by James McAllister
The article, “Questionable Engineers Estimates costing Guyana billion$”, in the April 19th edition of the Kaieteur News, is another attempt by the media to distort and peddle misinformation.
Accusations of corruption and incompetence were leveled against engineers. This is not the first time such accusations have been leveled against engineers by people who know little of what they are talking about. If it’s not the design engineer, it is the supervising engineer. It is time for engineers to take a stand.
The Kaieteur News accused engineers of causing government to lose billions of dollars because the engineer’s estimate is too high. This is preposterous. Clearly the Kaieteur News has no clue about the bidding process.
The Kaieteur News is correct when it said the engineer’s estimate is used for budgeting purposes. It boggles the mind as to how they moved from here to conclude the government is losing money when the estimate is above the contractors’ bid.
Kaieteur News, this is how the process works.
The engineer prepares the estimate and that amount of money is set aside for the project. When issued the bidding documents, contractors are expected to review the plans and specifications, visit the site, source materials, and develop their means and methods to execute the works. The contractors work up their prices using this information.
Unlike the engineer, contractors could use special circumstances to develop their prices. For instance, suppose we have a contract requiring substantial amounts of fill material. One contractor bids 40% of what the engineer estimated for this item, and as a result wins the contract with a price substantially below the engineer’s estimate. According to the Kaieteur News, the engineer is incompetent, but here is what could have happened.
This contractor is already working on a contract nearby which involves the generation of a substantial amount of excavated material for disposal by the contractor, as he sees fit. The contractor plans to coordinate the schedule for the two projects so that as the material is generated on one contract it could be placed on the other contract at no cost to the contractor. The contractor could plan for this, the engineer cannot.
Similarly, the contractor could have special access to low-cost material, special arrangements with equipment, or unique means and methods to execute the works. The contractor prices his bid based on these special circumstances, the engineer cannot. A low engineer estimate does not suggest an incompetent engineer.
And so what if the contractors are below the engineer’s estimate? This, on its face, is not a cost to the government. In fact, the government is potentially saving money, because it is getting the work done for millions less. This is not to say there are no jeopardies when a bid is substantially below the engineer’s estimate. It could be a case where the contractor made a mistake. I know of a case where a contractor, on a GT&T contract, priced m³ as if it was ft³. The GT&T project management office recognized the problem but still awarded the contract. However, they demanded that all the fill material be brought to site before the issuing of the mobilization advance. The contractor recognized his error and abandoned the contract, since GT&T refused to release him. He was blacklisted.
In all cases where the contractor is substantially below, he should be given the option to refuse the contract and forfeit his bid bond. If he does, the contract is then awarded to the next lowest bidder. However, the contractor could insist he is okay. Maybe because of some special circumstances, or because he just doesn’t know what he is about. Once the contractor insists he could execute the works for the substantially reduced price he must be monitored closely. This is a contractor who could be planning to do substandard work or use substandard materials.
It could be also a case where the bill of quantities had an error. This contractor did his due diligence by examining the plans, checking the quantities and visiting the site. He recognizes that item # 1 should have been 50 cu.yds, not 5,000 cu.yds. And item #2 should have been 5,000 cu.yd., not 50 cu.yds. So he priced item #1 at $1 instead of the usual $1,000, and he priced item #2 at $10,000 instead of the usual $1,000. This bid will appear low but would end up costing the government much more. This issue could be investigated during the evaluation of the bids, and once discovered a decision could be made on terminating the tender process, and re-advertising.
The article mentioned deliberately inflated quantities, which give some contractors an advantage. Listen! Every contractor has copies of the bidding documents. Examine the plans, read the specifications and conditions of contact, and visit the site. All the information is there. If after doing all this, a contractor cannot see that quantities were inflated, then he is not competent. However, if he does his due diligence, is awarded the contract, and something turns up that he could not have reasonably been aware of, then he could make a claim for Differing Site Conditions.
Kaieteur News also claimed that the bid closest to the engineer’s estimate is selected. This is not true. The contract is awarded to the lowest responsive bid— that is, meeting the qualification criteria set out in the bidding documents. Gone are the days when knowledge of the engineer’s estimate was sufficient to win a contract. Now contractors must improve effectiveness and efficiency, develop innovative means and methods, investigate the best sources for materials, and get the most economic financing arrangements for equipment. These things would make a contractor competitive.
Finally, if a contractor did not win a bid in three years, maybe he would want to hire a competent estimator.
Mr. James McAllister is a trained and experienced Civil Engineer. He is also a former executive member of the People’s National Congress Reform, the major political party in Guyana’s governing coalition.