Construction Management and Economics (2002) 20, 6781

Developing a tendering strategy in two-envelope fee

tendering based on technical scorefee variability
DEREK S. DREW 1 *, SANDY L. Y. TANG 1 and H. P. LO 2
1Department

of Building and Real Estate, The Hong Kong Polytechnic University, Kowloon, Hong Kong, PR

China
2

Department of Management Science, City University, Kowloon Tong, Kowloon, Hong Kong, PR China

Received 24 January 2001; accepted 30 August 2001

Consultants, in competing for work through two-envelope fee tendering, have been urged to consider variability differences between fees and technical scores, since the criterion with the greatest variability will in uence which consultant is awarded the contract. Fee and technical score variability arising from different client
fee tendering competitions is analysed in this paper, and a method proposed for determining whether a
particular clients two-envelope fee tendering competition is likely to be dominated in terms of technical
score or fee. Such information should be useful to consultants, as part of their bidding strategy, in deciding
whether to aim for a higher technical score or submit a lower fee. Standard deviation is used to measure
fee and technical score variability. Fee and technical score standard deviations are determined for each
tendering competition, expressed as a ratio and aggregated over a series of competitions. A technical scorefee
standard deviation ratio approximately equal to unity indicates that for future competitions consultants should
adopt a balanced bidding strategy in putting equal emphasis on fee and technical score. A smaller ratio indicates that consultants should adopt a low fee strategy whereas a larger ratio shows that consultants should
adopt a high technical score strategy. Fee tendering data from two large Hong Kong public sector clients
were analysed. Fees were found to dominate the vast majority of tendering competitions, thereby indicating
that consultants would be wise to adopt a low fee strategy in future competitions.
Keywords: Bidding, consultant, fee, strategy, technical score, tendering

Introduction
Two-envelope fee tendering is commonly used in some
construction industries, such as the UK and Hong
Kong (Hoxley, 1998; Drew et al., 2000), as a mechanism for allocating consultancy work to willing consultants such as architects, surveyors and engineers.
Normally, consultancy contracts are awarded on the
basis of price (i.e. fee) and quality (i.e. technical score).
In many cases, each consultants technical score and
fee is converted to a percentage or ratio relative to the
competitions highest technical score and lowest fee
before being weighted and aggregated according to a
given formula. Usually, the contract is then awarded
to the consultant with the best overall score. In such
situations consultants are faced with the problem in
deciding whether to aim for a high technical score
*Author for correspondence. e-mail: bsdsdrew@polyu.edu.hk

(which usually requires a higher fee) or submit a low

fee (which is more likely to attract a lower technical
score) or somewhere in between these two extremes.
In reaching a decision, consultants are urged to
consider the variability differences between fees and
technical scores since, as Connaughton (1994) points
out, the criterion with the greatest variability will in uence the outcome in selecting the consultant for
contract award. In other words, the more fees vary
relative to the variation in technical scores the more
fees will in uence the choice of consultant to be
awarded the contract, and vice versa.
It is suggested that for those client tendering competitions that result in a combination of high technical
score variability and low fee variability, consultants
should aim for a higher technical score in future
competitions. On the other hand, for those client
tendering competitions which produce a combination

Construction Management and Economics

ISSN 01446193 print/ISSN 1466-433X online 2002 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/01446190110096918

Drew et al.

68
of low technical score variability with high fee variability, consultants should focus on submitting a lower
fee. In adopting such a strategy consultants should be
able to increase their success rate in winning consultancy contracts.
The objective of this paper is to offer a model that
should help consultants in deciding, as part of their
bidding strategy, whether to aim for a higher technical
score or submit a lower fee to a given client. The model
focuses on the variability differences between consultant technical scores and fees arising from previous
competitions. Technical score standard deviations (TS
SD) and fee standard deviations (F SD) are determined for each of the clients previous tendering
competitions. These are expressed as ratios (i.e. TS/F
SD ratio) which can be aggregated over a series of
competitions. If the overall TS/F SD ratio is approximately equal to unity it is suggested that the consultant should adopt a balanced strategy in putting equal
emphasis on fee and technical score. If the overall TS/F
SD ratio is greater than approximately unity the
consultant should adopt a bidding strategy in which
the consultant focuses on obtaining a higher technical
score (a higher ratio indicates that technical score has
a greater in uence on contract award). If the overall
TS/F SD ratio is less than approximately unity the
consultant should adopt a bidding strategy in which
the consultant focuses on submitting a lower fee (a
lower ratio indicates that fee has a greater in uence on
contract award).

Developments in bid strategy modelling

Traditionally, bid strategy modelling has been
concerned with setting the mark-up level to a value
that is likely to provide the best payoff. Many of the
bid strategy models found in the literature relate to
contractors bidding for construction work. The rst
important contribution to bid strategy modelling was
published by Friedman (1956), who modelled the
distribution of mark-ups of all the competitors by a
gamma distribution with xed parameters. The probability of winning the project, P(M), could then be
found by using the gamma distribution. Friedman then
suggested that the best bidding level for the collaborating contractor was the value that maximizes the
pro t. Since then, a series of papers that extended or
modi ed Friedmans model has been published. For
example, in an attempt to simplify the method of
nding P(M) and to reduce the data requirements,
Hanssman and Rivett (1959) suggested using the
distribution of lowest competitors bids. Gates (1967)
considered the results of 381 contracts and discovered
a relationship between the spread of bids and the value

of the contract. Gates also suggested an heuristic

approach to obtaining the probability of winning the
contract. Carr (1982) developed a general bidding
model by using standardized bid to cost ratios. Ioannou
(1988) applied the principle of symmetry of information to examine the validity of the Friedmans model.
Using a large set of actual bids, Pin and Scott (1994)
developed normal distributions for competitive
bidding.
Carr and Sandahl (1978) identi ed that regression
modelling has many potential uses in a competitive
bidding environment, and used regression modelling
to determine a contractors optimum mark-up level.
Drew et al. (2001a) also used regression analysis to
help contractors determine the most appropriate markup level for various types and sizes of construction work
and for client types.
Bid strategy modelling also has expanded to encompass contracts awarded on a multi-criteria basis. For
example, construction clients are increasingly calling
for bids that require competing contractors to submit
both the bid price and contract time (Shen et al.,
1999). In such cases, contractors bid prices and
proposed contract times are commonly assessed in
accordance with the following equation (Herbsman,
1995):
TCB = p + (UTV 3 t)

(1)

where TCB is the total combined bid, p is the price,

UTV is the unit time value speci ed by the client (such
as liquidated damages rate), and t is the time. The
contractor with the lowest TCB is awarded the
contract. Shen et al. (1999) have considered this from
a contractors bid strategy viewpoint by relating the
contractors pricetime curve to the clients pricetime
curve, and from this have developed a mathematical
bid optimization model. The rationale behind the
model is illustrated in Figure 1. It is widely accepted
(e.g. Callahan et al., 1991) that every competing
contractor has an optimum pricetime point for each
construction contract. The pricetime curve of a
contractor is shown in Figure 1 as being S1, with the
optimum point as B1 and the corresponding bid
pricetime combination as p1,t1. The liquidated
damages rate, commonly used to represent UTV, is
shown as a straight line (S2) since it is a constant rate.
The total combined bid curve S (i.e. assessed cost to
the client) becomes S1 + S2. The optimum point at
which the contractor is most competitive from the
clients viewpoint is B0. Therefore the contractor
should submit the bid pricetime combination p0,t0 to
the client.
Bidding strategy decision making is more complicated in cases such as this and two-envelope fee
tendering. In addition to setting the mark up level to

Tendering strategy for two envelope fee tendering

69
decisions on whether to aim for a higher technical score
or submit a lower fee.

Awarding contracts on the basis of quality

and price

Figure 1 Pricetime relationship between the contractors

pricetime curve (S1) and the clients pricetime curve (S)

provide the best payoff, bidders need to make an additional decision with regard to the second criterion, e.g.
whether to submit a higher (or lower) tender price with
a shorter (or longer) contract period or, in the case of
two-envelope fee tendering, on whether to aim for a
higher technical score or submit a lower fee.
The value of any model depends on how well it
approximates reality. However, there appears to be a
gap between theory and reality, and bidding models
seem to be promoted by those in research circles rather
than by construction practitioners. For example,
Ahmad and Minkarah (1988) found less than 11% of
the top American contractors use any form of mathematical modelling. Many standard single-parameter
models presume that bidders attempt to maximize their
expected pro t, yet the bidders motive might be something else, for example, to minimize expected losses or
simply to maintain production levels even at a loss.
Ahmad and Minkarah (1988) and Green (1989)
suggest that there are many factors, other than pure
economic, that are considered in bidding strategy decisions. For some bidders at least, the combination of
circumstances may be so different from one bid to the
next that exibility in the adoption of polices is probably what in the end prevails.
Couzens (1991) suggests that bidding decisions are
largely heuristic in nature, since generally they are
made based on experience, judgement and perception.
Therefore any model or system should focus on
supporting, rather than replacing the judgments and
perceptions of decision makers. The model offered in
this paper does not focus on optimizing mark-up, but
provides a basis for determining whether a particular
clients two-envelope fee tendering competition is likely
to be dominated by fees or technical score. Such information should help consultants in making strategic

Traditionally, work to construction industry consultants such as architects, engineers and surveyors was
distributed on the basis of professional fee scales.
However, following the ruling from the UKs 1977
Monopolies and Mergers Commission Report (Seeley,
1997), this method of allocating work, in the UK at
least, has largely been replaced with competitive fee
tendering, direct negotiation and direct appointment
(Hoxley, 1998). Of these alternative methods, fee
tendering appears to be the most popular. For example,
in a questionnaire survey to UK quantity surveying
consultants Hoxley (1998) identi ed that 52.7% of
consultancy work is allocated via fee tendering. In
Hong Kong, Drew et al. (2000) found that consultant
quantity surveyors obtain 89% of work through fee
tendering.
Many commissions are awarded on the basis of
quality and price since it is recognized that you cannot
get a quality service if just the lowest tender is accepted
(CQSA, 1992). This is endorsed by the Construction
Industry Council (CIC, 1994), which has actively
promoted the development of what is commonly
known in the construction industry as the two-envelope
system.
Effectively, the shift from a fee scale to a fee
tendering environment means that consultants have
moved to an environment where price and quality were
not formally differentiated to one where they are.
Interestingly, Appleyard (1988) points out that scales
re ect only an average situation and they take account
only of value of project and the building type, yet in
a fee many other factors are considered including:
(1) nature of the client,
(2) detailed nature of the service required,
(3) expected duration of the planning/design
process,
(4) expected contract period,
(5) procurement method,
(6) location of site, client and other consultants,
(7) frequency of meetings and the like, and
(8) identity of other consultants.
When comparing competitive fee tendering with
contractor tendering, an important pricing difference
is that the breakeven point for competitive fee
tendering is likely to be more subjective, since the
work of consultants is largely a complex intellectual
process (CIB, 1996). Consequently, it would seem

Drew et al.

70
that consultants fee levels are more susceptible to
changes in market conditions. For example, Seeley
(1997) comments that in the 19901995 UK recession many quantity surveyors were charging fees at
50% or less of the scale fee in cut-throat competition
in order to secure work.

The two-envelope tendering system

Within the two-envelope tendering system competing
consultants are required to submit one envelope
containing the fee and the other containing information relating to quality of service issues, such as
company related information and project personnel,
organization and execution (CIB, 1996). The amount
of information required and scoring on quality differ
from client to client. In Hong Kong, for example, the
SAR Governments guideline (HKG, 1993) on the
assessment and marking of technical proposals reads:
The weighting to be allocated to each section of the
technical proposal shall be within the range indicated
below and shall total 100%:
Response to the brief (terms of
reference)
Approach to cost effectiveness
Methodology and work programme
Firms experience
Staf ng

1525%
1520%
1525%
510%
3040%

A typical marking scheme then given. The breakdown

of marks for consultants experience and staf ng is
shown as follows.
Firms experience
Hong Kong
Relevant to this project
International
Staf ng
Staff organization chart
Relevant experience of key staff
Responsibilities and degree of
involvement of key staff

4
4
2
5
15
20

On the other hand, the overall technical mark for Hong

Kong Housing Authority work is made up of 50% technical proposal and 50% past performance. The technical proposal for quantity surveyors, for example, is
broken down into achievement in quality assurance
(8%), proposed team structure (16%) and experience
of the project consultant (26%). A detailed marking
scheme is provided for each of these three sections.
The consultants past performance is based on the
latest two scores endorsed by the Housing Authoritys
Consultant Review Board.

The variability of marks attained for each section of

the technical proposal is likely to differ. For example,
the mark for a rms experience is more likely to be
the same from competition to competition, yet the
marks for staf ng will be more variable because key
members of the team will change from one competition to the next. Similarly, in respect of variability of
marks between consultants, it would not be unreasonable to expect two well-established large consultants to receive the same marks for rms experience,
yet their marks for staf ng the consultancy are likely
to be more variable.

The relationship between technical marks

and fees
The foregoing suggests that number of staff, team
experience and degree of involvement of key staff are
all important factors affecting both the consultants
technical mark and fee level. Timeframe and size of
the commission are likely to in uence the number of
staff. Greater experience and more involvement are
likely to result in a consultant receiving a higher technical mark. Since experienced and key staff normally
are paid higher salaries, this is likely to require a larger
fee. A higher technical score therefore requires a larger
fee, and fees are likely to go up at an increasing rate
according to the technical mark (because of salary
differences between lower and higher paid staff).

Combining fees and technical scores

In respect of combining fees and technical scores,
Drew et al. (2001b) identi ed seven different fee
technical score formulations from the literature
(HKG, 1993; CIC, 1994; Connaughton, 1994; Lam,
2000) and also suggested two new formulations.
Connaughton (1994) identi ed that fee and technical
scores may be aggregated using either a simple
weighting approach or prior weighting approach. The
essential difference between the two is that with the
simple weighting the technical score is used as a
weighting for the fee, while with the prior weighting
approach the technical score and fees are considered
independent of each other before aggregation. Of the
two approaches Connaughton (1994) recommends the
latter, citing that an important advantage of the prior
weighting approach is that the combination of highest
technical score and lowest fee bid produces the theoretically most desirable result. This is a key reason why
so many clients prefer to use a prior weighting method.
There are several popular feetechnical score formulations. According to Hoxley (2000), the UKs Con-

Tendering strategy for two envelope fee tendering

71

struction Industry Board (CIB, 1996) was asked by

Latham (1994) to choose and then endorse a speci c
feetechnical score mechanism for the engagement of
professional consultants; see Recommendation 13.5 of
Latham (1994). They recommended the following
equation.
CA = qWq 2 100Wf (f 2 fmin)/fmin) + 100

(2)

where q is the consultants technical score, Wq is the

predetermined weighting for technical score, Wf is the
predetermined weighting for fees, f is the consultants
fee, and fmin is the lowest fee. The consultant with the
highest CA value wins the contract.
In Hong Kong the SAR Government compares
consultants on a pair-wise basis according to the
following formulation.
CH = 100{Wq(qa2qb) /qb 2 Wf (fa 2 fb)/fb }

(3)

where Wq is the predetermined weighting for technical

score, qa is consultant As technical score, qb is consultant Bs technical score, Wf is the predetermined
weighting for fees, fa is consultant As fee, and fb is
consultant Bs fee.
A positive CH value indicates that the consultant with
the higher quality score wins while a negative
percentage difference indicates that the consultant with
the lower fee wins. Drew et al. (2001b) identi ed that
a major disadvantage in using this approach is that an
overall comparison of consultants is not possible, since
the numerators and denominators change according to
the pair-wise combination of consultants being
compared. In analysing a consultants competitiveness
towards Hong Kong SAR Government contracts they
therefore used the following formulation.
Cw = Wqq/qmax + Wf fmin/f

(4)

where qmax is the highest technical score, q is the consultants technical score, f is the consultants fee, and fmin
is the lowest fee. The consultant with the highest Cw
value wins the contract. The Hong Kong Housing
Authority also awards its consultancy contracts
according to this formula.
The Construction Industry Board (CIB, 1996)
recommends that clients set the predetermined
qualityprice weightings according to the complexity
of the project and the degree of innovation and exibility required in its execution. Their recommendations
are summarized as follows.
Type of project
Feasibility studies
and investigations
Innovative projects
Complex projects
Straightforward projects
Repeat projects

Indicative quality/price ratio

85/15
80/20
70/30
50/50
20/80

The predetermined weightings used for different

commissions will differ from client to client. Some
clients may even change the weightings from commission to commission, while other clients may use the
same weightings for all their commissions. In Hong
Kong, for example, the SAR Government uses a predetermined technical scorefee weighting of 70/30 for the
vast majority of its commissions, whereas the Housing
Authority, which also used to use 70/30 predetermined
weightings, now uses 50/50 predetermined weightings
(Drew et al. 2000).
The choice of predetermined weightings will affect
the variability of technical score, and fees with larger
weightings producing greater variability. In addition,
the clients choice of formulation will also affect the
technical scorefee variability.

Measuring variability differences in

technical score and fees
The TS/F SD ratio is now introduced. Table 1
compares the Construction Industry Board formula
(equation 2) with the formula used by the Hong Kong
Housing Authority (equation 4) using hypothetical fee
tendering competitions.
Consider a case where technical marks and fees are
combined without predetermined weightings. Suppose
four competing consultants, A, B, C and D, submit
fees of $5, $6, $7 and $8, respectively and obtain corresponding technical marks of 50, 60, 70 and 80.
Although the technical marks and fees have equal intervals and also are directly proportional to each other by
a factor of 10, Table 1 competition 1 shows for equation 2 that consultant A (the consultant with the lowest
fee and technical mark) easily wins the competition.
This is because the differences in fee scores (i.e. 20%)
is exactly double the differences in quality scores (i.e.
10). Consequently, the fee standard deviation of the
fees is exactly double that of the technical score. This
results in a TS/F SD ratio of 0.500 which indicates
that this particular competition is fee dominant.
Now compare this with equation 4. Table 1, competition 1 shows consultants A and D obtaining identical
total scores of 1.625, yet consultant C has a total score
of 1.589 and consultant B of 1.583. The reason for
the differences in scores of B and C is because in the
technical score ratio the highest technical score (i.e.
maximum technical competitiveness) is represented by
the denominator, yet in the lowest fee ratio the lowest
fee (i.e. maximum fee competitiveness) is represented
by the numerator. Since the lowest fee is taken to be
the numerator (and not the denominator), the scale of
the fee ratio becomes an inverse ratio. The slight difference in scales is re ected in the summary statistics. It

Drew et al.

72
Table 1
ratio

Hypothetical examples of fee tendering competitions illustrating the use of the technicalfee standard deviation
Equation 2

TM

F$M

TSc

FSc

Equation 4
TotSc

Rank

TM

F$M

TSc

FSc

TotSc

Rank

50.00
60.00
70.00
80.00

5.00
6.00
7.00
8.00

0.625
0.750
0.875
1.000

1.000
0.833
0.714
0.625

1.625
1.583
1.589
1.625

1=
3
2
1=

0.813
0.161

0.793
0.162 SD Ratio=0.995

0.438
0.525
0.613
0.700

0.300
0.250
0.214
0.188

0.569
0.113

0.238
0.049 SD Ratio=2.322

0.569
0.613
0.656
0.700

0.300
0.250
0.214
0.188

0.634
0.056

0.238
0.049 SD Ratio=1.161

0.634
0.656
0.678
0.700

0.300
0.250
0.214
0.188

0.667
0.028

0.238
0.049 SD Ratio=0.580

Competition 1
A
B
C
D

50.00
60.00
70.00
80.00

5.00
6.00
7.00
8.00

Mean
SD

50.00
60.00
70.00
80.00
65.00
12.91

100.00
80.00
60.00
40.00

150.00
140.00
130.00
120.00

1
2
3
4

A
B
C
D

70.00
25.82 SD Ratio=0.500

Mean
SD

Competition 2
A
B
C
D

50.00
60.00
70.00
80.00

5.00
6.00
7.00
8.00

Mean
SD

35.00
42.00
49.00
56.00

30.00
24.00
18.00
12.00

65.00
66.00
67.00
68.00

4
3
2
1

45.50
9.04

21.00
7.75 SD Ratio=1.167

A
B
C
D

50.00
60.00
70.00
80.00

5.00
6.00
7.00
8.00

Mean
SD

0.738
0.775
0.827
0.888

4
3
2
1

Competition 3
A
B
C
D

65.00
70.00
75.00
80.00

5.00
6.00
7.00
8.00

Mean
SD

45.50
49.00
52.50
56.00

30.00
24.00
18.00
12.00

75.50
73.00
70.50
68.00

1
2
3
4

50.75
4.52

21.00
7.75 SD Ratio=0.583

A
B
C
D

65.00
70.00
75.00
80.00

5.00
6.00
7.00
8.00

Mean
SD

0.869
0.863
0.871
0.888

3
4
2
1

Competition 4
A
B
C
D

72.50
75.00
77.50
80.00

5.00
6.00
7.00
8.00

Mean
SD

50.75
52.50
54.25
56.00

30.00
24.00
18.00
12.00

80.75
76.50
72.25
68.00

1
2
3
4

53.38
2.26

21.00
7.75 SD Ratio=0.292

can be seen that the mean technical score ratio is

slightly higher and less variable than the mean fee ratio.
The TS/F SD ratio is 0.995 (i.e. approximately unity),
indicating that the technical and fee ratios are almost
equal in terms of variability. A TS/F SD ratio of approximately unity indicates that this particular competition
is neither fee dominant nor technical score dominant.
As identi ed by Drew et al. (2001b), the numerator
denominator inconsistency can be overcome by inverting the technical score ratio and, in order to make sense
of the aggregating, deducting the fee ratio from the
quality score ratio, e.g.
Cy = qmax/q fmin/f

(5)

With this equation the consultant with the lowest Cy

would be awarded the contract. If equation 5 is used
in place of equation 4 the resulting technical scorefee
standard deviation ratio would be exactly equal to

A
B
C
D

72.50
75.00
77.50
80.00

5.00
6.00
7.00
8.00

Mean
SD

0.934
0.906
0.892
0.888

1
2
3
4

unity. However, Drew et al. (2001b) decided not use

equation 5 in their analysis citing, amongst other
reasons, that equation 5 distorts the competing consultants competitiveness. They explained that in
analysing the competitiveness of consultants it is vital
that the consultants total scores re ects, as closely as
possible, the aggregation method used by the clients,
since this forms the basis on which the contracts are
awarded. For this reason, therefore, equation 4 is used
in this analysis in preference to equation 5.
Now consider cases where the technical score and
fee score are combined with predetermined weightings
and the predetermined weightings are, say, 70% and
30%, respectively. Table 1, competition 2 shows that
for equation 2 consultant D (the consultant with the
highest fee and technical score) just wins the competition. This is because with the predetermined weightings the difference in technical scores is 7 while the

Tendering strategy for two envelope fee tendering

difference in fees is only 6%. This is re ected in the
competition standard deviations which produces a
TS/F SD value of 1.167, making the competition
slightly technical score dominant. Compare this result
with equation 4. For competition 2 consultant D
obtains the highest total score simply because this
consultant obtains the highest technical mark and the
technical ratio has a higher weighting than the fee ratio.
The TS/F SD ratio is 2.322, which is approximately
equal to 70/30 (i.e. 2.333).
If the differences in technical marks are decreased
from 10 to 5, as shown in Table 1, competition 3, it
can be seen that for equation 2 consultant A (the
consultant with the lowest fee and technical mark)
easily wins the competition. This is re ected in the
TS/F SD ratio of 0.583, which indicates that the competition is fee dominant. Equation 4, however, shows
that there is very little difference in the total scores of
the four competing consultants. This is re ected in
the TS/F SD ratio of 1.161. Being larger than unity, the
ratio indicates that consultants should place more
emphasis on getting a higher technical mark.
Now consider Table 1, competition 4, where the differences in technical marks are decreased further from
5 to 2.5. For equation 2 it can be seen that the competition has become even more fee dominant, with the
differences in technical marks decreasing from 3.50 (as
shown in competition 3) to 1.75. As a result the TS/F
SD ratio competition of 0.292 indicates that the competition is strongly fee dominant. For equation 4 it can
be seen that consultant A, who submitted the lowest fee
and obtained the lowest technical score, also wins the
contract. In this case the TS/F SD ratio is 0.580.
When comparing equation 2 with equation 4 overall,
the four competitions in Table 1 show that equation
2 competitions have a tendency to be more fee dominant than equation 4.
So far the technical scores and fees have been set at
the same interval and directly proportional to each
other. This was done mainly for ease of understanding.
The robustness of the TS/F SD ratio is now considered using the same fees as shown in Table 1 and same
maximum technical score of 80. The focus of the
analysis is on manipulating the three remaining technical scores and monitoring the effect on the TS/F SD
ratio. Many different combinations of technical scores
were tested. Table 2 illustrates the key ndings.
Table 2, competition 1 shows the technical scores
being manipulated so that all four consultants obtain
identical total scores for both equation 2 and equation
4. It can be seen that the standard deviations for fees
and technical scores are identical. This produces a
TS/F SD ratio of exactly unity.
Table 2, competition 2 shows consultants A and B
obtaining comparatively low technical scores of 50 and

73
51 for equation 2 and 65 and 66 for equation 4, yet
consultants C and D obtain technical scores of 79 and
80. As expected, consultant C (the consultant with the
second highest technical score) wins both equation 2
and 4 competitions. Note that the TS/F SD ratios are
1.514 and 1.457, respectively, which indicates that the
competition is technical score dominant. This demonstrates correctly that the competition is technical score
dominant, since consultant Cs technical score is only
one mark below consultant Ds, the consultant with
the highest score.
Now consider Table 2, competition 3. It can be seen
that consultants A, B and C each obtains identical
technical scores of 55 for equation 2 and 68 for equation 4. Consultant D on the other hand obtains technical scores of 80. It can be seen in both equation 2
and equation 4 that consultant A (the consultant with
the lowest fee) just wins the competition, yet the TS/F
SD ratios of 1.130 and 1.079 indicates a technical
score dominant competition. With certain very unusual
combinations of technical scores it seems that the TS/F
SD ratio may occasionally give a false reading. Taking
this shortcoming into account, the foregoing examples
serve to illustrate the following.
(1) If the TS/F SD ratio is approximately unity the
competition is neither fee nor technical score
dominant. The consultant should adopt a
balanced bidding strategy in putting equal
emphasis on fee and technical score
(2) If the TS/F SD ratio is greater than approximately unity the competition is technical score
dominant. The consultant should adopt a
bidding strategy in which the consultant focuses
on obtaining a higher technical score (a larger
ratio indicates that technical score has a greater
in uence on contract award)
(3) If the TS/F SD ratio is less than approximately
unity the competition is fee dominant. The
consultant should adopt a bidding strategy in
which the consultant focuses on submitting a
lower fee (a smaller ratio indicates that fee has
a greater in uence on contract award)
The hypothetical examples shown in Tables 1 and 2
serve to illustrate the workings of the TS/F SD ratio
in determining whether past competitions have been
(i) fee dominant, (ii) technical score dominant or (iii)
neither dominated by fee or technical score. By
analysing the technicalfee standard deviation ratio
over a series of past competitions a trend is likely to
emerge, and it is the summary statistics from this trend
that consultants may use in developing their bidding
strategies. It should, of course, be remembered that
the strength of this trend is dependent to some extent
on the consistency of predetermined weightings used

Drew et al.

74

Table 2 Further hypothetical examples of fee tendering competitions illustrating the use of the technical fee standard
deviation ratio
Equation 2
TM

F$M

TSc

TSc

Equation 4
TotSc

Rank

TM

F$M

TSc

TSc

TotSc

Rank

Competition 1
A
B
C
D

A
B
C
D

A
B
C
D

54.29
62.86
71.43
80.00

50.00
51.00
79.00
80.00

55.00
55.00
55.00
80.00

5.00
6.00
7.00
8.00
Mean
SD

38.00
44.00
50.00
56.00
47.00
7.75

30.00
24.00
18.00
12.00
21.00
7.75

5.00
6.00
7.00
8.00
Mean
SD

35.00
35.70
55.30
56.00
45.50
11.73

30.00
24.00
18.00
12.00
21.00
7.75

5.00
6.00
7.00
8.00
Mean
SD

38.50
38.50
38.50
56.00
42.88
8.75

30.00
24.00
18.00
12.00
21.00
7.75

68.00
68.00
68.00
68.00

1=
1=
1=
1=

A
B
C
D

67.15
72.95
77.00
80.00

5.00
6.00
7.00
8.00
Mean
SD

0.588
0.638
0.674
0.700
0.650
0.049

0.300
0.888
1=
0.250
0.888
1=
0.214
0.888
1=
0.188
0.888
1=
0.238
0.049SD Ratio=1.000

65.00
66.00
79.00
80.00

5.00
6.00
7.00
8.00
Mean
SD

0.569
0.578
0.691
0.700
0.634
0.071

0.300
0.869
3
0.250
0.828
4
0.214
0.906
1
0.188
0.888
2
0.238
0.049SD Ratio=1.457

68.00
68.00
68.00
80.00

5.00
6.00
7.00
8.00
Mean
SD

0.595
0.595
0.595
0.700
0.621
0.053

0.300
0.895
1
0.250
0.845
3
0.214
0.809
4
0.188
0.888
2
0.238
0.049SD Ratio=1.079

SD Ratio=1.000
Competition 2
65.00
59.70
73.30
68.00

4
3
1
2

A
B
C
D

SD Ratio=1.514
Competition 3
68.50
62.50
56.50
68.00

1
3
4
2

A
B
C
D

SD Ratio=1.130

by the clients. However, competing consultants should

know the clients consistency in using predetermined
weightings from previous competitions and account for
this in their bidding strategy. Likewise consultants
should also account for changes in market conditions,
since this also will affect the trend to some extent.

The relationship between total score and fee

and technical score ratio
In addition to the TS/F SD ratio, linear regression
analysis can be used to further determine the relative
in uence of technical score ratio and fee ratio on total
score. The results of each competition can be plotted
with total score as the dependent variable and quality
ratio as the independent variable. This procedure could
be repeated with fee ratio as independent variable. The
relative degree of in uence of the two independent
variables can then be compared using the coef cient
of determination (r2) and global F test.

Data collection
As part of their tendering procedures, both the Hong
Kong SAR Government and Hong Kong Housing

Authority provide all the competing consultants with

feedback information on all the submitted fees and
corresponding technical scores. Thus the data in this
analysis have been provided by two consultants: a large
quantity surveying consultant tendering for Hong
Kong SAR Government contracts and a large architectural rm competing for Hong Kong Housing
Authority contracts. The quantity surveying consultant
entered 17 SAR Government competitions between
September 1996 and September 1999, and there were
67 bidding attempts from competing consultants. The
architectural rm participated in eight Housing
Authority competitions between January 1998 to
December 1999 for which there were 72 bidding
attempts.

Analysis
The analysis is in four parts. As an introduction to
determining the extent to which the two clients
competitions are fee or technical score dominant, the
rst part of the analysis compares the successful
consultants technical ratio and fee ratio rankings. A
higher ranking should provide an indication of which
criterion is likely to be more dominant. Further
evidence is provided in the second part of the analysis,

Tendering strategy for two envelope fee tendering

75

which focuses on determining the overall TS/F SD

ratio for each client to establish the extent to which
the two-envelope fee competitions are dominated by
technical score or fees. The degree to which technical
ratio and fee ratio are correlated to total score is investigated in the third part of the analysis. The last part
of the analysis considers the extent which changes in
predetermined weightings affect the competition in
terms of feetechnical score dominance.
Successful tenderer analysis
A comparison of the successful consultants fees and
technical score rankings is considered rst. Table 3
shows that the consultants who submitted the lowest
fee won 12 out of 17 Hong Kong SAR Government
competitions using equation 2, and 11 out of 17 using
equation 4. Regarding the Housing Authority compeTable 3

titions, the consultants who submitted the lowest fee

were successful in all 8 competitions using both equation 2 and equation 4. This is in stark contrast to the
comparatively low technical score rankings.
The successful consultant rankings provide evidence
that for the vast majority of SAR Government competitions and all of the Housing Authority competitions
fees dominated technical scores irrespective of whether
equation 2 or 4 was used. It seems that Housing
Authority competitions are more strongly dominated by
fee for two important reasons: differences in predetermined weightings and differences in number of bidders.
The Housing Authority used a 50/50 predetermined
technical scorefee weighting, whereas the SAR
Government used a 70/30 technical scorefee weighting. The Housing Authority competitions generally
contain a larger number of competing consultants. Table 3 shows that there were either seven or 11

Ranking analysis of successful bidders

Equation 2

Case
No.

No of
bidders

Tech.
ratio

Tech.
rank

Total
score

Tech.
ratio

Tech.
rank

Fee
ratio

Fee
rank

Total
score

Hong Kong SAR Government Data (Wq=70% Wf=30%)

1
3
52.0
2
30.0
1
2
3
55.7
3
30.0
1
3
3
54.3
2
28.7
2
4
7
58.8
2
24.7
2
5
7
58.8
2
24.3
2
6
3
63.6
2
30.0
1
7
3
61.4
2
30.0
1
8
7
50.4
7
30.0
1
9
3
51.4
1
29.6
2
10
3
53.6
2
30.0
1
11
3
60.4
2
30.0
1
12
3
60.3
1
29.0
3
13
7
49.7
7
30.0
1
14
3
56.9
2
30.0
1
15
3
55.0
1
30.0
1
16
3
51.5
2
30.0
1
17
3
51.9
3
30.0
1

82.0
85.7
83.1
83.4
83.1
93.6
91.4
80.4
81.0
83.6
90.4
89.3
79.7
86.9
85.0
81.5
81.9

0.680
0.675
0.674
0.693
0.694
0.683
0.685
0.699
0.700
0.698
0.694
0.700
0.585
0.663
0.700
0.699
0.682

2
3
2
2
2
2
2
2
1
2
2
1
7
2
1
2
3

0.300
0.300
0.288
0.255
0.252
0.300
0.300
0.219
0.296
0.300
0.300
0.290
0.300
0.300
0.300
0.300
0.300

1
1
2
2
2
1
1
2
2
1
1
3
1
1
1
1
1

0.98
0.97
0.96
0.95
0.95
0.98
0.99
0.92
1.00
1.00
0.99
0.99
0.88
0.96
1.00
1.00
0.98

Av.
SD

84.8
4.1

0.683
0.028

88.3
87.7
88.5
82.6
85.8
86.0
85.5
85.8

0.462
0.454
0.458
0.443
0.423
0.425
0.418
0.423

86.3
1.9

0.438
0.018

55.6
4.3

Fee
ratio

Equation 4
Fee
rank

29.2
1.8

0.288
0.024

0.97
0.03

Hong Kong Housing Authority Data (Wq=50% Wf=50%)

1
2
3
4
5
6
7
8
Av.
SD

11
11
11
11
7
7
7
7

38.3
37.7
38.5
32.6
35.8
36.0
35.5
35.8
36.3
1.9

8
10
8
6
7
7
7
7

50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
0.0

1
1
1
1
1
1
1
1

8
10
8
6
7
7
7
7

0.500
0.500
0.500
0.500
0.500
0.500
0.500
0.500
0.500
0.000

1
1
1
1
1
1
1
1

0.962
0.954
0.958
0.943
0.923
0.925
0.918
0.923
0.94
0.02

Drew et al.

76
consultants competing for Housing Authority work
whereas the number of bidders for SAR Government competitions was xed at either three or seven
consultants.
Technical score and fee variability analysis
Table 4 shows the mean fee and technical scores for
each of the tendering competitions, together with the
corresponding standard deviations and TS/F SD ratios
for equations 2 and 4. For equation 2 the SAR
Government 70/30 predetermined technicalfee
weighting produced an overall average competition
technical score of 55.825 and a fee score of 19.730.
For the 50/50 Housing Authority predetermined technicalfee weighting, the overall average fee score was
8.370 and the average technical score was 38.689.
Turning to equation 4, it can be seen that the SAR
Table 4

Government 70/30 predetermined technicalfee

weighting produced an overall average technical score
and fee score of 0.679 and 0.245, respectively. For the
50/50 Housing Authority predetermined technicalfee
weighting, the overall average fee and technical scores
were 0.467 and 0.307, respectively. The extent to
which the fee and technical score ratios differ in terms
of variability can be seen by comparing the respective
standard deviations in each of the competitions.
For equation 2, Table 4 shows that in only three of
the 17 SAR Government competitions was the technical score standard deviation higher than the fee score
standard deviation (case numbers 9, 11 and 12).
Likewise, equation 4 shows an identical outcome for
the same three cases. The exceptions were because the
competing consultants submitted similar fees, yet
their respective technical scores were quite different.
It can be seen that in all eight Housing Authority

Analysis of TS/F SD ratios

Equation 2
Case

Fee

No.

Mean

Equation 4
Tech.
SD

Mean

TS/F SD

Case

Fee

Tech.

SD

Ratio

No.

Mean

SD

0.718
0.869
3.459
0.789
1.794
3.221
1.157
3.295
3.270
2.007
1.433
3.146
2.238
0.386
1.107
1.261
1.520
1.863
1.049

0.37
0.077
0.108
0.143
0.215
0.216
0.233
0.237
0.268
0.269
0.273
0.292
0.416
0.537
1.099
2.089
2.895
0.553
0.781

10
15
17
2
7
3
14
13
6
4
5
8
1
16
11
9
12

0.196
0.239
0.259
0.263
0.254
0.263
0.247
0.146
0.256
0.200
0.205
0.195
0.266
0.294
0.290
0.295
0.295
0.245
0.043

0.090
0.064
0.040
0.037
0.040
0.055
0.050
0.079
0.064
0.064
0.061
0.055
0.039
0.007
0.009
0.006
0.005
0.045
0.026

0.694
0.689
0.694
0.691
0.684
0.677
0.673
0.662
0.673
0.658
0.659
0.662
0.674
0.697
0.690
0.680
0.685
0.679
0.013

0.009
0.011
0.010
0.014
0.016
0.022
0.023
0.041
0.034
0.038
0.039
0.039
0.029
0.005
0.013
0.017
0.018
0.022
0.012

0.104
0.174
0.257
0.377
0.398
0.407
0.466
0.517
0.527
0.596
0.640
0.696
0.744
0.766
1.342
2.963
3.479
0.850
0.940

Mean

TS/F SD
SD

Ratio

Hong Kong SAR Government data

10
15
13 17
3
4
2
5
8
14
7
6
1
16
11
9
12
Av.
SD
Hong

8.276
19.361
53.200
20.457
11.226
54.143
15.240
32.051
56.165
24.630
5.509
52.780
24.578
8.330
54.530
11.132
14.924
55.805
25.377
4.967
57.003
12.668
13.923
55.800
11.064
12.200
56.041
22.496
7.454
57.755
23.962
5.244
61.339
23.051
10.764
62.601
25.694
5.378
51.567
29.363
0.718
51.263
28.920
1.007
60.093
29.485
0.604
49.933
29.491
0.525
59.012
19.730
9.070
55.825
11.382
8.099
3.573
Kong Housing Authority data

7
3

- 27.196
13.276

54.684
30.450

40.118
39.521

2.471
1.723

0.045
0.057

1
2

0.310
0.327

0.106
0.096

0.473
0.471

0.020
0.019

0.193
0.201

11.426

26.394

39.156

1.687

0.064

0.318

0.100

0.470

0.020

0.205

2
6
5
8
4
Av.
SD

17.043
12.695
18.026
21.501
0.192
8.370
15.697

24.811
26.555
25.308
23.119
29.091
30.051
10.222

39.149
40.029
39.861
39.857
31.819
38.689
2.800

1.600
2.336
2.301
2.353
3.324
2.224
0.565

0.064
0.088
0.091
0.102
0.114
0.078
0.024

7
5
6
8
4

0.242
0.333
0.312
0.343
0.274
0.307
0.034

0.132
0.107
0.104
0.101
0.096
0.105
0.012

0.473
0.470
0.473
0.470
0.433
0.467
0.014

0.029
0.027
0.028
0.028
0.045
0.027
0.008

0.220
0.254
0.265
0.274
0.474
0.261
0.092

Tendering strategy for two envelope fee tendering

competitions the fee ratio standard deviation was
higher than the technical score standard deviation.
Now compare SAR Government and Housing
Authority TS/F SD ratios. For equation 2 it can be
seen that the SAR Government TS/F SD ratios averaged out at 0.553 while the Housing Authority ratios
averaged out at 0.078. For equation 4 the SAR
Government TS/F SD ratios averaged out at 0.850
while the Housing Authority ratios produced an
average of 0.261. The results show that the vast
majority of SAR Government competitions are fee
dominant, and all eight Housing Authority competitions are fee dominant. In comparing the extent to
which fees dominate technical scores, 0.078 (equation
2) and 0.261 (equation 4) as compared to 0.553 (equation 2) and 0.850 (equation 4) indicates that Housing
Authority competitions are more strongly dominated

77
by fee than are the SAR Government competitions.
The foregoing results suggest that whenever consultants compete for work from either of these clients that
they should adopt a low fee bidding strategy. When
comparing the overall TS/F SD ratios of equations 2
and 4 it can be seen that equation 2 has a tendency
to be more fee dominant than equation 4.
In uence of technical ratio and fee ratio on total
score
Figure 2 shows the technical score regressed on the
total score for both the SAR Government data and the
Housing Authority data using equations 2 and 4. For
equation 2 both the HKSAR Government and Housing
Authority data show no correlation between technical
score and total score. This is re ected in the HKSAR

Figure 2 Correlation between total score and technical score using (a) Hong Kong SAR Government data and (b) Hong
Kong Housing Authority data

78

Drew et al.

Figure 3 Correlation between total score and fee score using (a) Hong Kong SAR Government data and (b) Hong Kong
Housing Authority data

Government data (R2 = 0.0097, F.05 = 0.6347, p =

0.4285, df = 1, 65) and the Housing Authority data
(R2 = 0.0221, F.05 = 1.5811, p = 0.2128, df = 1, 70)
regression model utility statistics. Equation 4, on the
other hand, shows that the two variables are positively
correlated, indicating that, in general, a higher technical score will result in a higher total score. However,
the linear regression model utility statistics for both the
Hong Kong SAR Government data (R2 = 0.1577, F.05
= 12.1736, p = 0.0009, df = 1, 65) and the Housing
Authority data (R2 = 0.04519, F.05 = 3.3129, p =
0.0730, df = 1, 70) show only a weak relationship
between the technical score and total score.

Now compare Figure 2(a, b) with gure 3(a, b),

which shows the fee score regressed on total score. The
scatter plots in Figure 3 show a much stronger positive correlation between fee score and total score for
both equation 2 and equation 4. Equation 2 shows
an almost perfect positive relationship between fee
score and total score. The model utility statistics
for equation 2 for both the SAR Government data
(R2 = 0.9582, F.05 = 1490.705, p = 0.0000, df = 1,
65 ) and the Housing Authority data (R2 = 0.9879,
F.05 = 5721.769, p = 0.0000, df = 1, 70) indicate a
very strongly signi cant relationship between fee score
and total score. Likewise, for equation 4 there is a also

Tendering strategy for two envelope fee tendering

Table 5

79

Comparison of TS/F SD ratio with different combinations of predetermined weightings

Equation 2
Case

Equation 4
TS/F SD Ratio

Case

No.
50/50
60/40
70/30
Hong Kong SAR Government data

80/20

90/10

10
0.016
0.024
0.037
15
0.033
0.050
0.077
13
0.046
0.069
0.108
17
0.061
0.092
0.143
3
0.092
0.138
0.215
4
0.092
0.139
0.216
2
0.100
0.150
0.233
5
0.101
0.152
0.237
8
0.115
0.172
0.268
14
0.115
0.173
0.269
7
0.117
0.176
0.273
6
0.125
0.188
0.292
1
0.178
0.268
0.416
16
0.230
0.345
0.537
11
0.471
0.707
1.099
9
0.895
1.343
2.089
12
1.241
1.861
2.895
Av.
0.237
0.356
0.553
SD
0.335
0.502
0.781
Hong Kong Housing Authority data

0.064
0.133
0.185
0.245
0.369
0.370
0.399
0.406
0.459
0.462
0.468
0.501
0.713
0.921
1.885
3.581
4.964
0.948
1.339

7
3
1
2
6
5
8
4
Av.
SD

0.181
0.226
0.256
0.258
0.352
0.364
0.407
0.457
0.313
0.096

0.045
0.057
0.064
0.064
0.088
0.091
0.102
0.114
0.078
0.024

0.068
0.085
0.096
0.097
0.132
0.136
0.153
0.171
0.117
0.036

0.105
0.132
0.149
0.150
0.205
0.212
0.238
0.267
0.182
0.056

TS/F SD Ratio

No. 50/50

60/40

70/30

80/20

90/10

0.143
0.299
0.416
0.552
0.831
0.832
0.898
0.913
1.034
1.039
1.054
1.127
1.605
2.071
4.240
8.057
11.168
2.134
3.012

10
15
17
2
7
3
14
13
6
4
5
8
1
16
11
9
12

0.044
0.075
0.110
0.162
0.170
0.175
0.200
0.222
0.226
0.255
0.274
0.298
0.319
0.328
0.575
1.270
1.491
0.364
0.403

0.067
0.112
0.165
0.243
0.256
0.262
0.300
0.332
0.339
0.383
0.411
0.448
0.478
0.492
0.863
1.905
2.237
0.547
0.604

0.104
0.174
0.257
0.377
0.398
0.407
0.466
0.517
0.527
0.596
0.640
0.696
0.744
0.766
1.342
2.963
3.479
0.850
0.940

0.178
0.298
0.441
0.647
0.681
0.699
0.799
0.886
0.903
1.022
1.096
1.194
1.275
1.312
2.301
5.080
5.964
1.457
1.611

0.400
0.671
0.992
1.455
1.533
1.572
1.798
1.994
2.032
2.298
2.467
2.686
2.868
2.953
5.177
11.430
13.420
3.279
3.624

0.407
0.509
0.575
0.580
0.792
0.818
0.916
1.028
0.703
0.217

1
2
3
7
5
6
8
4

0.193
0.201
0.205
0.220
0.254
0.265
0.274
0.474
0.261
0.092

0.289
0.301
0.307
0.331
0.381
0.398
0.411
0.711
0.391
0.137

0.449
0.468
0.477
0.514
0.592
0.618
0.639
1.105
0.608
0.214

0.770
0.803
0.818
0.882
1.016
1.060
1.095
1.895
1.042
0.366

1.734
1.807
1.841
1.983
2.285
2.385
2.464
4.264
2.345
0.824

strongly signi cant relationship between the two variables for both the SAR Government data (R2 = 0.8342,
F.05 = 327.016, p = 0.0000, df = 1, 65) and the
Housing Authority data (R2 = 0.9182, F.05 = 786.131,
p = 0.0000, df = 1, 70).
Effect of predetermined weightings on
feestechnical score dominance
The last part of the analysis concentrates on the effect
that different combinations of predetermined weightings have on the tendering competition outcome in
terms of fees and technical score dominance. Table 5
shows different combinations of technical scorefee
predetermined weightings ranging from 50/50 to 90/10
for both equation 2 and equation 4 and for both Hong
Kong SAR Government and Hong Kong Housing
Authority commissions. At 50/50 it can be seen that

16 out of 17 Government competitions are fee dominant using equation 2, whereas 15 out of 17
Government competitions are fee dominant using
equation 4. At 50/50 all Housing Authority competitions are fee dominant. At 90/10, eight out of 17
Government competitions still remain fee dominant
using equation, 2 and three out of 17 using equation
4. For the Housing Authority competitions, seven out
of the eight competitions still remain fee dominant at
90/10 using equation 2. On the other hand, at 90/10,
all 8 competitions become technical score dominant
using equation 4.
This analysis provides clear evidence that equation
2 is more biased towards fee dominance than equation
4. Also, it shows that the Housing Authority competitions are more dominated by fees than Government
competitions. An important reason for this is because
the Housing Authority encourages a larger number of

Drew et al.

80
consultants to compete for work. An increase in the
number of consultants appears to increase the differences between fee and technical score variability.

Conclusions
A model is offered in this paper which should help
consultants in deciding, as part of their bidding
strategy, whether to aim for a higher technical score
or submit a lower fee to a given client. The model
focuses on the variability differences between fees and
technical scores arising from previous tendering
competitions, since it is recognized that the criterion
with the greater variability will in uence the choice of
consultant to be awarded the contract. The variability
differences are expressed in terms of a technical
scorefee standard deviation ratio (TS/F SD ratio). A
TS/F SD ratio of approximately unity indicates that
for future competitions consultants should adopt a
balanced bidding strategy in putting equal emphasis
on fee and technical score. A smaller TS/F SD ratio
indicates that consultants should adopt a low fee
strategy, whereas a larger TS/F SD ratio shows that
consultants should adopt a high technical score
strategy. The TS/F SD ratio can be applied to any
two-envelope formulation in which fees and technical
scores are aggregated to form a combined score.
Two different two-envelope fee tendering formulations were rst tested using hypothetical data. The
results showed the model to be reasonably robust in
determining whether a particular clients two-envelope
fee tendering competition is likely to be (a) dominated
by fees, or (b) dominated by technical score or (c)
balanced in terms of fee and technical score. The
model, however, has the following limitations:
(1) unusual fee/ technical scores distributions may
result in a TS/F SD ratio being slightly larger
than unity (indicating that the competition is
technical score dominant), yet the consultant
who submits the lowest fee wins the contract
(and vice versa); and
(2) the use of certain formulations (e.g. equation
4) will slightly distort the TS/F SD ratio.
For these reasons approximately equal to unity is used
to describe the extent to which competitions are dominated in terms of fees and technical scores. It is also
recognized that the reliability of the trend emerging of
a series of competitions will also be affected to some
extent by the consistency of the predetermined weightings used by the client and by changes in market conditions.
An analysis of fee tendering data from two of Hong
Kongs largest employers of architectural, engineering

and quantity surveying consultants showed that fees

dominated technical scores in the vast majority of
competitions. Consequently consultants who submitted low fees stood a much higher chance of winning
contracts than consultants who obtained high technical
scores. This analysis shows that important factors
affecting technical scorefee dominance include the
clients choice of (i) feetechnical score formulation
method and (ii) predetermined weightings. An increase
in the number of consultants appears to make the
competition more fee dominant.
An important reason why the vast majority of
competitions are fee dominant is that, apart from
containing serious (i.e. genuine) fee bids, the fee
tendering competition may also contain non-serious
(e.g. cover prices) and/or suicidal fee bids (e.g. some
consultants may be desperate for work). This has the
effect of increasing the fee variability. On the other
hand, many technical marking schemes (including the
Hong Kong SAR Government) usually score on the
basis of factors such as rm experience, staf ng and
consultant work load. It is likely that the fee tendering
competition will contain competing consultants with
similar characteristics who, in turn, submit similar
technical proposals. This is likely to have the effect of
reducing the technical score variability.
Under such conditions it would seem that consultants must adopt low fee strategies if they are to succeed in getting work from these clients. However, this
appears not to be sustainable in the long run,
since as fees drop so the quality of service must, to some
extent, eventually drop. If two-envelope fee tendering
is to be retained as a mechanism for allocating work to
willing consultants, it seems that an important consideration is to develop a fee tendering system in which
technical scorefee variability differences are eliminated
before applying the predetermined weightings.

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