The Performance Information Procurement System (PIPS) is the latest among

construction procurement systems. It was developed essentially to address the problem of

non-performance in the construction industry. As the name indicates PIPS uses
performance information to evaluate the participating contractors. !ather than procuring
construction sub"ectively or based solely on price PIPS lends ob"ectivity by adopting a
ris# minimi$ation approach using past performance information along with price for
selecting contractors.
Source% (&ashiwagi '()*)
i. Quadrant I + ,ow -id or Price--ased Sector (described by high .perceived/
competition and minimal performance)0
ii. Quadrant II + -est 1alue Sector (described by high competition and high
performance)0
iii. Quadrant III + 2egotiated--id Sector (described by .perceived/ high performance
and controlled low competition)
iv. Quadrant IV + 3nstable 4ar#et (described by low performance and low
competition0 It is not a natural sustainable mar#et).
5onstruction started as a performance based industry (6uadrant III in 7igure )). It was
common practice for owners to pre-8ualify contractors have the contractors compete and
select and negotiate with the best value contractor. Price pressure moved the industry to
increase the amount of competition. 9owever there was no information based processes
available to compete the contractors based on both performance and price. This resulted
in an industry shift where the construction professionals deliver construction more as a
price based commodity (6uadrant I). The design-bid-build low bid award is the largest
delivery process of construction. 4any of the alternate delivery processes that are
supposedly best value awards still use pre8ualification and low-bid awarding. This is due
to the inability to identify and compete performance as well as price. :ne solution is to
move from a 6uadrant I environment to a 6uadrant II environment. 6uadrant II is a
process-based 8uadrant.
A Quadrant II process is defined by the following characteristics%
)) !is# is transferred to the contractor. The validation of this concept is that either
contractors minimi$e the ris# or withdraw from the pro"ect.
') Selection is done through performance% past performance ratings of #ey components0
and the contractor;s ability to identify prioritise and minimi$e ris# in terms of
money time and e<pectations.
=) 5ontractors are selected by their performance numbers.
*) The contractor is allowed to clarify un#nowns use their e<pertise to minimi$e ris#
and ma<imi$e their profit.
>) The designer designs and the constructor constructs.
?) All technical decision ma#ing of the client and their representatives are minimi$ed.