POSCO Construction, Abolition of Lowest Bid Award System

[Asia Economy Reporter Yoo In-ho] POSCO Engineering & Construction is the first in the industry to abolish the lowest bid winning system.

On the 17th, POSCO Engineering & Construction announced that it will introduce the 'Restricted Low Bid System' instead of the lowest bid winning system so that small and medium-sized enterprises can secure reasonable profits.

The Restricted Low Bid System excludes bidders who submit amounts lower than the restricted low bid standard amount calculated by a formula. The restricted low bid standard amount is set at 80% of the sum of the average bid amount?excluding the company's budget excess and the lowest bid?from the bids submitted by participating companies, plus the ordering budget.

POSCO Engineering & Construction explained that by adopting this method, although the construction costs for small and medium-sized partner companies may increase, the company does not expect a significant rise in its cost burden. Considering the side effects such as quality degradation and safety accidents caused by unreasonable low bid winning, the company judged that the positive effects are substantial and decided to implement the system.

A POSCO Engineering & Construction official said, “With the implementation of the Restricted Low Bid System, small and medium-sized enterprises will avoid excessive competition and achieve appropriate profits, which will help stabilize their finances. We also expect this to serve as an opportunity to enhance the competitiveness of the entire industrial ecosystem in line with the group’s management philosophy.”

This content was produced with the assistance of AI translation services.