A Study on Performance of Contractors Selected Using the Lowest Bid Evaluation Method as Major Criteria for Government Projects in Ghana, a Kumasi Study

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The aim of this study was to investigate Contractors’ performance on projects awarded using the lowest evaluated tender as the major criteria without comparing the figure with Consultant’s estimate as contained in the Public Procurement Act 663(2003), the regulating document for execution of government projects, with the view of identifying a more appropriate method of evaluating Contractors’ bids. The study involved sampling the views of Consultants (both government and private) on the performance of Contractors selected using the lowest evaluated bid method. The study investigated the performance of Contractors selected using lowest evaluated bid by the use of factors that were identified in the literature. It further identified factors that have strong impact on the performance of Contractors. The study also investigated the extent of usage of the Public Procurement in the selection of Contractors for execution of government projects. Out of 120 questionnaires distributed, 75 were retrieved. Fourteen of those returns were found to be poorly completed and were therefore discarded. This brought the responses effectively to 61, representing a response rate of 50.83%. The data was analysed using Stata 11.0 and Principal Component. Responses received revealed that six out of the ten factors identified have strong influence on performance of Contractors. These factors are rate of issuance of warning letters, rate of request to attend to warranty calls; compliance with instructions; compliance with specification; quality level and project completion time. Again among these factors the most influencing ones were quality and compliance with specifications. The study concluded that the performance of Contractors on projects awarded using the lowest evaluated bidder was not satisfactory. And that the unreasonably low tender submitted by the Contractors make it difficult for them to perform satisfactory. Again the major performance indicators that they were unable to achieve were time and contract sum, safety and quality levels. It was further identified that some shortfalls such as frequent variations, delay in payments, and delay in receiving instructions and approvals from Client and Consultants also contributed to the poor performance of the contractors. A key recommendation made from the study is the need to review the method of selecting Contractors spells out in the Procurement Act to possibly make provision for comparison of various bids to Consultants’ estimate so as to eliminate Contractors who quote unreasonably low rates and subsequently are unable to perform.
A thesis presented to the Department of Building Technology, Kwame Nkrumah University of Science and Technology In Partial Fulfilment of the Requirements for the Degree Of Master of Science in Construction Management Programme,