Effects of Lowest Bidding Bid Awarding System In Public Sector Construction Projects In Pakistan

Abstract

Construction industry participants have started recognizing that accepting the least price bid does not guarantee maximum value. Achieving a value-based procurement approach is a challenge, particularly for the Pakistani public sector clients, who are limited in  their ability to evaluate the competitive bids  based  solely on the lowest-bid award system. 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 Pakistan’s public construction works contracts. This research was undertaken to assess the performance of public owned construction projects awarded on a lowest bidder bid awarding system. Also, the objective was to  seek construction  professionals’  opinions  about  the  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  and  a  questionnaire  survey  was conducted  among  the different  groups that  make  up  the construction  industry in  Pakistan. Five alternate bid evaluation and contract award methods are discussed and presented in this research. The    questionnaire was distributed   online as well  as  through  visits   to  contractors,  clients  and   consultants. Additionally, 12 interviews were conducted with clients, consultants and contractors. In total 200 questionnaires were distributed. The data were collected and 112  valid  questionnaires were analyzed by using MS Excel, PH stat, SPSS-20 and Sigma XL. The study concludes that 70% of the respondents consider the multi-parameter bidding method is to be more effective than lowest bidding method  and  ranked  this method  as best amongst all six selected  methods. Insights and discussions are given in the analysis. Finally, this work will provide valuable information to clients, consultants and contractors and other stakeholders who desire to improve bidding methods in construction in Pakistan.

KEYWORDS:    Bidding System, Construction Projects, Public Sector Construction, Public Sector Procurement.