LTA tender gives unfair advantage to low cost contractors

I refer to the viaduct structure collapse at PIE. It is noted that LTA awarded the project to OKP which submitted the lowest bid.

LTA uses the two envelope system in awarding projects during tender evaluation. The first envelope (first round) consist of scoring of tender proposal, usually by independent party, based on a set criteria. The score is given 50% weightage.

Contractors passing the first round is then evaluated based on tender price. This is the second envelope, and is given 50% weightage. Therein lies the problem.

Any contractor who scores badly but passes the first round can still be awarded the project if it does a low ball.

Example:
Round 1
Contractor A – 25 (barely passing)
Contractor B – 45 (superb quality)

Round 2
Contractor A – 50 ($90 million)
Contractor B – 25 ($180 million)

Total
Contractor A – 75 (awarded contract)
Contractor B – 70

Infrastructures are designed to last 120 years. This system of awarding projects is detrimental to our society. The overall cost of maintaining a poorly constructed structure can even exceed the cost to build them.

The significant weightage given to tender price would encourage contractors to submit low prices using lousy proposals. Why waste time on developing brilliant proposals if you can’t beat the price.

This has to stop. In Olympics games such as figure skating, extreme scores awarded by judges are discarded. The LTA can adopt similar stance by encouraging quality design via higher weightage of 66% for first envelope. Unreasonable bids, 40% lower than median bid price should not be even considered as such contractors either underestimate project cost or too desperate for project, will try to undercut in some areas to squeeze out some profits to avoid going bankrupt.

 

Beh Chia Loh

 

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16 Responses to “LTA tender gives unfair advantage to low cost contractors”

  • 地条钢:

    Hopefully incident not because of using PRC’s 地条钢 ?

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  • LIONS:

    frankly,most of the govt agencies n ministries care only about COLLECTING MORE MONEY as if they are running private sector enterprises under a money-grabbing bo$$???

    PUBLIC SERVICE has been made a joke.
    where got true public service in SG these days???
    show me one?

    LTA is the worst of the lot.
    they just want to collect more money and ignore n neglect their other MORE SACRED DUTIES like ROAD SAFETY ETC.

    LTA should be AUDITTED MORE CAREFULLY.
    IT MUST HAVE MANY SERIOUS LAPSES.
    THE WAY IT IS BEING RUN.

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  • N.Jungne:

    Cheaperest, Fasterest and Betterest in this case, SInkapor loses.

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  • Amos humiliate L*L and PAP:

    Government agencies like stat boards use quantity surveyors (QS) in the preparation of tender documents. They also submit to the project owner an estimate of the cost of the project based on market prices. This estimate should be used in selecting the winning bid. Those who bid too low say 5% below QS estimate should be rejected. The only way to make money with a “low ball” bid is to cheat on the materials used, deliver shoddy workmanship and/or compromise safety.

    The problem with the current system is that no civil servant will ever go against “low ball” bid out of fear of being accused of favouring another bidder. Singapore civil servants are just overpaid, risk averse, spineless bureaucrats.

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  • 地条钢 is made:

    from scrap metal melted down with an intermediate frequency furnace, cast in a simple mold, with no temperature or quality control during the process.

    ““地条钢”是用中频炉把废钢铁熔化,再道进简单铸铁模具内冷却而成。其间,既不进行任何分析化验,也无温度等质量控制”

    https://www.youtube.com/watch?v=dtUJkrD-IkI

    http://upload.ceweekly.cn/2017/0116/1484550743340.jpg

    地条钢:
    Hopefully incident not because of using PRC’s 地条钢 ?

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  • Leegirlised Crony Corruption:

    The PIE COLLAPSE FIASCO
    Points out why using 3rd world labor to build a first world results in a 3rd world standard of products and services and infrastructure.

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  • opposition dude:

    Better be careful that all those HDB blocks built from the mid 90s or so don’t start collapsing one by one too!

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  • Bapak:

    Actually, there is a 3rd Round – PAP connection round.

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  • Boh Kia See:

    The low tender price is only one factor. The main game changer is their connections with the PAP.

    If yu are the public servant evaluating the tender–you get low tender price (which must be good), and you get good PAP connections. If the tender was rejected, it could spell the end of career progress for that official.

    That is why people join the PAP–and those who join are always rewarded in one way or another. Do you see any poor PAP members–picking up cardboards off the footpath?

    Now you know why these old folks work at cleaning tables and pick up cardboards—they are not PAP members and have never been all their lives.

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  • GS:

    Amos humiliate L*L and PAP:
    Government agencies like stat boards use quantity surveyors (QS) in the preparation of tender documents. They also submit to the project owner an estimate of the cost of the project based on market prices. This estimate should be used in selecting the winning bid. Those who bid too low say 5% below QS estimate should be rejected. The only way to make money with a “low ball” bid is to cheat on the materials used, deliver shoddy workmanship and/or compromise safety.

    The problem with the current system is that no civil servant will ever go against “low ball” bid out of fear of being accused of favouring another bidder. Singapore civil servants are just overpaid, risk averse, spineless bureaucrats.

    Overpaid, spineless, risk averse. They consider the risk to their careers obviously. But hard to blame them. They know they are paid to shut up. The rot started at the top. Civil servants with cojones like Philip Yeo and Ngiam are no more. We pay the price. Infrastructure in Singapore will soon be suspect.

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  • Amos humiliate L*L and PAP:

    GS: Overpaid, spineless, risk averse. They consider the risk to their careers obviously. But hard to blame them. They know they are paid to shut up. The rot started at the top. Civil servants with cojones like Philip Yeo and Ngiam are no more. We pay the price. Infrastructure in Singapore will soon be suspect.

    Happening now with the frequent breakdown/unreliability of MRT.

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  • Rabble-rouser:

    Remember the early 1970s hit by Middle of the Road called “Chirpy Chirpy CHEAP CHEAP!” And that’s what you get for being CHEAP! Contractors these day cut serious corners in order to break even on their low bids.
    It is no coincidence that the level of construction work started to deteriorate in all aspects around the mid-2000s – new residential housing projects including BTO projects; civil engineering projects; new buildings like Shopping Malls, etc. Look at the lack of building material resources to construct BRICKS ‘N MORTAR STRUCTURES. No one wants to sell to S’pore their sand & granite chips – critical & vital ingredients for making concrete. Tiling works & certain construction skills are still the domain of Malaysians, Thai, Burmese & PRCs. Indians & Bangladeshi workers can’t do those higher level construction work. Contractors these days rush through the work to avoid liquidated damages from delays. Many cut corners as long as it is not obvious to the independent surveyors’ eye to verify their work. And that is why the construction defects come out after the work is completed. Look at the BTO list of building defects that arose after BTO flat owners had taken possession of their flat. The WC chokes & water ponding came about after they had taken possession – indicating a lack of proper supervision/rush job in the process. Can it be called the ‘Ownself check ownself’ philosophy.
    Construction workers’ levy is highest in the land. So contractors have to maximize their workers in order to ensure they maximize their paying of workers’ levy to the govt. Another one of PAP’s $$$ & cents philosophy!

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  • Surrendered:

    Who is the minister incharge of LTA? Where is the fairness? Did CPIB initiate a check on TH, CPFB, HDB, SMRT and LTA? Can check the audit statement?

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  • nihon:

    in this particular case, it is unfair to blame the tender system.

    the contractor or kim peow has a v poor track record of safety crimes, cheating and cutting corners by using below specs materials, poor and shoddy works. during concreting, there was no supervisor or safety supervisor around.

    there was nothing wrong with the tender system, but the refusal to take a papigs connected contractor to task.

    these CONtractors are usually greedy money grubbers and will cheat and cut corners wherever possible. okp is the dirtiest. they know small civil serpents may turn the other eye simply cos of their political connections. okp management have zero engineering knowledge or skills.

    worse, okp has the dubious conquass cert which they used unfairly to win tenders even of their bid is not the lowest.

    uneducated n greedy okp management, greed and abuse, cover ups and cronyism all contributed to the collapse.

    just note how the w*o*e msm tried to cover up for okp, it only states the viaduct collapsed when okp was doing some work at site. it never mentioned that okp won the tender and was the contractor building the viaduct. thus minimizing its role. if this is not one sided leeporting, what is?

    nor did it state that okp won the tender for about $94.4 m.

    how can a highway collapse in a ‘first world’ contry?

    except that the CONtractor has 3rd world mentality.

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  • cvtybk:

    There is no right or wrong for this. They are saving up taxpayers money, whether for their own paper generals and politicians bonuses or to answer to the taxpayers.

    If they paying high for expensive contractors, when screw up happens, people will flame them. When paying low and getting shitty contractors. They could get away with it by saying paying low getting shit and to save money. hahaha

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  • Uniquely Singapore:

    Why pay million$$ to ministers if “saving up taxpayers money” is just to accept the lowest bid for such project?

    If like that, why ministers not paid the lowest bid?

    cvtybk:
    There is no right or wrong for this. They are saving up taxpayers money, whether for their own paper generals and politicians bonuses or to answer to the taxpayers.

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