Factors Influencing Success Rate of Contractors in Competitive Bidding for Construction Works in South-East, Nigeria

Article Sidebar

PDF EPUB
Published: Jul 31, 2016
DOI: https://doi.org/10.21315/Jcdc2016.21.1.2
Keywords:
Contractors, Bidding, Construction, Tender, Nigeria

Main Article Content

Isaac Olaniyi Aje
1Department of Quantity Surveying, Federal University of Technology Akure, NIGERIA
Timo Olugbenga Oladinrin
Department of Building and Real Estate, The Hong Kong Polytechnic University, HONG KONG
Angeline Ngozika Chibuike Nwaole
Department of Quantity Surveying, Federal University of Technology Akure, NIGERIA

Abstract

The focal point of this study was to assess the perspectives of construction professionals on factors influencing tender prices of construction works and the contribution of the factors to the success rate of contractors. Using literature review and questionnaire survey, 15 factors were identified in respect to contractors' tender price and success rate in Nigeria. The findings of this study based on the results of statistical analyses (mean score and chi-square) reveal that all the construction professionals (architects, builders, engineers and quantity surveyors) are of the opinion that material availability, labour productivity and level of profit are the most significant factors that highly influence tender price of construction works and consequently affect the success rate of contractors in competitive bidding. Project definition and construction plan have least influence on contractors' tender price. Also, it was found that government policy does not have significant effect on contractors' success rate in competitive bidding in Nigeria. It is hoped that the information presented in this paper will be of interest to all parties concerned, including Nigerian construction companies and foreign companies planning to enter the Nigerian construction market. In addition, while the research focused on a particular country, Nigeria, the study can be replicated in other countries particularly developing countries and the results can be compared.

Article Details

How to Cite
Isaac Olaniyi Aje, Timo Olugbenga Oladinrin, and Angeline Ngozika Chibuike Nwaole. 2016. “Factors Influencing Success Rate of Contractors in Competitive Bidding for Construction Works in South-East, Nigeria”. Journal of Construction in Developing Countries 21 (1): 19-34. https://doi.org/10.21315/Jcdc2016.21.1.2.
Issue
Vol. 21 No. 1 (2016)
Section
Articles
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Ahmad, I. and Minkarah, I. (1988). Questionnaire survey on bidding in construction. Journal of Management in Engineering, 4(3): 229–243. doi: 10.1061/(ASCE)9742-597X(1988)4:3(229).

Aibinu, A.A. and Jagboro, G.O. (2002). The effects of construction delays on project delivery in Nigerian construction industry. International Journal of Project Management, 20(8): 593–599. doi: 10.1016/S0263-7863(02)00028-5.

Aibinu, A.A. and Odeyinka, H.A. (2006). Construction delays and their causative factors in Nigeria. Journal of Construction Engineering and Management, 132(7): 667–677. doi: 10.1061/(ASCE)0733-9364(2006)132:7(667).

Akintoye, A. (2000). Analysis of factors influencing project cost estimating practice. Construction Management and Economics, 18(1): 77–89. doi: 10.1080/014461900370979.

Akintoye, A. and Fitzgerald, E. (2000). A survey of current cost estimating practice in the UK. Construction Management and Economics, 18(2): 161–172. doi: 10.1080/014461900370799.

Ameh, O.J., Soyingbe, A.A. and Odusami, K.T. (2010). Significant factors causing cost overruns in telecommunication projects in Nigeria. Journal of Construction in Developing Countries, 15(2): 49–67.

Andrew, N. and Baldwin, A.T. (1990). Information technology for construction cost estimating. Habitant International, 14(2): 157–163.

Anigbogu, A.I., Achuenu, E.N., Achigbogu, A. and Kuroshi, P.A. (2007). Assembly of consultants pretender estimates of building projects in Nigeria. Journal of Construction Management and Engineering, 1(1): 23–25.

Ashworth, A. (1995). Cost Studies of Buildings. 2nd Ed. London: Longman Group Ltd.

Ayandele, J.O. (1999). Postulates of management impact on productivity and construction of workers. The Quantity Surveyor, 29(5): 19–25.

Ayangade, J.A., Wahab, A.B. and Alake, O. (2009). An Investigation of the performance of due process mechanism in the execution of construction projects in Nigeria. Civil Engineering Dimension, 11(1): 1–7.

Ayodele, E.O. and Alabi, O.M. (2011). Abandonment of construction projects in Nigeria: Causes and effects. Journal of Emerging Trends in Economics and Management Sciences, 2(2): 142–145.

Babatunde, S.O., Opawole, A. and Ujaddughe, I.C. (2010). An appraisal of project procurement methods in the Nigeria construction industry. Civil Engineering Dimension, 12: 1–7.

Brook, M. (2012). Estimating and Tendering for Construction Work. Abingdon, UK: Routledge.

Drew, D. and Skitmore, M. (1997). The effect of contract type and size on competitiveness in bidding. Construction Management and Economic, 15(5): 469–489. doi: 10.1080/014461997372836.

Drew, D.S. and Skitmore, R.M. (1992). Competitiveness in bidding: A consultant's perspective. Construction Management and Economic, 10(3): 227–247. doi: 10.1080/01446199200000020.

Elhag, T., Boussabaine, A. and Ballal, T. (2005). Critical determinants of construction tendering costs: Quantity surveyors' standpoint. International Journal of Project Management, 23(7): 538–545. doi: 10.1016/j.ijproman.2005.04.002.

Enshassi, A., Al-Hallaq, K. and Mohamed, S. (2006). Causes of contractor's business failure in developing countries: A case study of Palestine. Journal of Construction in Developing Countries, 11(2): 1–14.

Fayek, A., Ghoshal, I. and AbouRizk, S. (1999). A survey of the bidding practices of Canadian civil engineering construction contractors. Canadian Journal of Civil Engineering, 26(1): 13–25. doi: 10.1139/l98-038.

Fellows, R. and Liu, A. (2003). Data collection. In Research Methods for Construction. 2nd Ed. Oxford: Blackwell Publishing Ltd, 137–60.

Florence, Y. L. and Min, L. (2005). Factors considered by successful and profitable contractors in mark-up size decision in Singapore. Building and Environment, 40(11): 1557–1565. doi: 10.1016/j.buildenv.2004.12.001.

Fu, W.K., Drew, D.S. and Lo, H.P. (2003). Competitiveness of inexperienced and experienced contractors in bidding. Journal of Construction Engineering and Management, 129(4): 388–395. doi: 10.1061/(ASCE)0733- 9364(2003)129:4(388).

Grosskopf, K.R. (2005). Teaching methods improvement using industry focus group: A case study in construction financing, construction education program. Journal of Construction Education, 1(3): 1–25.

Han, S.H. and Diekmann, J.E. (2001). Approaches for making risk-based go/no-go decision for international projects. Journal of Construction Engineering and Management, 127(4): 300–308. doi: 10.1061/(ASCE)0733-9364(2001)127:4(300).

Hatush, Z. and Skitmore, R.M. (1999). Contractor selection using multi-criteria utility theory: An additive model. Building and Environment, 33(2): 105–115.

Ibironke, O.T., Oladinrin, T.O., Adeniyi, O. and Eboreime, I.V. (2013). Analysis of nonexcusable delay factors influencing contractors' performance in Lagos State, Nigeria. Journal of Construction in Developing Countries, 18(1): 53–72.

Iyer, K.C. and Jha, K.N. (2005). Factors affecting cost performance: Evidence from Indian construction projects. International Journal of Project Management, 23(4): 283–295. doi: 10.1016/j.ijproman.2004.10.003. Johnstone, K.M., Bedard, J.C. and Ettredge, M.L. (2004). The effect of competitive bidding on engagement planning and pricing. Contemporary Accounting Research, 21(1): 25–53. doi: 10.1506/47TF-WHQ1-RG39-8JX4.

Joshua, O.D. (2010). Application of cost control procedures and cash flow analysis to budgetary control. Proceedings: Cost and Budget Control for National Development. University of Ibadan Conference Centre, Ibadan, Oyo State, 28 September. Oyo, Nigeria: Nigerian Institute of Quantity Surveyors.

Ki, E.J., Lee, J. and Choi, H.L. (2012). Factors affecting ethical practice of public relations professionals within public relations firms. Asian Journal of Business Ethics, 1(2): 123–141. doi: 10.1007/s13520-011-0013-1.

Kimms, A. (2007). On the amount and timing of project payments with hints to customary contracting in Germany. Gestão & Produção, 14(3): 441–451. doi: 10.1590/S0104-530X2007000300002.

Laryea, S. and Hughes, W. (2010). Risk and price in the bidding process of contractors. Journal of Construction Engineering and Management, 137(4): 248–258. doi: 10.1061/(ASCE)CO.1943-7862.0000293.

———. (2008). How contractors price risk in bids: Theory and practice. Construction Management and Economics, 26(9): 911–924. doi: 10.1080/01446190802317718.

Liu, J.Y., Li, B.G., Lin, B.S. and Nguyen, V. (2007). Key issues and challenges of risk management and insurance in China's construction industry: An empirical study. Industrial Management Data System, 107(3): 382–396. doi: 10.1108/02635570710734280.

Lo, T.Y., Fung, I.W. and Tung, K.C. (2006). Construction delays in Hong Kong civil engineering projects. Journal of Construction Engineering and Management, 132(6): 636–649. doi: 10.1061/(ASCE)0733- 9364(2006)132:6(636).

Lo, W., Lin, C. and Yan, M. (2007). Contractor's opportunistic bidding behavior and equilibrium price level in the construction market. Journal of Construction Engineering and Management, 133(6): 409–416. doi: 10.1061/(ASCE)0733- 9364(2007)133:6(409).

Lowe, D., Emsley, M. and Harding, A. (2006). Predicting construction cost using multiple regression techniques. Journal of Construction Engineering and Management, 132(7): 750–780. doi: 10.1061/(ASCE)0733- 9364(2006)132:7(750).

Lu, W., Shen, L. and Yam, M.C. (2008). Critical success factors for competitiveness of contractors: China study. Journal of Construction Engineering and Management, 134(12): 972–982. doi: 10.1061/(ASCE)0733- 9364(2008)134:12(972).

Nafziger, E.W. (1972). The economic impact of the Nigerian Civil War. The Journal of Modern African Studies, 10(2): 223–245. doi: 10.1017/S0022278X00022369.

Ndah, T. (2000). An appraisal of types tendering arrangements: Practices, procedures and documentation. Paper presented at the Workshop on Contractual Arrangement and Contract Administration. Lagos, Nigeria, 25 July.

Odusote, O.O. and Fellows, R.F. (1992). An examination of the importance of resource considerations when contractors make project selection decisions. Construction Management and Economics, 10(2): 137–151. doi: 10.1080/01446199200000013.

Ofong, C.H.O. (1999). Open and competitive tendering: A panacea for corruption in project procurement. The Quantity Surveyor, 28(2): 21–29.

Ogunsemi, D. and Aje, I. (2006). A model for contractors' selection in Nigeria. Journal of Financial Management of Property and Construction, 11(1): 33– 44. doi: 10.1108/13664380680001078.

Oladinrin, T.O., Olatunji, S.O. and Hamza, B.T. (2013). Effect of selected procurement systems on building project performance in Nigeria. International Journal of Sustainable Construction Engineering and Technology, 4(1): 48–62.

Onukwube, H.N. (2002). An evaluation of factors that influence tender prices of building works in Nigeria. The Quantity Surveyor, 40(3): 38–46.

Oo, B.L., Drew, D.S. and Lo, H.P. (2008). A comparison of contractors' decision to bid behaviour according to different market environments. International Journal Project Management, 26(4): 439–447. doi: 10.1016/j.ijproman.2007.06.001.

Oo, B.L., Drew, D.S. and Runeson, G. (2010). Competitor analysis in construction bidding. Construction Management and Economics, 28(12): 1321–1329. doi: 10.1080/01446193.2010.520721.

Palaneeswaran, E. and Kumaraswamy, C. (2001). Recent advances and proposed improvements in contractor prequalification methodologies. Building and Environment, 36(1): 73–87. doi: 10.1016/S0360-1323(99)00069-4.

Park, W.R. and Chapin, W.B. (1992). Construction Bidding: Strategic Pricing for Profit. New York: John Wiley and Sons.

Runeson, G. and Skitmore, M. (1999). Tendering theory revisited. Construction Management and Economics, 8(17): 285–296. doi: 10.1080/014461999371493.

Ryan, T.P. (2007). Modern Engineering Statistics. New Jersey: John Wiley and Sons. doi: 10.1002/9780470128442.

Shash, A.A. (1993). Factors considered in tendering decisions by top UK contractors. Construction Management and Economic, 11(2): 111–118. doi: 10.1080/01446199300000004.

Shen, L.Y., Li, Q.M., Drew, D. and Shen, Q.P. (2004). Awarding construction contracts on multicriteria basis in China. Journal of Construction Engineering and Management, 130(3): 385–393. doi: 10.1061/(ASCE)0733- 9364(2004)130:3(385).

Skitmore, R.M. and Ng, S.T. (1999). Client and consultant perspectives of prequalification criteria. Building and Environment, 34(5): 67–75.

Spear, J. E. (2000). The Performance Improving Contractor. Florida: Lewis Publishers. Topeu, Y.I. (2004). A decision model proposal for construction contractor selection in Turkey. Building and Environment, 39(4): 469–481. doi: 10.1016/j.buildenv.2003.09.009.

Watt, D.J., Kayis, B. and Willey, K. (2009). Identifying key factors in the evaluation of tenders for projects and services. International Journal Project Management, 27(3): 250–260. doi: 10.1016/j.ijproman.2008.03.002.

Yamane, T. (1967). Statistics: An Introductory Analysis. 2nd Ed. New York: Harper and Row.

Zou, P.X., Zhang, G. and Wang, J. (2007). Understanding the key risks in construction projects in China. International Journal of Project Management, 25(6): 601–614. doi: 10.1016/j.ijproman.2007.03.001.

Zou, P.X.W. (2007). An overview of China's construction project tendering. International Journal of Construction Management, 7(2): 23–39. doi: 10.1080/15623599.2007.10773100.