Rationalising public procurement of complex construction projects by the price component selection

The problems related to the traditional project procurement method are known to often lead to adversarial relations especially in the case of competitive fixed-price contracts and complex projects. Neither does the traditional, sequential involvement of the parties allow mutual exchange of information and collaboration for the benefit of the project. Therefore, early involvement of the construction team is increasingly utilised in demanding projects to incorporate versatile expertise in their planning. Often the solution is to strive for an open
process where the price (target cost) of the project is set later after a joint development phase by the owner and the selected team involved. Such a process poses, however, a challenge to public owners due to public accountability
concerns. This study tries to respond to this challenge by exploring the possibilities of awarding a contract based on capability and mere key price components combined with specific cost management methods to ensure the
economic efficiency of a project. This is done by delving into the practices and experiences of four different infrastructure construction projects. The price components used in those four projects consisted of, for instance, fee,
project overhead, risk and opportunity provision, preliminaries and direct costs of a certain part of the project; these items do not cover the total project price leaving part of the project unpriced in the selection phase. On the whole,
the experiences from case projects have been positive and they also encourage considering the possibility of using the price component method more extensively in challenging future public sector projects.