A rapid growth in infrastructure development and investment is expected in the Central European region, in line with economic growth and urbanisation trends, as demonstrated in the needs and corresponding investment gap analysis in the GI Hub’s Infrastructure Outlook.
However, government balance sheets are increasingly constrained by available funding for infrastructure development, resulting in the tendency of procuring infrastructure at the lowest possible initial cost, rather than a focus on whole-of-life project cost and corresponding quality.
This approach has, in some instances, led to a higher-than-expected overall cost, due to the lack of consideration and transparency of maintenance and operation costs, long-term durability, social (including resilience to natural disasters) and environmental factors.
In a panel discussion on Quality vs Lowest Price Infrastructure held on the 19 November 2018 in Prague, Czech Republic, panellists discussed the ‘Best Value Procurement’ (BVP) method designed to increase project value by mitigating risks and increasing transparency by underscoring the pre-award tender phase.
The panel included:
• Daniel Fedson, Director, Global Infrastructure Hub
• Dan Ťok, Minister of Transport of the Czech Republic
• Zbyněk Hořelica, Director, the State Fund for Transport Infrastructure (SŽDC)
• Tomáš Janeba, President, the Czech Infrastructure Association (ARI)
• Gabriela Teletin, Senior Technical Assistance Officer, Procurement Department, EIB
• Jaap De Koning, Witteveen+Bos, Nizozemí
• Wouter Smits, Ministry of Infrastructure and Environment, the Netherlands.
The BVP method is underpinned by principles of transparency, performance information measuring and contractor clarification. In its simplest form, the BVP is a procurement system that looks at factors other than only price, such as quality and expertise, when selecting service providers or contractors. In a best value system, the value of procured goods or services is simply described as a comparison of costs and benefits.
The BVP philosophy was initially developed in the USA and has been adopted in some jurisdictions, such as the Netherlands, in the delivery of their infrastructure program, with the BVP method representing some 20 per cent of their infrastructure program delivery. Mr Wouter Smits of the Ministry of Infrastructure and Environment, the Netherlands, presented several interesting case studies where the BVP method was successfully used, resulting in an increase in quality through ‘additional value add’ and transparency, whilst decreasing the overall price of the infrastructure project when compared to traditional procurement options.