The Rise of QBS

It has become a global standard for procurement.

Todd Busch, P.Eng., is a Senior Associate with Veneklasen Associates and a member of Canadian Consulting Engineer’s editorial advisory board (EAB).

Once upon a time, a small town’s council decided to use qualifications-based selection (QBS) to choose the best engineering firm to build a new bridge. The council advertised the project and received proposals from several firms. They evaluated the proposals based on experience and competence. After careful consideration, they selected the firm that had the most relevant and best qualifications for the project.

As the engineering firm worked closely with the town council to design and build the project, its own expertise ensured the bridge was safe, functional, and esthetically pleasing. The project was completed on time and within budget. The council was very satisfied with the results.

The success of the project demonstrated the benefits of using QBS for procurement. As a result, the council decided to use QBS for all future engineering projects. The town prospered as a result.

QBS is a procurement process originally established by U.S. Congress through the Brooks Act, a 1972 law also known as the Selection of Architects and Engineers statute. The act required the U.S. federal government to choose the most appropriate engineering professionals or firms for projects based entirely on their qualifications (such as knowledge, skill, and previous experience with broadly similar projects) and other specific factors (like the quality of a proposed approach and ideas for the project), rather than based on the most competitive price.

Over time, QBS was further developed as a process for public agencies to select architectural and engineering services for public construction projects. It set the stage for fair and reasonable fee considerations to be addressed through negotiations with the top-ranked firm for an agreed-upon scope of services.

Today, QBS has become a global procurement standard for architecture services. By way of example, it is recommended by the Ontario Association of Architects (OAA).

Pros and cons

QBS offers several advantages and disadvantages.

Pros

• Better quality of work: QBS is designed to ensure the most qualified professional or firm is chosen for the project, based on knowledge, skill, and experience with similar projects.
• Cost savings: QBS projects have experienced lower cost growth compared to other projects.
• Fewer disputes: QBS projects involve fewer disputes and change orders, saving time and money.
• Improved relationships: QBS promotes long-term business relationships between the involved parties.
• Better value for clients: QBS promises improved service, value, and quality for clients.

Cons

• Higher costs: QBS projects may involve higher initial costs, relating to the stronger qualifications of the selected professional or firm.
• Subjectivity: QBS is a subjective process that relies on the judgment of a selection committee.
• Time-consuming process: QBS can be time-consuming, as it involves evaluating the qualifications of each professional or firm.
• Limited competition: QBS may reduce competition by not considering price as a factor in the selection process.

Audits

There may be additional stipulations when using QBS, such as when government agencies require audits of engineering firms before determining billing rates, base hourly salaries, multipliers, and profits.

This requirement is sometimes imposed to ensure a project budget’s cost structure is subject to a degree of transparency, such that firms do not overcharge for services and, in turn, governments get a fair deal. It helps ensure engineering firms are held accountable for their work.

It is important for such audits to be conducted by independent third-party auditors who are not affiliated with the engineering firms, to ensure the audits are unbiased and their results are accurate. These auditors must review the firms’ financial statements, contracts, and other relevant documents to ensure they are operating within the legal and ethical boundaries of the industry.

The audits also help to ensure engineering firms are providing high-quality services that meet the standards set by the government. With such stipulations in place, QBS has proven itself as an effective tool for selecting service providers, as its advantages appear to outweigh its disadvantages.

Types of contracts

Two common types of contracts are fixed-price and time-and-materials (T&M).

With the former, a service provider determines a set price for a project and the customer agrees to pay that amount. This type of contract tends to be used when the scope of a project and its necessary expenses are well-known.

The latter, on the other hand, often comes into play for larger projects with less upfront certainty about the full scope of work.

It is important to weigh the pros and cons of each type of contract before drafting or entering an agreement.

Fixed-price pros:

• Predictable costs for the customer.
• Incentive for the service provider to complete the project on time and within budget.
• Reduced administrative burden for both parties.

Fixed-price cons:

• Risk of underestimating the project’s scope and expenses.
• Risk of overestimating the project’s scope and expenses (which could lead to losing the bid).
• Limited flexibility to adjust the project’s scope or requirements.

T&M pros:

• Flexibility to adjust the project’s scope or requirements.
• Ability to accommodate changes.
• Reduced risk of underestimating the project’s scope and expenses.

T&M cons:

• Uncertainty around final costs.
• Potential for the project to exceed the customer’s budget.
• Potential for the service provider to take longer than expected to complete the project.