ABSTRACT
The paper critically analyses the assessment of factors affecting
contractors tender for construction project. Designing
and implementing an effective tender is a huge challenge for most contractors
who seek government contracts in Nigeria. A study conducted by Obuji (2003) in
some West African countries including Nigeria, revealed that some small scale
contractors are not favoured during a tendering process by prospective clients
because, they neglect various factors that affect the success and failures of
submitting a tender for a contract. Some contractors do not structure and draft
their tenders in an appropriate manner; hence their chance of being contracted
is reduced. The major
objectives of the paper are: to identify
the challenges faced by contractors when applying for contracts in Nigeria and
to assess the factors that affect contractors tender for construction project.
Concerning methodology, both secondary and
primary sources of data was used for the study. A survey research design
coupled with a multi-stage sampling technique was used with a sample size of 50 contractors selected from 5 local
government areas of the state. Data
was analyzed using chi-square statistical tool. Key findings from the study
showed that majority of
the respondents faced favouritism. Recommendations for the study include; There
should be long-term industrial polices renewable after about 10 years to enable
small and medium scale contractors compete with larger construction firms for
bids/tenders and maximize the potentials of the economic environment.
TABLE OF
CONTENTS
Title Page - - - - - - - - - i
Approval Page - - - - - - - - ii
Declaration - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgement - - - - - - - v
Abstract - - - - - - - - - vi
Table of Contents - - - - - - - vii
CHAPTER
ONE – INTRODUCTION
1.1 Background of the Study - - - - -
1.2 Statement of General Problem - - - -
1.3 Objective of the Study - - - - - -
1.4 Research Questions - - - - - -
1.5 Hypothesis
- - -
- - -
- - -
1.6 Significance of the Study - - - - -
1.7 Scope of the Study - - - - - -
1.8 Definition of Terms - - - - - -
CHAPTER
TWO – REVIEW OF RELATED LITERATURE
2.1 Introduction - - - - - - - - -
2.2 Theoretical Framework - - - - - - -
2.1.1 CONTINGENCY THEORY- - - - - - - -2.2 COMPETITIVE TENDERING THE CONSTRUCTION INDUSTRY- - - - - - - - -
- -
2.2.1 Varying procurement strategy- - - - - - -
2.2.2 Competition in the construction industry- - - -
2.2.2.1 Price VS Performance- - - - - - - -
2.2.2.2 Experienced contractor VS Inexperienced
contractor- -
2.3 THE TENDERING PROCESS IN NIGERIA- - - - -
2.3.1 Steps in Tendering Process
in the Public sector- - -
2.3.2 Duration taken in tendering
process in Public Sector- -
2.4 FACTORS THAT AFFECT CONTRACTORS TENDER IN CONSTRUCTION
PROJECTS- - - - - - - -
2.4.1 Need for Work- - - - - - - - - -
2.4.2 Strength of Firm- - - - - - - - -
2.4.3 Project Conditions Contributing to
Profitability- - -
2.4.4 Risk of the Project- - - - - - - - -
2.4.5 Competition- - - - - - - - - -
2.4.6 Strategic Considerations- - - - - - - -
2.4 Ethical Practices and Its
influence in Tendering Process in Public Sector- - - - - - - - - - -
2.5 Training of employees involved
in tendering process in Public Sector Procurement- - - - - - - - - -
2.6 The use of ICT in Tendering
Process in Public Sector Procurement- - - - - - - - - - -
CHAPTER
THREE – RESEARCH METHODOLOGY
3.1 Introduction - - - - - - - - -
3.2 Research Design - - - - - - - -
3.3 Area of the Study - - - - - - - -
3.4 Population of Study - - - - - - - -
3.5 Sample size and Sampling Techniques - - - - -
3.6 Instrument for Data Collection - - - - - -
3.7 Validity of the Instrument - - - - - - -
3.8 Reliability of the Instrument - - - - - -
3.9 Method of Data Collection - - - - - - -
3.10 Method of Data Analysis - - - - - - -
CHAPTER
FOUR – DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - - - -
4.1 Data Presentation and Analysis - - - - - -
4.2 Characteristics of the Respondents - - - - -
4.3 Data
Analysis - - - - - - - - -
4.4 Testing Hypothesis - - - - - - - -
4.5 Summary
of Findings - - - - - - - -
4.6 Discussion of Findings - - - - - - -
CHAPTER
FIVE – FINDINGS, CONCLUSION AND RECOMMENDATION
5.0 Introduction - - - - - - - - -
5.1 Summary - - - - - - - - - -
5.2 Conclusion - - - - - - - - - -
5.3 Recommendations - - - - - - - -
References
- - - - - - - - - -
Appendix - - - - - - - - - -
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Shash (1993) explains that a
construction company can either negotiate with the client or use a competitive
tendering process to obtain a contract. Fu and Drew (2002) suggest that
competitive tendering is the most common method used for contractor selection. In
competitive tendering process, a client selects a numbers of contractors to
tender for the proposed project. The selected contractors must to decide
whether to tender or not tender. The contractors need to submit an estimated
cost to execute the project at hand, if they intend to tender. The client would
select the contractor who submitted the best cost for executing the
project.(Shash 1993, p.111). Therefore the decision to tender is the first step
that contractors need to consider.
There are various factors that need
to be considered by the contractors in order to make the decision to tender or
not. The decision is highly related to the specific project and macro
environment. It is hard to make a decision in a limited time by the management
team. The decision generally is made on the basis of experience, intuition and
guesses. (Egemen and Mohamed 2007, p.1373)
There are many researchers that have
discovered the factors that affect the tender/ no tender process.
Unfortunately, there has not been any similar research projects carried out in
Nigeria. Furthermore, during the global economic recession, construction
related activities are decreased significantly. Construction contractors?
original tender/ no tender decision making criteria may be changed.
1.2 PROBLEM STATEMENT
Designing
and implementing an effective tender is a huge challenge for most contractors
who seek government contracts in Nigeria. A study conducted by Obuji (2003) in
some West African countries including Nigeria, revealed that some small scale
contractors are not favoured during a tendering process by prospective clients
because, they neglect various factors that affect the success and failures of
submitting a tender for a contract. Some contractors do not structure and draft
their tenders in an appropriate manner; hence their chance of being contracted
is reduced.
Construction
industry has complexity in its nature because it contains large number
ofparties as clients, contractors, consultants, stakeholders, shareholders,
regulators andothers. Construction projects in Nigeria suffer from many
problems andcomplex issues in performance because of many reasons and factors.
This project isvery important to identify and to evaluate the main factors
affecting contractors’ tenders in construction projects in Nigeria. The
practices concerning with Tenders such as time, cost, project owner
satisfaction and safety checklists will be analyzed inorder to know the main
practical problems of contractors who do not win tenders as well as practical
solutions to help enhance the chances of our indigenous contractors in Imo
state in winning Federal government and foreign contracts.
1.3 OBJECTIVES OF THE STUDY
The
aim of this research is to analyze and assess the local factors that account
for the success or failure of tenders submitted by contractors when applying
for a construction project in Imo State. The aim of this research can be broken
down into the following objectives:
1.
To identify the challenges faced by contractors
when applying for contracts in Nigeria
2.
To assess the factors that affect contractors
tender for construction project.
1.4
RESEARCH
QUESTIONS
1.
What challenges do contractors in Nigeria face when
submitting tenders for projects/contracts?
2.
What are the factors that affect contractors tender
for construction projects?
1.5
SIGNIFICANCE OF THE STUDY
This
research will help contractors become aware of what the factors which need to
be considered when they intend to submit tenders for different projects. This
research will also provide the information that would be used by any contractor
to create a competitive bidding strategy.
This
study will also give a clear insight into the various ways in which profit and
efficiency from contracts and contracting can be increased and how the
challenges facing contract tendering can be properly tackled. The study also
gives a clear insight into the various factors affecting tenders and their
effects on contractor’s efficiency and chances of winning a contract in
Nigeria. The findings and recommendations of the researcher will help in
building a strong and better contract policy and tendering guideline for
contractors, especially small scale contractors in Imo State other construction
companies in Nigeria.
1.6
HYPOTHESIS
FORMULATION
Statements
of Hypothesis for the study are:
Ho:
There is no significant relationship between factors that affect contractor
tender and contractor chances in winning a construction project.
Hi:
There is a significant relationship between factors that affect contractor
tender and contractor chances in winning a construction project.
1.7
SCOPE
OF STUDY
This
research focuses mainly on the assessment of the factors that affect tenders
for construction projects, using construction companies and private contractors
in Imo State as case study. Results and recommendations may not be used to
generalise other construction companies or contractors in other parts of
Nigeria, as the researcher could not cover a wider scope due to financial and
time constraints.
Based
on the findings of this study other possible researchable areas may include
studies on the various effects of other aspects of contracts such as contract
laws in Nigeria and contract management and control.
1.8 LIMITATION OF THE STUDY
The
only limitation faced by the researcher in the course of carrying out this
study was the delay in getting data from the various respondents. Most
respondents were reluctant in filling questionnaires administered to them due
to their busy schedules and nature of their work. The researcher found it
difficult to collect responses from the various respondents, and this almost
hampered the success of this study.
1.9 DEFINITION OF TERMS
·
Tender:
According
to Simmons (2002), a tender refers to an offer (usually by a contractor or a
vendor) to undertake a job or supply goods.
·
Contract: Erikson (2002) defined Contract
as an agreement that creates an obligation binding upon the parties
thereto. The essentials of a contract are as follows: (1) mutual assent; (2) a
legal consideration, which in most instances need not be pecuniary; (3) parties
who have legal capacity to make a contract; (4) absence of fraud or duress; and
(5) a subject matter that is not illegal or against public policy.
·
Contractor:
According to Simmons (2002), a contractor refers to an organization or
individual that contract with another organization or individual (the owner)
for the construction of a building, road or other facility.
·
Construction/Projects: In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction
is a feat of human multitasking. Normally, the job is managed by a project manager, and supervised by a construction manager, design engineer, construction
engineer or project architect. For the successful execution of a project, effective planning is essential. Involved with the design and execution of the
infrastructure in question must consider the environmental
impact of the job,
the successful scheduling, budgeting, construction
site safety,
availability of building materials, logistics, inconvenience to the public caused by construction delays and bidding, etc. Marshall (2001)
REFERENCES:
1.
Erikson O. U., (2002)
Contract Planning and development in a Depressed Economy.Unpublished M.Ed.
Dissertation Submitted to Florida University. Florida
2.
Obuji P.I., (2007). Principle and practice of Contract
Feasibility Studies In Nigeria (Aba: Springfield publishers, 2006) p.31
3.
Simmons P.K. (2007) Understanding
Feasibility and Viability Analysis New York: Westside Publishers