AN INVESTIGATION OF VARIABLES AFFECTING BUILDING CONTRACTORS’ SELECTION
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Background to the study
Both direct negotiation with the owner or his agents and competitive bidding are viable options for securing construction contracts. Direct negotiation is the more common of the two (Adegbile, 2022). When just one company submits a bid for a job, the process is known as nomination or negotiation, and it does not include any kind of competition (Ashworth, 2022). The owner of a construction project will use competitive tendering, which involves inviting a certain number of contractors to bid for the construction job. It is generally agreed upon that this technique of tendering is the most typical manner by which contractors get jobs, and that it is the preeminent mechanism for assigning building contracts (Ashworth, 2022). To justify the awarding of contracts, clients and promoters of the construction industry in the public sector almost solely depend on competitive bidding.
According to Bathurst (2021), the most significant benefit of the competitive bidding system is that it protects the public interest in acquiring building work of an appropriate quality at the most economical price that is practically possible. It is also thought to be the most fair to all parties involved, since it requires contractors to consistently strive toward decreasing their costs by embracing new technology and management practices (Ashworth, 2022). The process of bidding for contracts comprises two very important choices (Bathurst, 2021). The first factor to consider is whether or not to submit a bid, and the second factor is the price at which bids will be accepted. The choice of whether or not to submit a bid is one that is convoluted, fluid, and dependent on a multitude of aspects; yet, the selection of the most suitable project for which to submit a bid is essential to the financial success of construction contractors. The preparation of a legitimate tender requires the contractor to make a financial investment, which will only be recouped in the event that the offer is awarded (Lowe and Parvar, 2004; Ward, 1979). Construction companies are consequently encouraged to be choosy in the work they tender for, picking from a variety of prospective projects that is always evolving (Fayek, 2020). As a result, contractors pick the contracts they tender for with great care from the pool of available contracts at an early stage in the process of deciding whether or not to accept bids.
The building business in Nigeria contributes a considerable amount to the country's Gross Domestic Product. Although some building projects are completed via the use of direct labor, the majority of the work is subcontracted to independent construction companies. It is a commonly held belief that inefficient tendering practices are a significant factor contributing to the inefficiencies of the building sector. Fayek (2020) made the observation that if a contractor approaches tendering in an unguided and non-selective manner, they would definitely squander valuable estimate work. Therefore, an improvement in Nigeria's tendering system has the potential to boost the sector's performance, save the country millions of naira in needless waste, and help to the survival and expansion of the construction industry (Fayek, 2020). (Fayek, 2020).
Fayek (2020) made the observation that scholars have paid relatively little attention to the choice that contractors make on whether or not to tender. The situation remained the same for more than a decade as FOCI (2022) said once again that there has been very little objective investigation into contractors' decisions about whether or not to submit for a project. There is abundant evidence to suggest that this judgment is often made based on subjective information rather than objective data. If the assumption made by these well-known writers is any indication, then the purpose of this research, which is to give information on the variables that impact the choice of contractors over whether or not to submit a bid, becomes even more important. Customers participate in initiatives with the intention of achieving certain goals. Value for money is the driving force behind these goals, thus achieving that is essential. The public customer, who must be responsible and accountable for the money provided by the tax payers, is the most significant factor in determining whether or not value is obtained for the money spent. When customers are planning construction projects, they go through a procurement process to choose a contractor who will carry out the work based on a set of preset selection characteristics.
The choosing of a contractor is one of the most important tasks and choices that are made by the customers. The performance of the project will suffer if an acceptable and accurate technique for picking the most suitable contractor is not used (Ashworth, 2022), which will result in the customer not receiving value for the money that they have spent. The customer is responsible for choosing the contractor who is the best fit for the job in order to increase the likelihood that the project will be successfully completed. This requires the implementation of a procurement system that is made up of five standard process components, namely project packaging, invitation, pre-qualification, short-listing, and bid assessment. The purpose of competitive bidding is to guarantee that customers will benefit from the lowest possible construction costs. The selection of the most qualified contractor is of the highest significance in order to prevent a failure in the execution of the project brought on by the contractor's incapacity to start or finish the job. Therefore, it is essential to have a standard set of guidelines to follow when selecting a contractor. This will ensure that the pricing and background of the bidder are thoroughly evaluated, and the best bidder will be chosen for the award. This will ensure the successful implementation of the project (Adegbile, 2022).
The Public Procurement Act, 2003 (Act 663) was adopted in Nigeria with the overarching goal of giving the greatest value for money by ensuring that public monies are spent in a transparent, efficient, and equitable way. This was accomplished via the establishment of a public procurement system (clause 16). The act establishes the Public Procurement Authority, makes administrative and institutional arrangements for acquisition, stipulates tendering processes, and provides for purposes linked to these provisions. It also allows for the procurement of public goods and services. The process of procurement is rather intricate, and as a result, it is essential that the extensive number of contacts involved be finished in an order that is both rational and predetermined. It is the mission of the Public Procurement Board to "harmonize the process of public procurement in the public service in order to secure a judicious, economic, and efficient use of state resources in public procurement and to ensure that public procurement is carried out in a fair, transparent, and non-discriminatory manner" (Act 663, Section 2).
"It is important to note that the kind of network that is in charge of directing the work makes a difference in determining whether or not the project will be successful. The authors recommend many sorts of improvements that might be made to the contracts, including an incentive for excellent quality and granting capabilities that are more than simply the price. This would help improve the current situation (Adegbile, 2022).
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