JWCI Proposal on Consultant SelectionAt the 1999 Biennial Meeting between the International Lending Agencies and the Consulting Industry (BIMILACI ’99), a Joint Working group of the Consulting Industry (JWCI) proposed a methodology of how price could be used in the selection of consultants, if borrowers wished to use the World Bank’s Quality and Cost Based Selection (QCBS) method. The JWCI methodology recommended the use of six parameters, namely:
Each parameter was given a score of 1 - 4, where 1 stood for "low importance" of the parameter, and 4 stood for "high importance". If the total of these scores exceeded 15, the project was deemed too important to be selected by QCBS, that is, the weight given to Cost (or Price) should be zero. If the score was less than 10, price could be considered, and JWCI recommended a maximum weight of 10 percent. In the Workshop that discussed the JWCI proposal, attendees agreed that there was an overlap in parameters 2 and 6, and that parameters 4 and 5 should not be considered, as there was some overlap between them and the other parameters. Thus the Workshop recommended that the JWCI submit a simplified methodology, using only the three parameters, namely:
Potential Damage if Project Fails There can be little doubt that if failure of the project, such as in the case of a dam, would lead to catastrophic financial or social loss, the client/employer should never select a design and construction administration services for the project on the basis of price. Thus, the client should examine the consequences of failure of the project, and if the consequences prove to be too high, selection of the consultant designing (and hopefully subsequently supervising the construction), should be done by quality-based selection (QBS). Complexity of the Project If the project is highly complex or specialized, again the client should be using the QBS system for consultant selection. Multiplier Effect If the impact of the consultant’s assignment would be major, such as in a strategic study for the development of a sector, or of a large project, or for government decision-making purposes that will have long-term effects, again the consultant should be selected by QBS. Obvious QBS Assignments These above three parameters, if they prove to be of high importance, call for the selection of the consultant to be done by QBS. The World Banks "Guidelines: Selection and Employment of Consultants by World Bank Borrowers", stresses the above points in its section 3.2 Quality-Based Selection (QBS), and extends the list of "QBS Assignments" to include those "that can be carried out in substantially different ways, such that proposals will not be comparable (for example, management advice, and sector and policy studies in which the value of the services depends on the quality of the analysis)." Therefore, there seems to unanimity of agreement in all banks, and all consulting federations that assignments with high complexity, or requiring specialization, or leading to high multiplier effect or downstream impact, or having disastrous impact if the related project fails, or assignments that are difficult to compare, should all be assigned on the basis of Quality Based Selection. QCBS Assignments The challenge for the JWCI is to propose a reasonably straightforward methodology that can be used by borrowers who believe that the assignment for the consultant does not fall into the above QBS category and hence can be assigned using Quality and Cost Based Selection (QCBS). Steyn Laubscher, FIDIC’s immediate Past President, prepared for FIDIC’s Annual Review for 1998-1999 a two dimensional diagram, shown below, which was intended to be a simple guide to borrowers, on when QBS should be used, and when QCBS could be used.
The diagram uses "complexity of the project" on the vertical axis and "multiplier effect and/or environmental impact" on the horizontal axis. Projects in the upper right hand corner are obvious "QBS projects", and those in the lower left hand corner are obvious QCBS assignments. However, the difficult part of the chart is the area between these two "corners". Steyn Laubscher avoided the difficulty by placing an "X" percent price line from the upper left corner to the lower right corner, and stating that "All we need to agree is the value of "X" in the diagram". FIDIC’s policy is to recommend a maximum of 10 percent weight for "cost" (price) in the QCBS methodology, arguing that the use of a higher weight for price risks making the selection virtually a "price selection". It is argued that many evaluators may be tempted to give very close evaluations on quality, letting the price component, which requires no evaluation, be the deciding factor. The World Bank, in Section 2.22 of its "Guidelines", recommends that "the weight for cost shall normally be in the range of 10 to 20 points, but in no case shall exceed 30 points out of a total score of 100". If one examines the diagram, it is apparent that all projects in the upper right hand half of the chart above, the "X" % price line should be selected by QBS. These projects are either highly complex and/or have a high multiplier effect and/or environmental impact, or have a relatively high combination of these parameters. Thus, the "X" quantity in the "X" % price line should be, in fact, zero. For projects placed in the upper right half of the chart, the consultants who will plan, design and supervise the construction of these projects should be selected on the basis of quality, not price. For those assignments in the lower left half of the chart, price can be an element of the selection evaluation, with the weight close to zero, if the project/assignment is near the 0% price line, up to a maximum of 10 percent (if one follows FIDIC’s advice) or 10-20, but no more than 30 percent (if one follows the World Bank’s advice), as the project/assignment location on the chart approaches the lower left corner. JWCI Curve: QCBS vs QBS If one examines the "Laubscher QCBS/QBS Diagram" and the World Bank Guidelines, one can determine that an adjustment could be made to the diagram which would make it reflect the World Bank (and other Development Banks) policy on QBS and QCBS, and allow it to be used as a fairly simple tool by borrowers to decide how to select consulting assignments. If one changes the horizontal axis to read "impact of the project (long-term social or environmental)", and one uses "complexity of the project" on the vertical scale to also be a measure of whether the assignment could be carried out in substantially different ways, then the "three parameter" methodology described in Section 3.2 of the World Bank’s Guidelines could be demonstrated on a two dimensional chart, similar to the "Laubscher Chart". The separation line (zero percent price line) between QCBS and QBS projects would start high on the Complexity (vertical) Axis, moving horizontally and then curving downward to join the Impact of the Project (horizontal) Axis at a high impact point (see QCBS vs QBS Diagram below). All highly complex and/or high impact projects or assignments, that is QBS assignments, are found in the upper right of this curve. QCBS are on the lower right of the "zero price line". The closer the project/assignment type is located to lower left corner (low complexity – low impact), the more weight that the proposal evaluators can place on the price (cost) component of the World Bank’s QCBS system.
JWCI Recommendation The Joint Working Group of the Consulting Industry (JWCI) recommends that a chart similar to that shown above be prepared for users of the "World Bank’s Guidelines on Consultant Selection", to demonstrate how borrowers would be expected to decide when to use QBS, when to use QCBS, and to decide about how much weight should be placed on the cost component (the financial proposal) when QCBS is used. FEPAC has previously made a submission on Consultant Selection as outlined in the Appendix titled "FEPAC Comments on Consultant Selection". |
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APPENDIX: FEPAC Comments on Consultant Selection The selection of the consulting company should follow the World Bank’s current guidelines, with application of QBS criteria for consulting services that happen to be defined, on cumulative bases, as services of high complexity, in undertakings of wide dimensions and acknowledged strategic relevance, positively involving state-of-the-art technologies. For other consulting services, not classified under those cumulative requirements, QCBS criteria should be used. FEPAC’s suggestion would be that the "evaluation of price" should be based on the "average" of all the proposals, with fixed limits on the "standard deviation" (both above and below the average) (1) ; offers outside this range being discarded. The "average" could well be considered to be representative of the "market price", and the evaluation criterion to be applied shall abide by the following rule (so that any offers coinciding with the average – if any – should be awarded 100 points):
where:
As for the evaluation of the technical proposal the 100 points basis (maximum) could again be applied, resulting in a score defined as ST (T for technical). The final steps consist on awarding rational weights to the values of both SP and ST, resulting in the formula:
where "SF" stands for "final score"; "m" and "n" are assigned weights, to be normally kept within the following ranges, as established by World Bank’s guidelines:
FEPAC believes that the above criterion (2) should have IFIs approval and would therefore be recommended to their borrowers.
DRAFT sent to FEPAC and EFCA on 20 August 2000, and approved for distribution to the World Bank. | SELECTION | |