ABSTRACT
Companies must have the
capability to deal with various tendering situations successfully in today’s
highly competitive construction market. The first step that the companies need
to consider is whether to tender or not to tender when they received a tender
invitation. The contractors‟ decision is affected by various factors and
influences. This decision is highly reliant to the specific project and the
macro environment. It is difficult to make this crucial decision in a short
time frame by the management team.
This research is looked at the
factors affecting the tender/ no tender decision making and the focus group was
on the to d contractors in Lagos region.
Data were collected for by carrying out a face to face structured interview
format, incorporating a questionnaire with eight participants. Through the
course of the interview, both quantitative and qualitative questions were
asked. “Experience and familiarity of your firm with this specific type of
work”, “Possible contribution in building long-term relationships with other
key parties” and “Current financial capability of the client” were the top 3
most important factors identified by the participants.
There are many differences between
the contractors’ opinion for the tender/ no tender decision. d contractors have
very similar responses about important factors affecting tender/ no tender
decision. By contrast, every d contractor has nearly every different individual
comment on most important factors. It is seen that d contractors have stronger
individual business strategy. In comparison to the literature, it was apparent
that the tender/ no tender decision making is very dependent on the location
the contractors are. The Marco environment is a very big influence driver for
contractors‟ decisions. So, it is important that the different construction
contractors should not use one standard to make the tender/ no tender decision
for projects in different countries
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 Background Of The Study
1.2 Problem Statement
1.3 Objectives
Of The Study
1.4 Research Questions
1.5 Significance
Of The Study
1.6 Hypothesis Formulation
1.7 Scope Of Study
1.8 Limitation
Of The Study
1.9 Definition
Of Terms
CHAPTER TWO
LITERATURE REVIEW
2.1
Introduction
2.2
Competitive tendering in 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 tender/no tender decision making process
2.3.1
Definition
2.3.2
Importance of tender/ no tender decision
2.3.3 Decision
making difficulty
2.3.4 The
tender/ no tender decision making processes used in industry
2.4 Factors
affect the tender/ no tender decision making
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
2.5 Chapter
Summary
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research
design
3.2.1 Research
methodologies utilized in the literature
3.2.2 Research
methodologies
3.2.2.1 Qualitative research
3.2.2.2 Quantitative research
3.2.2.3 Triangulated research
3.2.3 Research
methods
3.2.4 Chosen
research design
3.3 Data
collection
3.3.1.1 Questionnaire
3.3.1.2 Interview
3.3.2 Chosen
data collection
3.3.3 Sampling
3.3.3.1 Sample size
3.4 Data
collection procedure
3.5 Data
analysis procedure
3.6 Reliability
and validity
3.6.1 Reliability
3.6.2 Validity
3.7 Ethics
considerations
3.8 Chapter
summary
CHAPTER FOUR
DATA PRESENTATION AND DISCUSSIONS
4.1 Data
presentation
4.1.1 Quantitative
data
4.1.1.1 The participants
4.1.1.2 Participants’ company size
4.1.1.3 Type of projects the companies
doing
4.1.1.4 Percentage of jobs obtain through
competitive tendering
4.1.1.5 Percentage of rejected tender
invitations
4.1.1.6 Experience of participants
4.1.1.7 Participant job role
4.1.1.8 Factors affecting tender/ no
tender decision making process
4.1.2 Qualitative
data
4.1.2.1 Reasons given to top 3 most
important factors
4.1.2.2 Reasons given to 3 least
important factors
4.2 Discussion
CHAPTER FIVE
SUMMARY AND CONCLUSION
5.1 Summary
REFERENCES
APPENDIX A: RAW DATA
APPENDIX B:
QUESTIONNAIRE
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 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 of parties as clients, contractors,
consultants, stakeholders, shareholders, regulators and others. Construction
projects in Nigeria suffer from many problems and complex issues in performance
because of many reasons and factors. This project is very 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 in order 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:
i.
To identify the challenges faced by contractors when applying
for contracts in Nigeria
ii.
To assess the factors that affect contractors tender for
construction project.
1.4 RESEARCH QUESTIONS
i.
What challenges do contractors in Nigeria face when
submitting tenders for projects/contracts?
ii.
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’ 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 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 Lagos State as case study. Results and
recommendations may not be used to generalize 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:Â
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)
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