NATIONAL SCIENCE FOUNDATION
TOKYO REGIONAL OFFICE
The National Science Foundation's (NSF) Tokyo Regional Office periodically receives and disseminates reports on research developments in Japan that are related to the Foundation's mission. It also provide occasional reports on developments in other East Asian Countries.
These reports present information for the use of NSF program officers and policy makers; they are not statements of NSF policy..
Special Scientific Report #02-06 (March 22, 2002)
HOW TO IMPROVE THE ELECTRONIC BIDDING AND CONTRACT SYSTEM OF CALS/EC (CONTINUOUS ACQUISITION LIFECYCLE SUPPORT/ELECTRONIC COMMERCE) FOR PUBLIC WORK PROJECTS
The following report was prepared by Morris Green Jr., a graduate student in both the Department of Industrial Engineering and the Department of Urban Planning at the State University of New York at Buffalo (SUNY at Buffalo). Mr. Green Jr. was a participant in the 2001 Summer Institute Program in Japan, co-sponsored by the National Science Foundation (NSF) and the Japanese Ministry of Education and Science (Monbukagakusho). While in Japan he conducted his research under the guidance of Mr. Kenichi Matsui, Head of the Construction Management Division and Mr. Hisashi Mitsuhashi, Researcher of the Information Technology Division at the National Institute for Land and Infrastructure Management (NILIM) in Tsukuba, Japan. Mr. Green Jr. can be reached at either mgreen@eng.buffalo.edu or jon_blaze24@yahoo.com.
Before I was accepted into the NSF/ Monbukagakusho program I did not have a solid research assignment at my school. I knew that I wanted to make significant contributions towards improving quality, safety, customer/employee satisfaction, product development, efficiency and cost for the public and to study the Japanese philosophy and culture. Furthermore, I knew that I wanted to utilize my diverse educational background and work experience in Civil/Industrial Engineering and Urban Planning to the success of an agency or project.
Ever since I went to Tsukuba, Japan and worked with NILIM I was able to apply my combined educational background, knowledge and work experience in Civil/ Industrial Engineering and Urban Planning to the improvement of a project. During my stay in Japan I researched ways to improve electronic bidding and contract system of CALS/EC (Continuous Acquisition Lifecycle Support/ Electronic Commerce) for public work projects. In addition, I compared the Japanese construction process with the American construction process to see if any improvements in Value Engineering and Project Management systems were needed.
CALS/EC is a public works database that uses electronic information and the Internet to create an environment for transparent contract awarding procedures for public works projects. CALS/EC also creates higher efficiency through electronic delivery and more interaction between citizens and administration through electronic communication.
The purpose of the electronic bidding system of CALS/EC is to allow bidders to enter their bids via the Internet. Since the system relies on the Internet for communicating information to various individuals, it will influence more bidders to participate in the bidding process, especially if the bidder’s company is overseas. If more bidders participate in the bidding process, competition would increase, thus providing the owner or government with reasonable set prices for constructing various public work projects.
Once I understood the purpose of the electronic bidding and contract system I, with the help of colleagues, had to identify ways to improve the system. To improve the electronic bidding system, it was necessary to create an efficient database where bid information from potential bidders could be stored from an Internet-based web page and transferred to a database. The ideal type of database was Microsoft Access database linked to Microsoft FrontPage to create a web page where bid information could be assessed, collected and updated. The database information will include schedule information, ordering information and bidding results.
Other information included in the system will be the bidders’ name and address, employment history or evidence of capability from previous completed projects, the bidders’ budget records, any claims or litigation for incomplete or unsatisfactory project completion and the bidder’s list of hired union/non-union agencies. Incorporating an Access database with FrontPage allows clients to provide feedback on the public works project. The system also enhances the availability of information to be gathered, uses less paper, and offers faster communication and service. In addition, the database makes it possible for the government, the customer and the private company to collaborate over an online network.
At present, the Ministry for Land, Infrastructure Transport (MLIT) which originally developed the electronic bidding system is administering the system at no cost to its agency and to certain public purchasers. The agency wants to expand the application of the system for public purchasers, which includes other ministries, public and private corporations, prefectural authorities and local government officials. Currently, there are 586,000 companies involved in the Japanese construction industry. Out of the 586,000, MLIT has 40,000 companies registered for bidding on public work projects. From these companies bidders receive an invitation from MLIT for tendering.
Potential bidders who are interested in bidding for public work projects must apply for an authentication certificate at the Certification Authority, which is the Tokyo Databank Company. After the bidders apply for the certification, the Certification Authority sends the bidder’s application to the Electronic Bid Server Control Center (e-BISC) for certification validation. Once the e-BISC center approves the application and confirms it with the Certification Authority, then the authentication certificate and an authenticity card are issued to the potential bidders.
The authenticity card (IC card) is used for advance security by bidders to obtain information on available projects such as bidding announcements and results and ordering schedules. The IC card is offered by the Public Works Procurement Information Service (PPI). Once bidders find a project of interest, they submit an electronic bid to e-BISC center. The bid goes directly to the public purchaser for bid evaluation. When the public purchaser reviews the bid information they evaluate certain criteria such as the bidders’ reputation/work experience, the ranking system and the bidders’ price quotes.
When analyzing the company’s work experience, the public purchaser looks to see how successful the companies are in completing public work projects with respect to quality, time, cost and satisfaction to the owner and user. Overall the public purchaser judges the companies/bidders by their past results on public work projects. Based on the companies past results and work experience, the public purchaser uses a ranking system to determine which group they belong in. The groups are categorized as big size, medium size and small size companies.
If a company is classified as a big size company it is more likely to win the bid contract for the project. For companies that are classified as small size, their chances are less in winning the contract. But if small size companies want to improve their chances of winning the contract, they would have to be subcontracted or enter in a joint venture with the big size companies. The Ministry of Land, Infrastructure and Transport encourages collaboration among various companies and is more willing to award several companies a contract if they work together as a team.
After companies are ranked by their size and experience, the public purchaser narrows its selection to a few companies. From these few companies the public purchaser judges the bidders’ asking price for performing the project. In reviewing the bid price for the companies the bidders’ price range must be close to one another. An upper and lower bound price range is determined by the public purchaser’s willingness to pay for completion of the project. After the purchaser completes its review of the bid price from the bidder, the bidder’s reputation and past experience are evaluated again to determine the lowest responsible bidder.
Overall the electronic bidding system was developed by the Ministry of Land, Infrastructure and Transport (MLIT) to help lower the administration costs in paper usage, improve work efficiency by unifying several services, including document creation and reduce the number of physical transfers for individuals involved in the bidding process. The entire process is made possible through the Internet.
In the United States most bidding process takes place face to face (in person) not electronically, therefore this system was fairly new to me. Due to the short time in Japan I was unable to finish the database creation at my host institute. But, by attaining a solid research opportunity at my host institute I am able to continue working on this database at my university. To prepare myself in helping with the research at NILIM I took a course this past fall 2001 semester in the Department of Urban Planning. The course, “Information System for Urban Management” investigated the directions and possibilities of “E-Planning (Electronic-Planning)” based on the use of information technology available and the skills required to develop and achieve such planning processes. Among the skills that I’ve learned is how to develop a web page by using Microsoft FrontPage. I also learned how to utilize Microsoft Access to design new and existing databases with the integration of data from a Microsoft Excel spreadsheet. The course not only emphasized information technology, but it also addressed issues of digital divide, privacy problems and education of information technology. In addition, the course paid close attention to the application of “E-Planning” concerning low-income inner-city communities.
Once this web page/database system is created I will develop a cost estimation system to gather the cost of various building facilities and public works projects. I planned to use the RS Means book and information obtained from various contractors as a reference to gather this cost information. This cost estimation system will be helpful for the public purchasers to verify or self check if the bid prices obtained from different bidders fall in the range of previous constructed facilities and projects. A sample model of the cost estimation system is shown on the next page.
Create an email system of all the people involved with the capacity to receive reports and design files. Name of Individual who is in charge: ____________________ Name of Company _____________________ and Job Title __________________ Type of Facility: __________________ List the number of parts needed to construct that facility Direct Costs List the name and number of equipment needed __________List the name and number of materials needed __________List the number of manpower/laborers needed __________Example: # of parts __________ x $ cost = total $
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Model 1
I am still researching the comparison of the Japanese construction process with the United States to see if any improvements in Value Engineering and Project Management systems are needed.
Overall, my research experience at NILIM demonstrated that the electronic bidding system has an excellent chance to be successful in the public works domain of the construction industry. By focusing on the use of electronic information and the Internet, the system can contribute to an environment where transparent contract awarding procedures for public works projects, higher efficiency through electronic delivery and more interaction between citizens and administration through electronic communication is achieved.
In addition, the research project has required the combination of various disciplines of social science and engineering to create an electronic bidding and contract system. This experience to me was ideal because it was the first time where I was able to use my diverse educational background of Civil/Industrial Engineering and Urban Planning in the development of a research project.
I also learned the value of true teamwork and collaboration. While working with my host institute I noticed the team-oriented environment when the staff engaged themselves in brainstorming sessions every week to discuss their work progress on a particular project/s or ways to improve certain projects. As for the collaboration the Ministry of Land, Infrastructure and Transport (MLIT) encourages collaboration especially when it involves winning bids for public works projects. MLIT is willing to award several companies of a contract if they work together as a team. This strategy is effective especially for small size companies that want to improve their chances of winning a contract through joint venture initiatives with big size companies.
Collaboration also takes precedence when developing this electronic system. Many agencies such as the MLIT, the Ministry of Construction (MOC), Japan Construction Information Center (JACIC), the Service Center of Port Engineering (SCOPE), the Construction Management Division and the Information Technology Division at the National Institute for Land and Infrastructure Management (NILIM), prefectures, potential bidders, citizens and other public and government agencies were involved in the creation of the system.
But, in a less positive side of the system, I do question the response by bidders, public purchasers and other government and private agencies in using this system because it threatens the conformity or comfort zone of face-to-face transactions and communication. Since computers will replace face-to-face communication many people who once provided the face-to-face service to customers will lose their jobs. Also, those individuals who choose not to use information technology to govern their operation will not have access to available bid and project information. Overall, a switch from a paper oriented process to an electronic delivery of service and communication system may not be an easy transition.
By having this opportunity to conduct research with a foreign agency I was able to offer my technical background and external perspectives to the decision-making process of improving the electronic bidding and contract system. Furthermore, this opportunity taught me to appreciate the value of science/ engineering international development by seeing a community interested in improving the lives of people. Only through this NSF/ Monbukagakusho program was I able to gain knowledge from this research experience and continue research efforts at my university.
Most important, this program allowed me to learn and appreciate the value of friendship in Japan. I have a new profound respect and appreciation for the people I worked with and for the people who have made my transition from the American lifestyle to the Japanese lifestyle easier. The people whom I considered friends will always have a special place in my heart. Someday I would like to work in an agency where international development and science/engineering research is encouraged. I feel that through research, collaboration, active participation and promotion of broad-based development in international affairs the United States can strengthen its relationship with various countries in a positive manner.
Acknowledgements
As an underrepresented person of color in science and technology I will always love and cherish this opportunity. This opportunity not only allowed me to learn and appreciate the Japanese culture, but it also allowed me to teach Japanese people about the life of an American person of color. And for that I would like to thank the staff of National Science Foundation (NSF), Japan International Science and Technology Exchange Center (JISTEC), National Institute for Land and Infrastructure Management (NILIM), Japan Construction Information Center (JACIC), Public Works Research Institute (PWRI) and the staff of Kenshu Center and Ninomiya house for accepting me into their program and making me feel comfortable during my stay in Japan.
I also would like to thank my host family (Fujii san and Maeda san), my Japanese instructors (Mihara sensei and Maki sensei), my Japanese friends and families whom I met while in Japan during my cultural excursion, my friend Mayumi, Ryuta and his family, Ryuta’s girlfriend and her family, Ms. Watanabe san, Hiroko, Naoko, Hatakeyama san, Yoshiko san, Pi san, Wu san, Kobayashi san, Chiba san, Matsui san, Kato san, Kuwabe san and his wife, Yamaguchi san, Mitsuhashi san and his family, Donna, Leslie, Danny, Lee, KC, Erica, Dr. John Staley, Dr. Nallan Suresh, Dr. Christopher A. Loretz, Catherine Pollina, Dr. Yasuhiro Monden, Dr. William A. Blanpied, Ms. Thomasina Edwards, Ms. Christine French and my professors Dr. Yasuhide Okuyama, Dr. Robert E. Barnes and Alfred Guiffrida for giving me this opportunity to work and experience the culture of Japanese people. In my farewell I would like to say Totemo Arigatogozaimasu!!!
Websites that reflect this project
1. Technology Research Office, Ministerial Secretariat, Ministry of Construction
2. Japan Construction Information Center (JACIC)
a. http://www.cals.jacic.or.jp/ or http://www.jacic.or.jp (Japanese only)
3. Ministry for Land, Infrastructure, Transport (MLIT)
4. Public Works Procurement Information Service
a. http://www.ppi.go.jp (Japanese only)
Photos