Effects of high prequalification requirements

When designing a set of prequalification requirements, the first objective is to select the basic factors that are deemed appropriate to scrutinize, and the second objective is to establish the threshold for each of these factors to evaluate the capability and capacity of the bidders on a given project; together, these factors and the limits imposed on each constitute the basis for qualifying or disqualifying each of the bidders. To obtain the desired prequalification results and the consequent quality delivery of a project, both selecting the factors and determining the limits for each factor are crucial and must be given careful attention with due consideration of the prevailing environment (including market conditions, deadlines, need for technology transfer, etc.). In this study it was found that an improper design of prequalification requirements seriously affected the progress and cost of projects, provided opportunities for collusion, and encouraged the obtaining of contracts through improper practices. Based on an analysis of data from 30 Taipei Mass Rapid Transit projects, together with information gleaned from numerous interviews with contractors, consultants, and clients, it is shown that a risk-taking attitude by the Government and the establishment of relatively low prequalification requirements would be more conducive to achieving a desirable balance among (a) satisfying the schedule and sequence of contracting, (b) obtaining lower prices by an increase in competition, (c) procuring the timely delivery of a quality project, and (d) fostering the growth of local contractors.