Early identification of lowest responsive bid in competitive bidding process of construction projects (original) (raw)
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The costs incurred by various stakeholders participating in the tendering process and their magnitude has attributed incongruity between government and contractors, economic drain and less competition in public sector projects. The aim of the study is to develop model that predict the transaction cost of bidding construction projects based on Public Procurement Act 2007 (PPA 2007). To achieve this, quantitative survey design based on structured questionnaire was used. The data collected from 143 sampled contractors selected using stratified sampling techniques from the NorthWest states of Nigeria were analyzed using Partial Least Squares-Structural Equation Modeling software. The results from the analysis revealed three (3) major sources of transaction costs identified from the field as; eligibility documents, contract administration costs, and securing related documents methods. In addition, the three identified transaction costs sources were found to be significant determinants of transaction costs for contractors bidding for construction projects of various types. Moreover, bidding costs model was found to exhibit good forecasting power that can be used to predict the magnitude of costs incurred by contractors in bidding projects in Nigeria. The study concludes that the transaction costs of contractors in bidding construction projects on average is 8.21% of contract sum after validating the model with real life data, and it will benefit incoming firms into the industry as a bidder by knowing their entry probable costs indicators for public projects. The study recommends that further studies should be explore to identify some potential factors such as Equipments, financial capability and professional staff strength which could provide new insights into bidding transaction costs incurred for construction projects.
Bid decisions either leads to procuring good opportunities or incurring large loss due to selection of inappropriate projects. The decisions to bid or not, made on experience and instincts have lower success rate compared to decisions made on real time facts governing the entire process. Smart contractors tend to be more factual rather being more heuristic while bidding for a project. To improve the bidding process and the competitiveness over a global market, the contractors need to identify and analyze the key factors influencing the bid process, which in turn boosts the economy of the country. This paper reports the factors influencing the bid decisions obtained through the response from the survey questioning various contractors from different construction projects in India. This study also ranks the factors obtained based on their importance weightages and the top ranked factors being studied using a statistical tool.
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Procurement of public construction projects generally adopts first-price sealed auctions to promote competition between bidders and reduce owner's cost. This paper presents an analysis for bidding behavior of contractors in public construction markets. The analysis utilizes real data representing the bid results of 1396 projects submitted for public construction projects in Jordan. Bidding data were classified depending on the type of project into: building construction, transportation, infrastructure, water, and electro-mechanical projects. The data includes also engineering design and/or engineering supervision projects. The analyzed behavior attributes are: 1) competition between bidders measured by number of bidders and the bid spread between the lowest two bidders; and 2) bidding variability measured by the coefficient of variation. The analysis revealed that number of bidders and bid spread depend on type of project advertised and market conditions. The variability of bidding results also is correlated with type of project. The performed analysis provide owners with an assessment of the efficiency of the competitive bidding process and can be used to identify weaknesses that need to be addressed in bidding regulations. Contractors can utilize the results to develop their bidding strategies to win profitable jobs.