Since the introduction of Best Price Quality Ratio (BPQR) tendering, specific (non-financial) tender elements in the bid can also be decisive for winning the tender. These so-called qualitative aspects are therefore important means in the tender to distinguish a bid from competin
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Since the introduction of Best Price Quality Ratio (BPQR) tendering, specific (non-financial) tender elements in the bid can also be decisive for winning the tender. These so-called qualitative aspects are therefore important means in the tender to distinguish a bid from competing bids. Although competition is believed to enhance a fair quality price ratio in the tender phase, this study points out that safeguarding the competition principle throughout the execution phase is not guaranteed. It turns out, added value of a measure in the execution phase, does not always coincide with the promised value in the bid (=misalignment). The objective of this research was to determine to what extent distinctive tender elements are aligned with added value during or after project execution for projects procured with the BPQR tender procedure. Besides, the aim was to define what underlying mechanisms in the BPQR tender process are causing eventual (mis)alignment. In this regard, the following research question has been drawn: What underlying mechanisms cause (mis)alignment between distinctive BPQR tender elements and the actual added value during or after project execution? Three research phases are being distinguished in this investigation: the exploration, the analysis (consisting of phase A and phase B) and lastly the synthesis. The exploration phase involved a literature study in which the aim was to gain full understanding of the theoretical aspects surrounding the topic of research. It was found that misalignment is mainly perceived as both disadvantageous for the client as well as for the losing bidders. As a result, the current focus is on alignment between tender and practice. This explains initiatives like SMART formulation of measures and the introduction of fines for non-fulfilment. Even new ‘out of the box’ ideas emerge like involving the losing bidders of the tender in auditing the execution of the project . All these approaches aim at maximising alignment, assuming misalignment would be disadvantageous for the client. The first phase of the analysis involved the analysis of the BAM Infra tender results. This analysis is used to create a general image of the tenders on which BAM Infra did perform outstanding and thus was able to distinguish itself. Furthermore, this analysis enables a proper selection of the tenders to conduct the case study research. The second phase of the analysis therefore explores the impact of quality aspects, bothin the tendering as well as in the execution phase of a project. This second phase involves a case study on four strategically selected projects regarding the distinctive character of the tender bid for each project. Subsequently, the study assesses how these elements turn out in practice, by conducting interviews with both the client and the contractor. The first finding is that measures can be divided in four quadrants: 1. Measure not implemented; effect not achieved (Q1) 2. Measure not implemented; effect nonetheless achieved (Q2) 3. Measure implemented; effect not achieved (Q3) 4. Measure implemented; effect achieved (Q4) Only measures in the fourth quadrant are examples of alignment, since in those examples both the implementation and the effect are aligned with the original promise formulated in the bid. Literature refers to, among other causes, strategic behaviour of contractors (adverse selection, moral hazard and strategic misrepresentation) as the cause of misalignment between tender and practice. The researcher did however identify four main causes for misalignment: Change of situation (A), enhanced / new insights (B), strategic behaviour (C) and bad luck (D). Subsequently, the total set of measures determining the distinctive character of the bid has been analysed. Resulting from this analysis, the researcher composed a categorization and a list of characteristics that measures can have. The categorization is both Mutually Exclusive and Collectively Exhausting (MECE) and it involves a distinction between process vs. product measures and temporary vs.permanent measures. Furthermore, the researcher did formulate seven characteristics. These characteristics are not MECE, which implies one measure can have multiple characteristics and the list might not necessarily be limited to the seven characteristics listed below. Ø Integral measures Ø Performance measures Ø Technical specification Ø Sexy measures Ø Beads (Dutch: Spiegels en kraaltjes) Ø Commercial-off-the-shelf measures Ø Multi-applicable measures Thereafter, the measures are mapped in the quadrants and subsequently analysed on commonalities. It was found that although their abundance in the set of most distinctive measures is roughly equal, product measures are more frequently implemented and more often achieve the intended effect than process measures. Furthermore, it turned out that measures that are not implemented whilst the effect is achieved, are always process measures. However, most process measures involved concerned situations in which the added value was absent. Besides, temporary measures are most coincide with process measures and, hence, score for the majority similar with these process measures (measures not implemented prevail). Temporary measures are less often implemented than permanent ones. Also, performance measures seemed to be the perfect measures in order to achieve alignment. Nevertheless, the room for distinguishing on this type of measures is questionable. But since the promised effect is very likely to be achieved by these measures, criteria of high importance of the clients could best be formulated as a performance measure. Commercial-off-the-shelf measures are preferred by contractors since they are easy to implement and are proven concepts. Yet, the clients state that these measures do not add value, since they would also have been conducted anyway. Sexy measures come with a large reputational risk for the client. This also relates to the responsibility public authorities have: generating public value. If public expenditures do not generate the value expected; public authorities will encounter social discontent. Based on the findings of this research, the following conclusions are drawn that answer the main research question: What underlying mechanisms cause (mis)alignment between distinctive BPQR tender elements and the actual added value during or after project execution? This research pointed out several causes for misalignment, of which strategic behaviour is one category. Strategic behaviour does however not dominate. It was however found that presumably, changes of circumstances are stimulating strategic behaviour of contractors. Issues underlying causes of misalignment are amongst others: multi-headedness of both the client as well as the contractor; lack of full-openness (of both parties) during the competitive dialogue and the use of inappropriate criteria to mitigate future maintenance costs in a construction contract. This results in misunderstanding, or a lack of (correct) information. In this respect it was learned that higher similarity in team composition (i.e.linking pin principle) between tendering and execution phase, can avoid loss of background information on important measures in a project. The research did also reveal that alignment is no holy grail. The focus on alignment not always generates value. Of the identified causes for misalignment, several cases are found in which fulfilment of the measure appeared to be disadvantageous for the client (!). This is especially the case when new insights occur and unforeseen added value appears. Yet, this study reveals that in those cases the specific measure involved often is not implemented. So, client satisfaction can also be achieved in case of misalignment. Although important, alignment is no cure for contractual discussions. A rigid focus on alignment may even have a negative impact on the provided added value for the client (and thus a negative impact on public value). Discussions whether measures are righteously implemented or not, consume time. And time – delay – means money. Given the fact that most clients are public bodies, this would involve loss of taxpayer’s money. In addition, rigid focus on alignment will put strain on the element of trust in the relationship between contractor and client, bringing the positive outcome of other future discussions in jeopardy. This reflection implicitly emphasises that a more externally focused value approach may have its advantages. Initiatives such as mixed client-contractor construction teams (Dutch: Bouw teams), that have an entirely different approach of project definition before the tendering phase, anticipate on that. In other words: currently the aim is to maximise internally focused value (=alignment of tender and practice) but in the end the evolving relevant issues all seem to indicate more externally focused value generating approaches in the future.