The Philosophy of Low Bid

By Ted Garrison

This month, Garrison takes a philosophical approach to the concept of the low-bid system, asking himself, “Why does it exist?”

Looking at the low-bid process from a philosophical perspective might seem strange to some, but really it’s not. Instead, it’s about trying to better understand his or her beliefs. I often write that the low-bid process is not in the best interest of any stakeholders in the construction industry, including the client. If you disagree with this statement, why is that?

The word philosophy originates from two Greek words meaning “to love” and “wisdom.” Therefore, philosophy is about the pursuit of knowledge.

The field of economics is subject to a great deal more debate than science, for example, since scientific theories can be proved through scientific research. Most people have their own philosophy concerning the world around them. The individual’s personal filters process information in a unique way, therefore creating an individual philosophy. This is no different than when we see light through filters—the color that we see depends on the filters the light passes through.

Let me give you an example of what I’m talking about.

If I were to hold up a red ball and ask an audience what color the ball was the majority would say red. Yet, it is possible that someone would say it was gray. Is this person wrong because he or she is colorblind? This logic applies to intellectual information as much as it does to information obtained simply through our senses. In other words, “truth”—it can be argued—is a combination of the external world and the individual’s personal make-up.

Unfortunately, the senses can be confused. For example, if you place one hand in water that is as hot as you can stand, place the other hand in a bucket of snow, and then take both hands out at the same time and place them in bucket of water at room temperature, you’ll get a surprising result. The hand that came from the hot water will feel that the bucket of water is cold; while the hand that came out of the snow will feel like it is hot. Same water, but different results! Actually, both perspectives created a false impression.

Similar results occur when different people review the same intellectual information. One person comes to one conclusion, while another person comes to a totally different conclusion. My conclusion is that the low-bid process is seriously flawed, while others conclude the opposite. 

So who is right? The key may lie in the writings of John Kenneth Galbraith. It’s probably today’s conventional wisdom that one should obtain several bids and then take the low bid. However, this logic assumes all the bids are equal in what they will provide in quality and service. Most general contractors admit that one of their most difficult jobs is evaluating subcontractor bids, and yet they do this almost on a daily basis. Therefore it seems unreasonable to assume that someone who is not a construction professional, like the project owner, can evaluate bids to ensure the only variable is price.

When Galbraith coined the term “conventional wisdom” he didn’t considerate it a compliment. Therefore, if the low-bid process is the conventional wisdom, then maybe it’s not the best option. In general, people tend to believe what is acceptable.

For example, when someone gives a speech the various audience members tend to interpret what was said to confirm what they already believe.

Galbraith has written, “Numerous factors contribute to the acceptability of ideas. To a very large extent, of course we associate truth with convenience—with what most closely accords with self-interest and individual well-being or promises best to avoid awkward effort or unwelcome dislocation of life.”

In other words, since it’s much more difficult to analyze a set of bids to determine the best-valued bid, it’s more convenient to simply take the lowest. Further, for the person making the selection it’s safer to accept the low bid. In essence, the individual hides behind conventional wisdom and the individual really didn’t make the selection. Instead, the process selected the low bid, so the individual has no responsibility and therefore avoids any “unwelcome dislocation of life.”