potential quality and cost (fee) of the consultancy services, a CTFA approach has been adopted by the public and quasi-governmental clients in HK. The CTFA methods essentially consist of three main stages: prequalification, short-listing, and final selection. Pre-qualification stage In order to bid for the government or quasi-governmental projects, consultants have to register in the approved lists of consultants of the respective clients. The prequalification process helps to establish whether an applicant has the required financial, technical, managerial and resource capabilities to provide a particular type of consultancy services. Figure 1 highlights the generic procedures of consultant prequalification adopted by government and quasi-governmental clients in HK. 2 The name of the quasi-governmental client is not revealed to preserve anonymity. 641 Ng, Kumaraswamy and Chow Receive registration of interest Open the registration of interest and store the original copies in tender assessment room Check late submission and compliance against the requirements of the preliminary information brochure Ask for omitted information from consultants. Assess technical-related data and fill the scoring sheet Forward relevant information to the Financial Division for the assessment of financial eligibility. Forward relevant completed scoring sheet in sealed confidential envelope to the Assessment Panel Forward financial assessment report in sealed confidential envelope to the Assessment Panel. Compute and list the average and range of scores Preparation of a final report that identifies and ranks the submissions in order of average score and states the financial eligibility of each consultant. Convene a final review meeting and preparation of a recommendation report. Approval of recommendation report Finalise the prequalified list of consultants Figure 1: Procedures of consultant pre-qualification Consultants who are interested to be pre-qualified are required to complete a form and submit the relevant information to the client for assessment. The assessment criteria used by the government and quasi-governmental clients being examined are predetermined and related to task performance3 (cf: Ling, 2000), and these include consultant’s experience, resources, performance and project management (see Table 1). Despite that, the importance of selection criteria varies from one organization to another. The public client is more concerned about the resources of the consultant (weighting: 30–40%). The quasi-governmental client, however, places a very strong emphasis (weighting: 50%) on consultant’s relevant experience. The consultants are assessed by the members of an Assessment Panel according to the pre-agreed selection criteria and marking system. In addition, financial information is assessed, and a financial assessment report outlining the financial eligibility of a consultant is prepared. A final score for each consultant is computed having taken into account the above factors and consultant’s performance on previous projects. 3 Task performance relates to the proficiency and skill in job-specific tasks. 642 Consultants selection Table 1: Importance of pre-qualification criteria Selection Criteria Consultant’s experience Consultant’s resource General performance record Project management Weightings (%) Government 20-30 30-40 10-20 10-20 Quasi-governmental 50 30 10 10 Short-listing stage Since there could be many consultants on the approved list, it is necessary to reduce the number of bidders to a manageable size, and this is done at the short-listing stage. Three to five consultants are selected from the relevant approved list of consultants and they will be invited to bid for the assignment. Since the consultants on the approved list are deemed to be both capable and suitable for the project, the short-list is compiled according to their current workload and recent performance. Once the tender list is compiled, the tendering process will commence. Final selection stage Short-listed consultants are required to submit their technical and fee proposals based on the client’s brief and the project’s requirements (see Figure 2 for detailed procedures). This applies to all public sector projects irrespective of their sizes and natures. The final selection stage is to identify the best-qualified consultant firm to provide the professional services for the project at the lowest cost. Technical Proposals A technical assessment strives to identify whether a consultant has the necessary skills, resources and proven experience to complete the project satisfactorily, and the criteria used include consultant’s experience relevant to a particular type of project, resources, etc. In addition, criteria related to contextual performance4, such as approach to ensure the cost effectiveness, partnering, etc., are also considered by the clients based on engineering judgements. The technical proposals are assessed by the Assessment Panel based on pre-agreed selection criteria and marking scheme. As shown in Table 2, the most important criterion for the quasi-governmental organization is consultant’s experience (40%), while consultant’s resources are the most important consideration of the public client (25-40%) in this comparison case study. This highlights a difference in the perception of clients on the relative importance of different assessment criteria. Fee proposal The fee proposal includes a lump-sum fee figure, breakdowns of fee among stages of agreement and among disciplines or phases of project, make-up of lump-sum fee for staff cost, time-charge multiplier for salary costs and resident site staff on-cost rates. The assessment of the fee proposals will be carried out after the technical proposals are examined so as to eliminate any biases when assessing the latter. The fee scores are calculated as a percentage of the lowest received tender. The more expensive the tender is, the lower the fee score a consultant will receive. 4 Contextual performance relates to the soft skills, e.g. to interact and communicate with one another, and their method of assessment can be found in Ling et al. (2000). 643 Ng, Kumaraswamy and Chow Receive technical and fee proposal Short-listing of proposals Open each technical proposal Carry out a detailed review of the short-listed proposals, as appropriate and prepare a list of technical and fee questions and send it to proposer Open each fee proposal and register result Collect proposals and place all technical and fee proposals in lockable cabinets in separate proposal assessment rooms and create a viewing register Receive answers to question from proposers Complete assessment of technical proposals Examine each proposal received to ensure sufficiency and compliance with the requirements of the instruction to proposers Complete assessment of fee proposals Preparing letter listing deficiencies in each proposal and submit to proposers for immediate action Combining technical and commercial assessment and prepare a list ranking proposers Carry out a preliminary assessment and scoring of all technical proposals Prepare proposal recommendation report and get approval Prepare preliminary technical report Carry out preliminary assessment of all fee proposals and prepare a preliminary report Best-qualified consultant firm is selected Figure 2: Procedures for assessing technical and fee proposals Combined technical and fee assessment After the assessment of the technical and fee proposals, the scores are combined. The weightings between the technical and fee depend on the nature and complexity of projects, and the standard range of technical/fee weightings of the public client are illustrated in Table 3. The weightings are made known to the consultants at the time of tendering, so that they could appreciate the importance of technical proposal and plan accordingly. As shown in Table 3, the technical proposals of the consultants carry higher weighting than the fee proposals in all categories indicating that the public client is more concerned about the capabilities of the consultants than the fee. DISCUSSIONS The technical proposal is obviously more important than the fee proposal for all services in the current CTFA approach. However, the relative weightings of criteria used for technical assessment used by the public and quasi-governmental clients are different. In addition, the public client allows the assessors to determine suitable weightings for technical-related criteria and technical/fee assessment based on the predetermined ranges. There is a chance that the weighting could seriously affect the score and hence a consultant’s opportunity to win an assignment. 644 Consultants selection Table 2: Criteria used for assessing the technical proposal Description Consultant’s experience Local experience International experience Relevant to this project Organization and staffing Experience and number of staff Organization structure Computer facilities Responsibility of key staff Current workload Methodology and resource planning Technical approach Programme Contract management and site supervision Approach to cost effectiveness Ability to produce cost-effective design Approach to achieve cost-effectiveness Response to brief Understanding of objectives Identification of key issues Understanding of key requirements Innovative proposals Quality assurance System assurance Partnering Weightings (%) Government Quasi-governmental 5-10 40 25-40 17.5 15-30 12.5 15-20 10 15-25 -- ---- 5 5 10 Table 3: Weightings of the technical and fee proposals of the public client Type of project Multidisciplinary projects that requires special emphasis on technical input, including complex feasibility studies, investigation-stage consultancies and design and construction consultancies of above average complexity Less complex feasibility studies and investigation-stage consultancies and design and construction consultancies of average complexity Technically straightforward design and construction consultancies Technical : Fee 80% : 20% 70% : 30% 60% : 40% To examine the effects of the different weighting perceptions between the two clients, a hypothetical case is set up and used for assessment. Four criteria in common to both clients are used for this exercise. As for the public client’s weightings, the upper ranges were used in this study. Table 4 shows the details of the hypothetical case and the weighted average scores of each case, as normalized to a 0-10 scale. As shown in Table 4, the weighted average scores of the quasi-governmental and public clients are quite different in this exercise. Consultant B (weighted average = 4.3) is the preferred consultant for the public client, but this consultant is the worst one (weighted average = 3.7) under the quasi-governmental firm’s analysis. On the other hand, Consultant A scores highest (weighted average = 4.2) in the quasigovernmental client, while the public client’s assessment has resulted in the lowest score (weighted average = 3.5) for this firm. A similar analysis was conducted basing on the lower and upper ranges as stipulated by the public client, and the results are shown in Table 5. In this exercise, the most preferred firm is Consultant B if the assessment is based on the upper ranges of the public client weightings (weighted average = 4.3). However, the results indicate that 645 Ng, Kumaraswamy and Chow Consultant A is preferred when the lower ranges of weightings are used (weighted average = 3.6). Table 4: Weighted scores based on the weightings of both clients Weightings G Q-G 20 10 30 12.5 10 40 40 17.5 100 80 Assessment criteria Cost effectiveness Programme Experience Staffing Weighted total Weighted average Consultant A S G Q-G 3 60 30 4 120 50 5 50 200 3 120 52.5 350 332.5 3.5 4.2 Consultant B S G Q-G 4 80 40 4 120 50 3 30 120 5 200 87.5 430 297.5 4.3 3.7 Consultant C S G Q-G 3 60 30 4 120 50 4 40 160 5 200 87.5 420 327.5 4.2 4.1 Note: G=government, Q-G=quasi-governmental, S=score Table 5: Weighted scores based on the lower and upper ranges of the public client Weightings L U 15 20 15 30 5 10 25 40 60 100 Assessment criteria Cost effectiveness Programme Experience Staffing Weighted total Weighted average Consultant A S L U 3 45 60 4 60 120 5 25 50 3 75 120 215 350 3.6 3.5 Consultant B S L U 4 60 80 4 60 120 3 15 30 5 75 200 200 430 3.3 4.3 Consultant C S L U 3 45 60 4 60 120 4 20 40 5 75 200 200 420 3.3 4.2 Note: L=lower range, U=upper range, S=score CONCLUSIONS In this paper, the CTFA approach as used in HK is introduced. The CTFA consists of three main components, namely pre-qualification, short-listing and final selection. Clients in HK have realized the importance of criteria pertinent to contextual performance, and have considered some soft skills of consultants during the technical assessment process. However, to ensure a suitable consultant is selected, more criteria related to consultants’ contextual performance (cf: Ling et al., 2000) during both the pre-qualification and final selection stages should be considered. Different organizations have different perceptions on the importance of criteria used for pre-qualification and technical assessment. In the comparison case study in HK, the public client places greater emphasis on consultant’s resources, while the quasigovernmental client considers consultant’s experience as more important in both the pre-qualification and technical assessment processes. Both approaches have their merits and may be based on the types of projects handled by each organization, for example, the quasi-governmental client deals with a specific type of project, where experience is important, whereas the government client needs to cater for a greater variety of project types for which the basic resources are important. Furthermore, the ‘range’ provides a suitable flexibility for the latter as well. Hypothetical cases were used to illustrate the effects of using different weightings on the technical assessment. The results indicated that the preferred consultants may turn out to be totally different between the two clients. Another analysis, which was based on the lower and upper ranges set by the public client, also revealed a difference in the choice of consultant. Although the same Consultant A emerged on top in both the quasi-governmental client approach and the lower range approach of the government client, this was just a coincidence in this simplistic hypothetical case. The evident 646 Consultants selection differences in weightings could very well yield different outcomes in other cases. The outcomes are therefore quite sensitive to the subjectively chosen weightings. Since the technical proposal is so crucial in the CTFA approach, it is important to ensure that the weightings are fair and truly representing the perception of the client. In addition, a number of technical-related criteria, such as consultant’s experience, approach to cost effectiveness, response to brief, etc., are qualitative in nature. The assessment of these criteria requires the subjective input of assessors, which may not correspond to the significance of decisions being undertaken. Further studies are being conducted by the authors to examine the pre-qualification and technical-related criteria and their importance, and ways by which to reduce the subjectivity of assessment. The results of these studies will be presented when available. ACKNOWLEDGEMENT The authors would like to acknowledge the University of Hong Kong for funding this research under the Research Initiation Grant, No. 10203264. REFERENCES Construction Industry Board (1997) Framework for a National register for Consultants, Working Group 4. Cooley, M.S. (1994) Selecting the right consultants, HR Magazine 39(8): 100-103. FIDIC (1997) Quality-based selection for the procurement of consulting services, Lausanne: Fédération Internationale des Ingénieurs-Conseils. Hattan, D.E. and Lalani, N. (1997) Selecting the right consultant team, Institute of Transportation Engineering Journal, 67(9): 40-46. Kasma, D.R. (1987) Consultant Selection. Journal of Management in Engineering. 3(4): 288296. Leung, L.K. (1999) Balancing quality and cost in the selection of consultants. Proceedings: Mainland and Hong Kong Conference on Management Systems of the Engineering and Construction Industry and Urban-Rural planning, (April). Beijing, China, II 284290. Ling, Y.Y. (2000) A theoretical framework for selection of consultants by design-build contractors. Journal of Construction procurement. 6(2): 147-163. Ling, Y.Y. Ofori, G. and Low, S.P. (2000) Importance of design consultants’ soft skills in design-build projects. Engineering, Construction and Architectural Management. 7(4): 389-398. Parks, G.A. and McBride, R.R. (1987) Competitive Bidding for Engineering Services. Journal of Professional Issues in Engineering, 115(1): 66-76. Queensland Government (1997a) A Consultant’s Guide to Pre-qualification (PQC) – Competing For Government Building Consultancy. Queensland Government. Queensland Government (1997b) Consultant Selection and Invitation Process – Competing For Government Building Consultancy. Queensland Government. Sparke, A. (1993) The Compulsory Competitive Tendering Guide. London: Butterworths. U.K. Government Procurement Group (1997) Government Construction Procurement Guidance. HMSO. WSDOT (1996) Consultant Services Procedure Manual. Washington State Department of Transportation. 647

Tutor Answer

Thomas574
School: Cornell University

Hello, I' done, I have attached an outline showing the key points addressed in the paper.

Running head: LITERATURE REVIEW

Literature Review
Name
Professor
Author
Institution
Course
Date

1

LITERATURE REVIEW

2

Summary
This study was aimed at examining a combined Technical and Gee Assessment (CTFA)
which is an approach used in Hong Kong to discuss the weakness of the currently used CTFA
approach. After a systematic study, the researcher employed several procedures and guidelines for
collecting consultant selection from overseas clients. The collection was done through interviews
as well as the internet not to mention sources of major quasi-governments clients in HK through
discussion. The data collection was done to compare case study related to the procedures of the
government based on the weightings and approval for tender evaluation and pre-qualification. The
CTFA comprised of three central components which include pre-qualification, short-listings as
well as the final selection. Criteria pertinent are essential to contextual performance. Various
organizations have presented different perceptions when it comes to the benefits of the used criteria
for technical assessment as well as the pre-qualification (FIDIC, 1997).
While comparing the Hong Kong case study, a greater emphasis was been placed on the
resources of a consultant while on the other hand, the client of quasi-government considered the
experience of consultant as crucial in both technical assessment and prequalification process. Both
merits were found to have benefits and were based on the different types of projects that were
handled by various organizations. In using hypothetical ca...

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Anonymous
Good stuff. Would use again.

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