Relationship Between Cost and Qualifications-Based Proposals for Architecture, Engineering, and Construction Firms

Incorporating qualifications into the procurement process of Architecture, Engineering, and Construction (AEC) firms has been shown to improve project outcomes. This shift has led to the adoption of procurement methods like the best-value (BV) approach, which considers qualifications rather than relying solely on cost, as in the traditional low-bid method. However, the construction industry still debates whether higher qualifications necessarily lead to higher costs. This study examines 1,572 proposals from 327 projects in the US and Canada to assess the relationship between qualifications and cost in BV procurement using both inferential and descriptive statistics. Results from Spearman’s Rank Correlation found no significant correlation between qualifications (technical proposals, past performance information, and interview) and cost proposals. The Kruskal–Wallis H test showed that highly qualified firms submitted cost proposals only about 13% higher than lower-qualified firms, suggesting a modest cost premium. Findings indicate that BV-selected firms often submit competitive, sometimes lower-than-average cost proposals while maintaining strong qualifications. This study provides insights into BV procurement, demonstrating that owners can select high-quality AEC firms without a substantial cost trade-off, potentially improving project outcomes while maintaining cost efficiency.