[mc32]

Do what they used to do in the old days. You pay 50% now and the rest in X decades, so long as it meets some minimums set in advance. This would eliminate under bidding. It might put financially weak vendors sag a disadvantage but them’s the breaks.

[Frondo]

Another way to do this involves a shift from lowest-cost purchasing to best-value purchasing. Under lowest cost guidelines, the agency cannot take any factors but price into consideration, leading to this garbage. With best-value, they can look at the contractor's past performance in making a determination. Slowly, agencies are making the change, but a lot of them are still required by guidelines to go with the lowest bid.

[my123]

Best value is hard to evaluate objectively, which is one of the reasons why this mess even happened.

And corruption can affect it evaluating the value too

[Frondo]

It's true that best value can be gamed, but any system can be gamed.

When buyers can define some evaluation criteria like reviewing the bidder's past performance (delivery on-time vs late, cost overruns) in addition to current bid, they can better assess how smoothly this project will go, and past performance is difficult to game without lying, i.e. submitting a fraudulent bid package.

The procurement field has a number of membership organizations and certifications and these people are largely good and ethical workers who take pride in doing good for their employers. Not all, but the good ones far outnumber the lazy, incompetent, and corrupt. (I'm not one, but worked adjacent to the field for a while, and I think buyers often don't get a fair shake, because the corruption can be shocking when it's visible.)

[jlmorton]

Another way to avoid this is with a Design-Build-Operate contract.

The transit agency is on the hook for the agreed construction cost, and for ridership estimates and minimums. If ridership does not develop, then the contracting agency is responsible for making the operator whole.

The contractor is on the hook for the design, build and operation of the system for N years.

The worst possible way to design a large, complex system is the way most US transit agencies do it: the agency operates as the prime contractor, and it issues an initial design subcontractor, which submits an alignment and maybe a 20% design. Then the agency issues bids for each segment, and the new contractor completes the design.

[magduf]

>The transit agency is on the hook for the agreed construction cost, and for ridership estimates and minimums. If ridership does not develop, then the contracting agency is responsible for making the operator whole.

> The contractor is on the hook for the design, build and operation of the system for N years.

This won't work: the contractor will just declare bankruptcy when things don't work out that great. But the owners will have bags full of money by then.

[jlmorton]

This is not an idea I just dreamed up. It works and is in practice around the world.

For a successful example, look to the Canada Line in Vancouver.

https://en.wikipedia.org/wiki/Canada_Line

[adrianN]

Make suitable insurance for the case of bankruptcy a prerequisite then.

[rstuart4133]

From https://www.abc.net.au/radionational/programs/backgroundbrie...

> In the early 2000s after the collapse of insurance giant HIH, NSW and Victoria abolished some classes of builders' warranty insurance. The governments said it was to try and stabilise the industry and ensure its viability. > > So if you're in a new apartment building of more than three storeys, instead of making a claim with an insurer, it's now you versus the builder. You've still got a warranty, but you may need a lawyer.

The rational was builders of that size and above would avoid being put out of business by insurance claims. It had been true up until that point. But from https://www.abc.net.au/news/8403744 :

> Then, in February this year, almost three years after the owners commenced legal action, the developer, Payce Properties, announced that it was being placed into administration. > > The parent company, Payce Consolidated, is still trading, and has plans to roll out more than 7,000 more apartments in the next five years.

Surprise, surprise, there has been a rash of shoddily built large buildings with arguments about was footing the bill every since.

[Reason077]

> "Another way to avoid this is with a Design-Build-Operate contract."

The linked PDF seems to argue for the opposite. It suggests that "design & build" contracts tend to inflate costs, and countries with lower subway construction costs tend to separate design contracts from construction contracts.