Tendering inhibits innovation in construction
It will never be the same as it used to be, even when the economy picks up again. The world around us has structurally changed, and so has market demand. Old recipes no longer work. This means we need to innovate! Innovating means experimenting and actively implementing changes. Innovation can only succeed if you look outward, not inward. A characteristic of every crisis is introversion, risk aversion, and the prevention and punishment of mistakes. This is certainly true for the construction and real estate sector, where distrust, fragmentation, and a claim culture are so deeply embedded in the system that only a few can distance themselves from it.
“DUTCH CONSTRUCTION MARKET CHARACTERIZED BY DISTRUST & CLAIM CULTURE”
One of the important pillars of the 'old' system that significantly fuels distrust, fragmentation, and the claim culture is the world of tendering. It was originally conceived to prevent unfair competition, but in practice, it has become a bureaucratic, money-consuming, and time-consuming tool that does not necessarily exclude unfair competition. On the contrary, it may even foster unfair competition, false certainties, and distrust. Especially when considering that the economically most advantageous tender (read: the cheapest) is often one of the decisive factors for awarding contracts. But what does the submitted price actually say about the efficiency and quality of the process and product before and after the award of the work? Was the design of the tendered end product created integrally and cost-efficiently? Were the knowledge bearers of the end product (read: suppliers) consulted in a timely manner? Was a thorough qualitative and quantitative risk analysis conducted regarding the opportunities and risks in the subsequent process?
From past examples that made the headlines (e.g., HSL, North-South Line, A2 tunnel), I think we can safely say that this has not always been properly safeguarded, to put it mildly. This resulted in enormous cost and time overruns. This does not even take into account all the company costs and preliminary costs that bidding (consultancy) firms, executing companies, and the like must incur to compete for a contract. Or consider all the legal costs associated with the tendering process and the claim culture after the award of the work. Thus, what seems cheap becomes expensive.
''THE PROCUREMENT PROCESS IS MONEY-CONSUMING, TIME-CONSUMING, AND CREATES FALSE CERTAINTY''
By clinging rigidly to the "old" tendering system and its associated regulations, I believe that the much-needed radical and sustainable innovation in the real estate and construction sector will be hindered rather than encouraged. My proposal is to work towards a more open and less regulated system focused on trust, openness, and transparency, sharing knowledge, and learning from mistakes rather than punishing them. Early on, and by this, I mean in the initiative phase, bring all necessary knowledge bearers who play a key role in the design and realization of the end product to the table. Collaboration, long-term thinking, standardization, and a shared revenue model will form important ingredients for the new reality. A new system,
''SYSTEM CHANGE AS A DRIVER FOR LONG TERM VALUE''
This is beneficial for the further development of knowledge and products, the stimulation of innovation, the entrepreneurial climate, and last but not least, the taxpayer.
After all: "The man who decides but makes mistakes brings more money to the table than the perfectionist who misses the connection."
