Determining the most economically advantageous tender based on capability and fee-percentage criteria

    Research output: Contribution to journalArticleScientificpeer-review

    6 Citations (Scopus)

    Abstract

    Early involvement of the construction team is increasingly utilized in demanding projects to incorporate versatile expertise in their planning. For public owners this is a challenge since they are obliged to use competitive, transparent team selection based on the 'most economically advantageous' criterion which ensures that both price and quality viewpoints are taken into account. In the case of early involvement, the price component naturally does not include the total price, but may consist only of the fee-percentages of competing service providers. This study examines such a selection situation in project alliancing in the European context and seeks to find a way to integrate the fee component in a multi-criteria selection system and determine reasonable fees for different levels of capabilities. The study builds on the performance difference between different capabilities, derived from a survey of practitioners, and determines an indifference curve arithmetically for the planning of a selection method. The influence of the owner's risk attitude and risk premiums are also considered exploratively based on the pricing methods of the theory of finance.
    Original languageEnglish
    Pages (from-to)409-446
    Number of pages38
    JournalJournal of Public Procurement
    Volume13
    Issue number4
    DOIs
    Publication statusPublished - 2013
    MoE publication typeA1 Journal article-refereed

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    fee
    planning
    premium
    service provider
    pricing
    finance
    expertise
    performance

    Cite this

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    title = "Determining the most economically advantageous tender based on capability and fee-percentage criteria",
    abstract = "Early involvement of the construction team is increasingly utilized in demanding projects to incorporate versatile expertise in their planning. For public owners this is a challenge since they are obliged to use competitive, transparent team selection based on the 'most economically advantageous' criterion which ensures that both price and quality viewpoints are taken into account. In the case of early involvement, the price component naturally does not include the total price, but may consist only of the fee-percentages of competing service providers. This study examines such a selection situation in project alliancing in the European context and seeks to find a way to integrate the fee component in a multi-criteria selection system and determine reasonable fees for different levels of capabilities. The study builds on the performance difference between different capabilities, derived from a survey of practitioners, and determines an indifference curve arithmetically for the planning of a selection method. The influence of the owner's risk attitude and risk premiums are also considered exploratively based on the pricing methods of the theory of finance.",
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    Determining the most economically advantageous tender based on capability and fee-percentage criteria. / Lahdenperä, Pertti.

    In: Journal of Public Procurement, Vol. 13, No. 4, 2013, p. 409-446.

    Research output: Contribution to journalArticleScientificpeer-review

    TY - JOUR

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