Adviser, Royal HaskoningDHV

Abnormally Low Tenders (ALTs) are considered unfavourable for the economically sustainable execution of (infrastructure) projects. Projects for which the contract has been awarded to an ALT typically face cost escalation, lower quality delivered, renegotiation of contract terms, dissatisfied stakeholders and disputes between client and contractor. Even though the ALT phenomenon is regulated in the EU Procurement Directives, there is no commonly acceptable definition of what constitutes an ALT or a framework to detect such tenders in practice. The introduction and extensive use of integrated contracts, such as Design and Build (DB), makes the identification of ALT much more complex. The contracting agency does not possess a detailed design during tendering, which hinders the accurate estimation of the project costs. Despite the negative implications of integrated contracts, the identification of ALTs can be dealt with in an objective way through developing a standardised framework. In order to be effective, such a framework should be described on the tendering guidelines of contracting authorities and be specified in the tender documents, and not under national or European law.

The importance of (transportation) infrastructure projects for the economy was already recognised in 1776 by Adam Smith in the “Wealth of Nations”. The author underlined that the nature of those projects is such that “the profit could never repay the expense to any individual or small number of individuals”, which makes the involvement of the public