Introduce legislation that requires governments to go with the second lowest qualifying bid. You'll get more reasonable bids in the first place (as purposefully underbidding will no longer be rewarded), and should make the firms responsible more financially surefooted.
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Definitely a route worth considering.
There are also other options.
Insert warranty requirements. This is currently done w/tree planting. All contractors supplying and planting trees for the City must warranty their survival for 2 years or replace them at their own cost.
Now, it's worth saying this is not enforced as well as it might be, though it is, sometimes.
You could likewise leave a contractor on the hook to remedy any deficiencies or things that go wrong w/i a 2-5 years of project completion. The way to do this would be a performance bond to ensure that that the contractor doesn't fold their tent and run.
You could also withhold the final 10% of payment pending independent verification that the project is complete, deficiency-free.
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Another important measure is properly trained City project managers. Many do not have enough experience w/trades or construction to oversee work properly.
It's normal in projects of size to have to sub spec'ed materials as things become unavailable or circumstances change.
A challenge is that a contractor goes to a City project manager and says 'we can't get 'x' tile or this type of tree or whatever and the manager in question has no concept of the relative importance of what was spec'ed in the first place
or whether the substitution is a reasonable equivalent.
As an example, a major streetscape project was done a year or two ago in the City, where the tender spec'ed red oaks.
The contractor claimed after winning the bid that they were unable to get red oaks in the fall (BS); they then proposed to substitute Crimson Norway Maples (a non-native, invasive that Parks won't plant anymore).
The project manager was not a forester or ecologist, clearly had no idea there was a policy against planting Norway Maple, and approved the substitution.
This sort of thing happens all too often in a variety of different ways.
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There is a need for better tender writing.
I've read more than a few in my day, and it never ceases to amaze me what isn't said.
Some would think it 'common sense', but if you don't say certain things....
I will afford an example from the private sector, a major landlord hired a company to repaint the common areas of several buildings.
The tender said not much more than that. Shall paint the following common areas at properties 'x', 'y' and 'z'.
The work was awarded to the lowest bidder.
The paint job was done so poorly (bubbling and peeling within days) the work had to be entirely re-done by a different contractor, costing a lot of $$$
Here's what was missing in the tender:
- no requirement to clean the surfaces or sand prior to painting.
- no specification as to paint quality
- no specification as to using drop cloths (painters managed to drop paint over several sections of new carpet)
- no specification that the painters themselves had to have any experience or be supervised by anyone with experience (several painters were total novices)
If you want Quality, you must make that clear in the tender.
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Finally, the City must adopt a clear program of adversely scoring or banning from bids, poorly performing contractors.