ABSTRACT
There are so many contractors that are not technically and managerially competent. This makes procurement and contractor selection processes an onerous task to be performed by the client. Yet, without a proper and accurate method for selecting the most appropriate contractor, the performance of the project will be affected denying clients value for money. Therefore, the study assessed the Influence of Contractors’ Selection Criteria on Public Project Delivery in Abuja using the sequential mixed methods design. The research questions were analysed using thematic analysis, Mean score, Factor analysis, Canonical Correlation analysis and Regression analysis.185 questionnaires were used for the analysis. The outcome revealed that the selective, competitive and negotiated processes were the widely used tendering system; multi-criteria system was prefer over the “price only” for evaluation of tenders; Use of fictitious document by contractors, lack of Pre-qualification of consultants, unrealistic Tender price and undue interference from higher authorities hinders the optimum selection of contractors. It was discovered that Experience, Financial Capability, and Technical Capability are widely considered criteria in the selection process while all the critical success factors for project delivery are very much crucial and that Procurement related factors, Project stakeholders’ related factors, and Daily site factors are key parameters to project delivery. The study concluded that there exists a significant relationship between the factors considered in selection of contractors and the criteria success factors. The study concluded that the niche on the inadequate use of the contractor selection criteria in the construction industry in Nigeria will be enhanced by tackling the barriers hindering optimum selection of contractors, diligence evaluation of contractors and the introduction of e-procurement system in the tendering process to minimise the cumbersomeness of the process.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
The construction industry all over the world constitutes one of the most important sectors in the economy of any country. It is well known that the construction industry is a very challenging industry as it is very competitive and unstable during economic down turn (De Valence & Runeson, 2011).Oladinrinet al. (2012) noted that construction industry plays an important role in the economy, and therefore vital to the achievement of national socio-economic development goals of providing shelter, infrastructure and employment. Construction activities affect nearly every aspect of the economy and the industry is vital to the continued growth of the economy. Oftentimes, it is perceived to be the enterpriser of its respective economy as it cuts across all aspects of human activities. The Nigerian construction industry is not an exception as its contributions range from enabling the procurement of services to the provision of buildings and other infrastructure, thereby providing employment opportunities to its labour force, while contributing immensely to the Gross Domestic Product (Ikechukwuet al., 2017). The industry accounts for 3.05% of the GDP and also provides employment opportunities for over 11 million Nigerians (National Bureau of Statistics, 2016).
However, Oluwakiyesi (2011) stated that the construction industry is complex and requires proficient professionals who are ready to meet the expectations of their clients. Clients in the construction industry could be private individuals including corporate bodies or public organizations which include the government. In Nigeria, the Federal Government is often seen to be involved in the most complex projects with about 38.4% of the market (Ayangade,2009) thereby contributing significantly to the economic development of the country. Consequently, construction industry is a business arena for both construction and non-construction professionals. This is manifested in the ways construction firms sprang up daily and many who were inexperienced in the business of construction flocked in to make quick money (Ikaetal., 2012). This implies that there are so many contractors that are not technically and managerially competent. This makes procurement and contractor selection processes an onerous task to perform by the client. Yet, without a proper and accurate method for selecting the most appropriate contractor, the performance of the project will be affected denying the client value for money (Cheng &Heng, 2004).
The procurement system basically comprises five common process elements; project packaging, invitation, pre-qualification, short-listing and bid evaluation (Hatush&Skitmore, 1997). The importance and concern given to procurement methods in the industry are based on two reasons. Firstly, the procurement of construction projects involves a series of processes that are interrelated and sequential. Therefore, effectiveness and efficiency of the processes have considerable impact on the success or failure of projects (Idoro, 2006). Secondly, several procurement methods are available for a developer to adopt in procuring a project and some are more appropriate for a particular project, hence, the project developer sometimes faces major challenge in selecting one method out of many others. Alhazini and McCaffer (2000) maintained that each project has its own characteristics and requirements, and for a project to be successful, the procurement method must address the technical features of the project alongside the clients’ and contractors’ needs. This reflects a very crucial importance of procurement methods and the contractor selection criteria for the delivery of construction projects.
Consequently, one of the most difficult decisions taken by the clients in the construction industry is in the selection of contractors especially in public project with competitive bidding (Zavadskaet al., 2004). This is because construction project is characterized by risks and uncertainty; incompetent contractor increases the chances of time and cost overruns, substandard work, disputes, or even bankruptcy (Hatush, 1996). Thus, one of the ways of ensuring that a contractor is qualify to execute the assigned project in accordance with client and project objectives is to assess the contractor’s capabilities at the prequalification stage and tender evaluation stage. Moreover, given the high number of competitors nowadays, successful execution of bidding process is very crucial (Alsaediet al., 2019).
Pre-qualification as a pre-tender process is used to investigate and assess the capabilities of contractors to carry out a contract satisfactorily. The current practice of pre-qualification according to Public Procurement Act (PPA), 2007 of the Federal Republic of Nigeria (FRN, 2007) involves a screening procedure based on a set of selection criteria. Fundamentally, selection criteria are sets of factors considered in the selection of contractor for a project. For pre-qualification to be useful, however, it is necessary to know how these different criteria are likely to affect the main project objectives or Project Success Factors (PSFs) in terms of time, cost and quality. It has been reported in the past that, such knowledge was lacking in public procurement, as most client (and consultant) pre-qualifiers are more concerned with the process rather than with undertaking any serious study of the relationships (Hatush,1996). This may be as a result of the long-term confidence in the pre-selection process, and the fact that final selection is made predominantly on the cost elements of tenders (Ogunsanmi, 2013).
In a related development, Akatsuka (1994) observed that the lack of post-construction evaluation which suggests that owners do not really feel that pre-qualifying contractors is important.
However, with the spate of development, researchers are now interested in these relationships and it had received attention in the field as project delivery on schedule and within budget nowadays is observed to be less than expectation. Thus, Olatunji (2008) also reported that the economic resources often wasted in cost and time overruns, substandard work and shoddy workmanship, client-contractor-practitioner’s acrimonious relationships and non-performance of projects as envisaged by clients and end users is huge as a result of the wrong choices of contractors.Okoreet al. (2017) stated that in the recent past efforts were made towards delivery of projects on schedule and within the budget. Therefore, in order to ensure that, project is completed successfully; the client must select the most appropriate contractor.
1.2 Statement of the Research Problem
The main aim of the 2007 Public Procurement Act is to ensure that quality public projects are delivered on time, within budget, without acrimony (FRN, 2007). However, for a contractor to be able to deliver a project on time, the contractor must be well prepared; technically ready, managerially sound and financially stable. To ensure that such contractor is selected, proper selection and procurement process is required. This involves procurement systems that basically involve pre-qualification and bid evaluation (Mathonsi&Thwala, 2012).
According to Ali (2011), for a project success, a contractor has to be carefully selected based on availability of knowledge, capability and experiences; this ought to be considered before the tendering stage in order to ensure that an appropriate contractor is selected. But studies have shown that, despite pre-qualification exercise and the final selection, most clients are still faced with some challenges as some contractors have been reported to demonstrate incompetency and failed to deliver on scheduled and/or within the budget.
Sidik (2010) asserted that there is no commensurate improvement in construction project success despite all the procurement and contractor selection methods adopted. Eriksson (2013) also discussed the issue further observed that the absence of competent contractors as a result of in adequate selection process is the key factor responsible for weakness of construction performance and need to be urgently investigated. In the same way, the industry has been criticized for its high costs, inefficiency, ineffectiveness, and delays in project due to the procurement process and the selection criteria being adopted (Adesanya, 2014).
It was also observed by Othman (2016) that a large number of projects have been delayed and a lot have failed due to lack of proficiency and inability of the contractors which is as a result of the absence of adequate selection criteria used for the selection of contractors. This is seen as a vital issue in relation to the achievement of construction projects. Delays in project completion time and increase in cost of construction projects are closely related to specifications and contractors’ qualification such as financial, technical, experience, contract type, variation between the contractor’s bid price and the next lowest bidder’s price which have been associated with the capability of the contractor (Omranet al., 2012).
Similarly, in Nigeria, large numbers of projects have failed because of lack of competence and ability of the contractors to deliver promptly (Ajayi, 2010). This may have been due to the absence of appropriate selection criteria which allows selection of incompetent contractor. To improve and enhance the operations of the Nigerian construction industry, it is necessary to understand the key factors affecting the construction industry and its associated operations. From the foregoing, it is clear that there are unsatisfactory approaches in both private and public sectors in contractor selection methods which are considered most important factors that impacts on construction project success in Nigeria construction industry. Besides, for public building projects (with laid down rules in the Public Procurement Act guiding the process of selecting contractors) not to be effectively delivered calls for the following questions; what happens to pre-qualification? Why did selected contractors deemed to have been pre- qualified still show incompetency or fail to deliver project as scheduled? Again, the exercise appears to be a mere one and does not seem to have any impact on adequacy of selection using contractors selection criteria in relation to project success factors.
Considering the foregoing, the research problem observed is based on the fact that, there has been an overwhelming challenge on the use of the best practices for the selection of contractors in the construction sector in Nigeria; therefore this study assessed the influence of contractors’ selection criteria on public project delivery in Abuja,Federal Capital Territory (FCT), Nigeria through a deliberate search for answers to the following questions:
i. What is the selection criteria process of contractors for project delivery in the study area?
ii. What are the barriers hindering the optimum selection of contractors for the delivery of building projects in the study area?
iii. What are the factors considered in the selection of contractors for project delivery in the study area?
iv. What are the critical success factors (CSFs) for project delivery in the study area?
v. What is the relationship between the factors considered in the selection of contractors and CSF in project delivery?
1.3 Aim and Objectives of the Study
The study assessed the influence of contractor selection criteria on public building project delivery in Abuja, Federal Capital Territory, Nigeria. However, in order to achieve this aim, the following specific objectives were set to:
i. determine the selection criteria process of contractors for project delivery in the study area;
ii. examine the barriers hindering the optimum selection of contractors for the delivery of building projects in the study area;
iii. assess the factors considered in the selection of contractors for project delivery in the study area.
iv. determine the Critical Success Factors (CSFs) for project delivery in the study area.
v. establish the relationship between the factors considered in the selection of contractors and Critical Success Factors (CSFs) in project delivery.
1.4 Justification for the Study
There are several studies around the world that have been carried out in the area of contractors’ selection criteria and its impact on projects delivery. Ghadamsi and Braimah (2012) developed a conceptual framework to assess the influence of procurement methods on project performance; it was established that methods used have strong relationships with project performance outcome (of time, cost, quality), making the selection method the most important decision for every project. Liefers (2012) carried out an exploratory study in Netherlands to investigate the influence of the contractor selection criteria on public infrastructure project success; it was reported that projects that are straightforward are awarded on lowest price but complex projects that needs to be designed by the contractor adopts the multi-criteria selection method. Similarly, Araújoet al. (2015) proposed a model for contractor selection in the Brazilian construction industry; the model proposed considered the interaction between the group decision and an integer programming methods.
Monyane and Emuze (2015) explored the contractor selection process for public sector projects in South Africa; the study showed that the procurement process appeared to be laden with loopholes that are being exploited by tender adjudicators. Sidik (2010) carried out a study to identify the significant factors for contractor selection in Ghana using factor analysis, and also to find the preferred criteria for evaluation and selection of contractors in Ghana; using factor analysis, it was deduced that the variables had common underlying factors which were five, namely: managerial factors, quality and standards factors, resource availability factors, duration and cost factors and location factors. These factors accounted for 59% of the variance of the variables for the multi criteria selection method and were still not adequate, suggesting that the method is inappropriate.
Aje and Ogunsanmi (2012) developed a linear regression model to ease clients burden of selecting contractors using linear regression equation and concluded that experience, tender sum, equipment and workmanship quality are independent variables, hence the most significant criteria for selecting contractors. Doloi (2009) asserted that both researchers and stakeholders from the industry over the time came up with different methods and procedures for selecting contractors: there has been a challenge in creating favourable outcomes for all parties due to inability of the previous studies to link the selection criteria and the project success.
It is obvious from these numerous studies that the subject matter is of a serious concern to the construction industry all over the world; this also reflects a niche on the inadequate use of the contractor selection criteria in the construction industry in Nigeria as it is obvious that some contractors have failed to meet up with procurement agreement. This study therefore is undertaken to assess the influence of contractor selection criteria on public project delivery in Abuja with a view to improving contract administration. The study is crucial as it will contribute to the knowledge entity, a deliberate and definite approach to an enhanced usage of the selection criteria for contractors in building projects.
The findings of this study will benefit both the industry and the research community. With respect to the industry; clients will be better positioned to understand the details of what is to be considered during pre-qualification and selection in order to optimize and select the best contractors for a project. The knowledge gotten from this work will make clients (especially Federal Government) and consultants to improve on their assessment and selection performance. Also, contractors will gain an increased understanding of the major factors affecting the bidding decision process. Contractors in possession of this information will be better positioned to make more informed bidding decisions, taking into account the most critical factors. This should pave the way to a more efficient and effective bidding process.
1.5 Scope and Limitation
This research work was designed to assess the influence of contractor selection criteria on public building project delivery in Abuja, Federal Capital Territory because of the high concentration of public buildings.This work was limited to only public projects as private projects werenot included, The study was restricted to professionals in the construction industry namely; Architects, Builders, Quantity Surveyors, Contractors and Clients in the public sector that adopts multi-criteria process and those that adopt the lowest bidder process.
1.6 Definition of Terms
Procurement: Procurement is defined as the act of obtaining by care or effort, acquiring or bringing out. In building and civil engineering works, it is generally understood to involve all the processes of acquiring, from the design through the construction, financing and sometimes operation until the client acquires what is required (Hibberdet al., 1991).
Contractor Evaluation: Contractor evaluation is the process of investigating or measuring project-specific attributes (Faridah, 2007).
Contractor Selection: refers to the process of aggregating the results of evaluation to identify optimum choice (Faridah, 2007).
Bid Evaluation: is used to denote the procedure for strategic assessment to tender bids submitted by contractors (Wahab, 1986).
Open Tendering: A procurement procedure in which any qualified contractor may submit bid at tender (Brynjarsdóttir, 2016).
Closed Tendering: is a procurement procedure in which any qualified contractor may request to participate in the tender and whereby only those invited to tender may participate (Brynjarsdóttir, 2016).
This material content is developed to serve as a GUIDE for students to conduct academic research
IMPACT OF CONTRACTOR SELECTION CRITERIA ON PUBLIC PROJECT DELIVERY IN ABUJA, FEDERAL CAPITAL TERRITORY
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