SMRT’s lowest tender system is to blame for frequent train breakdowns: former presidential candidate contends

8099

Former presidential candidate Tan Kin Lian has suggested that SMRT’s tender system may be to blame for the frequent breakdowns plaguing Singapore’s public transport system, in a Facebook post uploaded in the wake of the Joo Koon MRT collision earlier this week:

“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.”

In a subsequent Facebook post, Tan introduced an alternative tender system idea:

“For the past two decades, I have taken a view that the competitive tender system is a bad system. The principal may get a lower price but the contractor may cut corners and provide inferior material and workmanship to keep a profit.

“It is difficult for the principal to monitor the work closely. It also leads to conflicts, and request by the contractor for additional payment due to variation orders. It is a game. One party tries to “cheat” the other party.

“What is an alternative system?

“This is my suggestion. The principal will ask two quantity surveyors to estimate the cost of the project. If the price differs, in the case of two estimates, the principal will ask the quantity surveyors to explain the difference, and will select the more realistic estimate.

“In asking for tender, the principal will disclose the estimate made by the quantity surveyor. This will help the bidders to prepare their bids.

“When the bids are received, the principal should select a bid that is close to the estimate and award the contract to the bidder that has the best resources including the quality of the manpower and their availability.

“The principal should give preference to the contractor that has fewer projects on hand, as they can focus on the new project.

“The aim of this system is to give a fair price to the contractor for the project, so that they can focus on doing a good job, rather than worry about cutting cost. If they have a good profit margin, they will not have to cut corners on the quality of materials or workmanship.

“If a contractor cuts corners to make a bigger profit, they should be barred from future projects.

“This system of awarding a fair price will encourage contractors to build up a pool of permanent workers who can develop their skills. They are assured of a continuing flow of work.

“I suggest that the public sector adopt this new system of awarding projects based on “a fair price”. The private sector will be encouraged to follow this practice.

“Suppose the fair price for a contract is $200 million. Under the current competitive system, a contractor may bid $180 million to get the job. They may look for ways to reduce their cost, such as using cheaper materials (i.e. lower quality) or cheaper workers (i.e lower skill). This will have serious impact in the years ahead.

“Alternatively, the contractor will find ways to ask for additional payments through variation orders to get the additional $20 million. This can lead to disputes. The principal may end up paying the same cost.

“The system of getting the principal to disclose its estimate also helps the contractors to prepare their bids at a lower cost. They do not need to carry out the entire work as they can use the principal’s estimate as the basis to make adjustments to their final bid. It will remove most of the uncertainty and allow the contractor to focus on where they can add their value.

“The most important benefit of a “fair price” system is that it allows contractors to build up a pool of permanent workers who can develop their skills over time. They will be confident that they have a job that for many years. The contractor will also be confident of providing this assurance to their workers.

“We have seen the harm that comes from our competitive tender system, as reflected by the continuing problems in our MRT system and also the poor quality of many new property projects.

“It is time to consider a better system to award projects to contractors, based on a “fair price” system.”

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

Posted by Tan Kin Lian on Wednesday, 15 November 2017

For the past two decades, I have taken a view that the competitive tender system is a bad system. The principal may get…

Posted by Tan Kin Lian on Friday, 17 November 2017

Get the latest news, opinions and commentaries. Available on Android  

102 comments

  1. Calvin Teo says:

    Lowest bid wins happens in most if not all the companies. What matters ultimately is how detailed the tender specs is drafted and whether it covers all aspects of what needs to be done and addressed. This will weed out all those that are not competent to carry out the work. Is there anything wrong to award to the lowest quote that can fulfil all requirements laid out in the tender specs?

  2. Louis Seah says:

    Is not lowest tender, it’s the mindset of commuters that caused all these, and also the monkeys in the organization trying to tarnish the impact of our government.

    1. Irvin Quek says:

      They have been making lots of money from non train business, so in the first place in a time long long ago, how can the PTC allow for price increases?

      Now using the formula there is 3.2% down but the decrease until further notice???

      What kind of
      multiple standards is this???

  3. Only clowns from that circus knows ,”“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.”! They are part of that evil system which does so much bad for the country for 10-20-30 years, then still comes off like the white shiny knight and kk slays the dragon. This clown I have no respect

  4. Edwin Kwan says:

    The point made is off the mark. The cause could be the privatisation and listing of SMRT where CEOs are pushed to trade off profits and costs etc. As a Temasek company and listed one, it has to show profits that will prop the share price and dividends. Whatever KBW says it’s the job of CEO to balance out, he was never a company senior executive and he has no track record to say it. We are so fortunate that our founding PM objected to public listing of the airport, otherwise it will follow the same path.

  5. That is very true. Our present bidding system is a “sick” system which has been adopted by our government as the norm. Likewise we see business that have been striving for years being booted out of their premises because of rent increase. Another tenant bid higher to displace the old tenant so to speak. This is the failure of the PAP and it’s cronies. And you Singaporeans still voting for these incompetent leaders.

  6. Jim Lion says:

    The tender system for the lowest price is the cornerstone for all infrastructure projects n supplies n has been universal n successful so far. Why it did not work only for the MRT system is puzzling.

  7. Ben Teo says:

    Problem lies with the competency of the project head to select the better value . If it is override by cost cutting by management then the board is responsible. A tender system is just a dead procedure.

  8. Why we need to say so much with all the imaginary up in the head. Just simply need go down to “All the “MRT Site’s with the Relevant Authority and Independent Surveys commissioned by the President to see it with your own #Naked Eyes..#Bet You all will be Shocked out of your life. The Almighty truth and nothing else but the truth. So help me God bless the Trains.

  9. In private sector, tenderers compete to bid with the lowest price. As if it can’t get worse, the tenderer with the lowest price often will be pressured to give a discount to get the contract awarded. No wonder we cannot afford to upgrade our work with more automation, higher technology but be dependent on cheap foreign labour. The tender system is abused by all public and private sectors to get lowest cost and often with ridiculous unachievable contract period. Only way for tenderer to survive is to cut on quality and safety. SG is not interested in high quality, productivity work. It is evident everywhere.

  10. Our parliament rubbish chute refurbishment already cost almost a million dollars… Why the SMRT tender system not looked into how our female minister able to award the tender to rubbish chute?
    Train system is definitely more complicated than rubbish chute.

  11. Lowest bidder gets tender. But citizens dont get the benefit. Now with himalayan scale of breakdowns – who will foot the loss? Its again the public. Whichever the case, people are the loosers. Thanks to Sinkies for helping Elites.

  12. I won’t deny lowest price is not good. Just as we consumers when buying something, we always compare a few retailers before making purchase. Dun get distracted by those useless free goodies, as majority retailers like to do this nowadays. This should apply to SMRT to always compare what is being offered between the lowest, middle and highest price bidding in term of quality, reliability and after sales service. Just make sure that we get the best value not in term of price. Apparently the team which responsible for this software tender or bidding is not doing a good job. In short it seems to me that the whole SMRT is a lousy organisation. They really need someone who is bold enough to revamp / reform the organisation and rebrand it with a fresh start. Citizens expectation is very simple. If you dun change SMRT, we will change you.

  13. Jimmy Ng says:

    They were not looking for a reliable system to serve the public, to ensure the system meet business and operating requirements. They make the decision to meet their KPI. This is the cultural problem of the ruling party. Inside SMRT, cultural issues of complacency leading to poor performance. Externally, KPI driven ministers and leaders leading to poor selection of solution.

  14. Joey Lim says:

    Of all the people in Singapore, TKL should be the last person to talk about tender system. For he is the one that introduced Tender System to Motor Car accident repair in Singapore which NTUC Income is still practicing.

    You bet that it is the lowest bidder will get the job. Because during his time, he let more than 100 workshops bid for each job.

    Cut corners? If the bidding price dropped to 20% of the usual market price, it is not cutting of corners, it is outright asking the workshops to cheat in order to survive.

    TKL knows best about Tender System, for he had set up the mother of all tender system in motor repair trade. Ask your friends who are in this trade and they will give you the facts.

    What a joke!

  15. Low bidder win the contract while the transport minister is being paid the highest. What logic is that? Obviously PAP is no longer able to lead this country anymore. Under Saw management, we questioned why appoint someone who has no experience on running a railway system to be the CEO. Then the breakdown started to occur which force Saw to step down. Then they appoint a paper general. Again, we questioned why appoint someone who has no track record of leading a corporate organisation. Today problem is the result of appointing wrong people on the job. If same group of wrong people leading this country, the result is even worse.

  16. The lowest bid model is prevalent throughout govt infrastructure. Why do you think we can have a flyover collapse still halfway through building. In order to acheive lowest bid. Corners have to be cut. If not how to make profit margin?? Bid low . skim on materials and resources in order to make a reasonable profit margin. Maybe now people can start to see the truth. Take the red pill people.

  17. Easier said than done … in this particular saga , even the highest quote will result in the breakdowns … it’s the attitude , lack of pride and responsibility of all involved ….

  18. Ronald Lim says:

    He is out of his depth! If the tendering was done correctly, the lowest should be awarded the contract. This requires stringent pre-qualification of the tenderers. It is the best and most transparent system. There was not problem with the MRT until the a few years after the appointment of the Saw woman, followed by the so called general!

    1. Ryan Ong says:

      Uh, no. Tendering is not “correct” if the cheapest is picked. It’s correct if the best and most cost-efficient is picked. Would you buy a car with $2 seatbelts?

  19. Why use outside contractors at the 1st place…MRT is the artery of a country should employ and trian our own in house maintenance work force so SMRT could have better in
    controlling and accountability.

    1. 李紳華 says:

      Mohan Sinnapillay, out sourcing of cos not cheap. i believed were done under “biz made biz” who knows from whose left pocket to whose right pocket.

    2. We have top universities locally and SMRT should partners with our universities here via students attachment programme to get these engineering students to come out with ideas on how to strengthen our train reliability as their graduation assignment. Throughout this process, if that particular students performance is outstanding, SMRT can then recruit them upon their graduation to form own strong engineering team and gradually remove subcontracting job to 3rd parties.

    3. White collar jobs also rather depend on foreigners instead of locals. Rather groom/train foreigners…Brainless…expect them to strike on works…n give citizenship like toilet papers for the sake of power?? Killing n destroying S’pore n local breed citizens

  20. Linda Lim says:

    Awarding to the cheapest quote does not only affects the SMRT. It affects every ministries in the Gebiz as all suffering from the lowest quote quality but was not made known to the public. SMRT cannot hide the breakdowns as is a public transport.

    1. Linda Lim says:

      Ali Yahya Raee yes I have also given up 1 year ago. Foreign companies quote to below their cost, to get the contract. Do up a good P&L pay taxes so that they can get their PR here.Our ministries goes for the lowest quote and get all shit but yet got to keep the peace.

  21. Chee Wong says:

    Twenty five years ago when we were bidding for international contacts, the principal already told us that they know the price of the project so they will not necessarily give the project to the lowest bidder. Smart foreigner.

  22. Norman Wee says:

    Are you sure? If SMRT change it’s policies, you sure it will be as smooth as the HongKong MRT? What if is not? My reading… Its more of the bugs and the hacks…. What to know more?

  23. Prem Ravi says:

    This is what I have been saying all this while. (Cheep) Too many under-table, now got fucked themselves and now trying hard with all other fucking excuses. Third world trains and parts fuck the whole system. Again don’t fool Engineers pls.

  24. Across the entire country i think ministries now all practises and adopt lowest bid wins system which will continues to see major issues surfacing! I agree with Mr Tan this is starting to show!!!

Comments are closed.