Assessment of Factors Affecting Building Contractors’ Selection
Chapter One
Objectives of the study
- To identify from the literature and other sources the variables which have been determined to be used for contractor selection.
- To identify and evaluate the factors that affect contractors’ decision to tender
- To determine if any agreement exists among small, medium and large size construction contractors on the important factors considered in contractors’ decision to tender.
- To recommend the factors to be considered in the selection of contractors in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Procurement of building works involves the selection of contractors through effective evaluation and it is a very important aspect of contract administration which if not carefully undertaken could adversely affect contract execution. It is therefore important that contractor selection be carried out with careful thought and consideration. The procedure for contractor selection however is giving way to more modern methods which seek to correct the inherent deficiencies and maladies to more realistic evaluation and reporting.
“The methods of selection of contractors can be described as either by competition or by negotiation. In either case, the decision taken should reflect the client’s development aims – i.e. the completion of his or her construction project economically, safely, quickly to the required quality and at a profit” Kwakye (1997) .
The utility of any procurement method is measured in terms of time/speed, cost, quality and other variables such as certainty, flexibility of the method to accommodate unforeseen but important design changes without a problem, ability to deal with complex projects, the level of risk associated and how risk is shared and finally the avoidance of disputes (Osei Tutu, 1999).
Public Institution and Government Agencies in Nigeria are regulated in their procurement, since 2003, by the norms of economic transaction established by the state. The 663rd Act of the Republic of Nigeria entitled “The Public Procurement Act, 2003” was enacted to provide the legal framework for the procurement of public works.
Anvvor and Kumaraswamy (2006) concluded in their work that, while the Nigeria
Procurement Act sets out the legal, institutional and regulatory framework to secure fiscal transparency and public accountability, the sole reliance on traditional contracting and price-based selection limits the scope for the value for money achievable. Expanding the reforms to cover procurement, project delivery methods and strategies, with a focus on ‘best value’, will increase the potential and likelihood of achieving value for money in public construction in Nigeria.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The study employed descriptive method and survey design method. An extensive review of literature was undertaken to identify the factors that are considered by contractors in deciding to tender for construction contracts. Based on this review, twenty tendering decision factors which are relevant to Nigerian construction environment were identified. Since tender decisions are often taken by top management, the target respondents were managing director, commercial managers, contracts managers, construction/project managers, site managers, estimators and other key personnel involved in the tendering process of building construction firms.
Sampling technique and procedure
A total of 100 samples were drawn from a population comprising building construction firms of all categories (small, medium and large) based in Lagos or conducting construction activities there as the time the study was conducted.
Purposive sampling was adopted for the study due to the researcher’s inability to obtain a comprehensive list of building contractors operating or based in Lagos. The city is central to Nigeria’s economy, having a high concentration of construction activities promoted by public agencies and private sector investors as well a rich presence of different categories of highly experienced construction professionals.
Method of data collection
A structured questionnaire distributed by hand was used as instrument for data collection. The questionnaire was developed based on the reviewed literature on contractors’ decision to tender, the researcher’s general knowledge of tendering in Nigeria and series of pilot studies involving tendering/estimating departments of some selected building contractors. Respondents were requested to rate the level of importance of the factors affecting decision to tender. The ratings were to be done on a 4-point scale (1 = Not important, 2 = Less important, 3 = More important, 4 = Most important).
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Results and Findings
The result and analysis of the data obtained from the questionnaire is presented in this section. Only 64 questionnaires were completed and returned, representing a 64.00% response rate. Table 1 shows the summary of the demographic and company characteristics of the respondents. Quantity Surveyors constitute the highest proportion (56.3%) of the respondents while a sizeable proportion (84.4%) of respondents is in managerial positions. About 58% of the respondents have working experience of 11 years and above in construction industry.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
Conclusion
Clients and promoters of the construction industry in the public sector rely almost exclusively on competitive tendering to justify the award of contracts. Clients from private sector also tend to follow the practice of public sector and also largely employ competitive tendering procedures.
Tendering decision for a construction project is a complex one due to many influencing factors and the uncertainty in the outcome of the decision. The complexity is the source of the difficulty faced by many contractors in determining appropriate tendering decisions. The decision to tender is very important, as the success or failure of a contractor’s business lies in the outcomes derived from this decision. Contractors’ tendering decisions have received very little attention from researchers and evidence abound that this decisions are usually determined by subjective rather than objective approach.
Findings from this study show that availability of resources is the most important factor considered by contractors when taking a decision whether to tender or not for a construction project. Resource availability is an important factor in determining contractors’ capacity and competence and provides contractors with confidence to tender for a construction projects. Also the result of the study provides an insight into the influence of contractors’ size on tendering decision. It reveals that an agreement exist among small, medium and large size building contractors on the important factors that affect contractors’ decision to tender for construction projects. In order words, the size and category of building contractors do not have significant effects on the important factors considered during mark-up size decisions.
The sampling approach imposes some limitations on the study. It should be stated that the findings of this study are most reflective of tendering decisions of construction contractors operating in Lagos . Therefore generalizing on the population would require a more representative sample of contractors across Nigeria. Future work should consider covering additional states in Nigeria, increasing the sample size and listing additional factors, especially country-specific factors, in the research questionnaire.
The study sets the foundation upon which researchers can develop a realistic bidding model for Nigerian construction contractors and provides a springboard upon which future studies can be conducted. Despite the limitations of the sampling approach, the findings of this paper provide an interesting profile of the factors affecting decision to tender of contractors in Lagos , Nigeria. They also provide an indication of, or insight into, the possible tendering practices of contractors in other parts of the country. In any case, further development of this study is required to confirm these conclusions.
Recommendations
From the analysis and discussions in the preceding chapter, the following recommendation is made for consideration:
The few professionals that knew about the multi-criteria selection methods used it. This suggest that if the selection methods are known by construction professionals they will apply the methods. These multi-criteria selection methods should therefore be made known to construction professionals to help select ‘best’ contractors for clients to achieve project objectives through seminars and conferences by stakeholders.
Further research
With the government of Nigeria being a major player in the Nigeriaian construction industry, it should take the initiative and encourage other stakeholders to study into the multi-criteria selection methods and determine which is/are suitable for any type of contract and type of client or stakeholder involved.
References
- Adegbile, M. B. O. (2004). Tendering procedure and contractual arrangement: A review of the state of the art.
- Construction in Nigeria. 19 (1), 12 – 21
- Ashworth, A. (2001). Contractual procedure in the construction industry (4th Ed.). Pearson Education Ltd, Harlow.
- Bathurst, P. E. and Butler, D. A. (1980). Building cost control techniques and economics; William Heinemann Ltd., London.
- Fayek, A, Young, D.M. and Duffield, C.F. (1998). A survey of tendering practices in the Australian construction industry. Engineering Management Journal, 10 (4), 29 – 34.
- Fayek, A., Ghoshal, I. and AbouRizk, S. (1999). A survey of bidding practices of Canadian Civil engineering construction contractors. Canadian Journal of Civil Engineering, 26, 13-25.
- FOCI (2004). Fifty years of construction in Nigeria (1954 – 2004). Lagos: Federation of Construction Industry.
