Weakness of the tender system

I met an engineer who has been in the contracting business for two decades. He also provide cable testing services.

I asked him about his view on the frequent MRT breakdowns and if his business involve the testing of cables in the MRT system.

He was very convinced in his reply, He said: The problem is with our tender system. We get various contractors to tender different parts of the MRT system. All the systems need to interact with each other.

Under the tender system, the award is usually given to the lowest tender. Although the government has introduced the two envelop system, it does not work.

He explained that the two envelop system requires the award committee to evaluate the tenders based on quality before they consider the price. He said that in practice, it is difficult for the award committee to award the work to a bidder quoting a higher price.

The winning contractor may be squeezed as their bid has a low margin. They may resort to buying lower quality materials or using unskilled workers. This has led to quality issues.

I agree with his view. Another engineer, who worked in the marine industry, said that it is important to have a quality audit plan that is carried out rigorously. He suspected that this was not done with SMRT.

For many years, I have seen the weakness of the tender system. I believe that there is a better way to award the project to the contractor that does not involve competitive tendering. I will write about it in a separate article.

We are now seeing the outcome of the weakness of the tender system. The cost of this bad practice is much higher than most people had anticipated.

Tan Kin Lian