Best-Value Model Based on Project Specific Characteristics Magdy Abdelrahman, M.ASCE 1 ; Tarek Zayed, M.ASCE 2 ; and Ahmed Elyamany 3 Abstract: Best-value becomes a well known procurement practice in many states in the country. The objective of this transformation from the old practice of lowest bid to best-value is to increase the value added to the project for each dollar added. This paper discusses a new concept of best-value modeling that is unique and tailored to each project. The model uses records of past projects to obtain specific evaluation criteria, from which a best-value score is determined for each contractor. Primary parameters that impact contractor selection are identified and analyzed based on which best-value model is designed. Data are collected from groups of experts in the Minnesota Department of Transportation. Two application methods are used to assess the best-value: 1 the weighted average method; and 2 the analytic hierarchy process. Although the paper is written to assist government agencies in selecting the best contractors, the research results shared in this paper are relevant to both academics and practitioners. The paper provides practitioners with a tool for ranking contractors based on best-value and provides academics with selection parameters, a model to evaluate this best-value, and a methodology of quantifying the qualitative effect of subjective factors. DOI: 10.1061/ASCE0733-93642008134:3179 CE Database subject headings: Bids; Highway construction; Project management; Contractors; Parameters. Introduction Many agencies from federal and state levels are adopting best- value procurement. Best-value aims at enhancing the long-term performance through selecting the contractor with the offer most advantageous to the owner where price and other selection factors are considered. Factors other than price can vary, but they typi- cally include technical and managerial merit, financial health, and past performance Gransberg and Ellicott 1996, 1997; Gransberg and Senadheera 1999; Gransberg et al. 2006. The inclusion of key factors that match the specific needs of a project increases the possibility of selecting the best contractor for the project. The NCHRP 10-61 research study Scott et al. 2006 shows an in- creasing trend in the construction sector toward the use of various best-value procurement methods. A long-standing concern ex- pressed by government agencies is that low-bid, while promoting competition, and a fair playing field may not result in the best- value for dollars expended or the best performance during con- struction. As noted by Scott et al. 2006, the low-bid system encourages contractors to implement cost-cutting measures in- stead of quality enhancing measures and therefore makes it less likely that contracts will be awarded to the best-performing con- tractors who will deliver the optimum quality projects. However, the research revealed that federal agencies have moved aggres- sively toward the use of best-value procurement, have attempted to measure its relative success, and are convinced that it achieves better results than low-bid. The best-value system is viewed as a balance between the consideration of price and qualifications. Several studies showed that best-value is useful for the owner and the project due to the following reasons: • The low-bid method fails to serve the public interest because the lowest offer may not result in the lowest overall cost to the public FAR 2005. • A reduction in cost growth from 5.7 to 2.5% and a reduction in claims and litigation by 86% NAVFAC 1996. • The General Services Administration Public Building Services procures 100% of its new buildings and renovations through best-value procurement. • A 1997 National Science Foundation study concluded that design-build contracts procured using the two-step best-value procurement procedure had the best cost and schedule growth performance, albeit representing a very small average im- provement over the other procurement methods Scott et al. 2005. • The best-value procurement was emerging as a viable alter- native to traditional low-bid method in the public sector construction, and practitioners need to be prepared for this emerging trend Vacura and Bante 2003. Considering Project Specific Characteristics The NCHRP 10-61 research study recommends few basic strate- gies to implement in the area of best-value procurement starting from legislative guidelines to model specifications and including industry collaboration. A research shortage is noticed in relating project characteristics with parameters, which should be a base in the contractor selection process. Therefore, the aim of this study is to establish a flexible model capable of being tailored to the 1 Assistant Professor, Dept. of Civil Engineering, North Dakota State Univ., CIE 201F, Fargo, ND 58105. E-mail: m.abdelrahman@ndsu.edu 2 Associate Professor, Dept. of Building, Civil, and Environmental Engineering, Concordia Univ., 1515 Sainte-Catherine St. W., Montréal, PQ, Canada H3G 1M7. E-mail: zayed@encs.concordia.ca 3 Ph.D. Student, Dept. of Civil Engineering, North Dakota State Univ., CIE 201, Fargo, ND 58105. E-mail: Ahmed.Elyamany@ndsu.edu Note. Discussion open until August 1, 2008. Separate discussions must be submitted for individual papers. To extend the closing date by one month, a written request must be filed with the ASCE Managing Editor. The manuscript for this paper was submitted for review and pos- sible publication on March 12, 2007; approved on July 13, 2007. This paper is part of the Journal of Construction Engineering and Manage- ment, Vol. 134, No. 3, March 1, 2008. ©ASCE, ISSN 0733-9364/2008/ 3-179–188/$25.00. JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE / MARCH 2008 / 179