Performance Study of Lowest Bidder Bid Awarding System In Public Construction Projects

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Addis Ababa University


Ethiopian construction industry participants have long recognized that accepting the lowest price bid does not guarantee maximum value. Achieving a value-based procurement approach is a challenge, particularly for the Ethiopian public sector clients who are limited in their ability to evaluate the competitive bids based solely on the low-bid award system. In the current economic climate it is increasingly likely that construction organizations will submit abnormally low tenders to win new work. Persisting problems of inferior quality of constructed facilities, high incidence of claims and litigation, and frequent cost and schedule overruns have become the main features of Ethiopian public construction works contracts. This research was undertaken to assess the performance of public owned construction projects awarded on a least bidder bid awarding system and to seek construction professionals’ opinions about the current traditional bidding procedure and other alternative systems for evaluation of bids and awarding contracts. An extensive literature search was carried out to identify different practices, a questionnaire survey was conducted among the different groups that make up the construction industry in Ethiopia, and projects data were collected from selected federal government clients and consultants administering public construction works. A number of alternative bid evaluation and contract award procedures are presented and discussed in this research; some of these alternatives are in use in other countries and industries, and some are emerging. Federal government regulations are reviewed to examine the objectives and intent of the law on this issue. The research showed that least responsive bid evaluation and contract award procedure (awarding contracts to the contractor who offers the least price) have been the main method of awarding public constructions works contract. Only in rare situations other factors, basically the contractors past record on projects owned by that particular public client, has been taken in to account in awarding contracts. Competitive low bid method has been highly criticized for its ix negative impact on disputes/claims, coordination, quality control and project duration. Most of the projects have been suffering in material and equipment shortages. Manpower shortage was also encountered in many projects. On the other hand, other alternative bidding procedures included in the study were highly appreciated by respondents for their positive effects on these attributes. Particularly, the researcher shared the idea of adopting the average bid method of awarding contracts among responsive bidders which are supported by many construction professionals included in the study.



Ethiopian public construction