Factors influencing the cost of tendering for work by contractors in Ghana
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Date
November, 2014
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Abstract
Throughout the world tendering in the construction industry tendering is
acknowledged to be complicated, adding considerable cost to construction. Efforts to
understand the cost of tendering are confounded by issues that are both visible and
invisible to formal accounting of the construction process. Even in those cases where
there are genuine intentions to capture costs of tendering there is a failure to do so.
While there is currently awareness of the cost of tendering and that effort should be
taken to minimise this cost, there is little precise understanding of it in terms of value
or how it happens. This research was conducted with the aim of investigating factors
that influence the cost of tendering incurred by construction companies through
selective competitive tendering method in Ghana. The objectives of the study were to
identify significant factors that influence the cost of tendering for construction works
in Ghana and identify appropriate strategies to address these factors. A survey
approach using questionnaire was adopted for the study. Data from the survey was
largely analyzed using descriptive statistics. Fifty-four questionnaires were distributed
to contractors, quantity surveyor, architect, engineers and project managers. Forty-three were retrieved. Three out of the forty-three were found to be too badly
completed to be useful for the analysis and were therefore discarded. This brought the
responses effectively to forty, representing a response rate of 74%. The study
confirmed „bid security‟, „Tax clearance certificate‟, „auditor‟s report‟, „SSNIT
clearance certificate‟, „quality of tendering and bidding documents‟, inability to
quickly and reliably assess the birds‟, „labour certificate‟, „source of funding‟ and
„price of tender document‟ as the most significant factors that influence cost of
tendering.
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Findings from the study points to „implementation of an e-GP system‟, „blacklisting
of non-performing contractors‟ and „early notification to non-responsive tenderers; as
the most significant strategies which should be adopted to address these factors. The
study also provides the much needed insight into the problem and makes
recommendations to include in the tendering processes to reduce their cost. It is also
recommended that contractors should be mindful of the cost associated with tendering
in the Ghanaian construction industry in their decision making process concerning
whether to tender or not to tender for a project. For this reason especially, it is
concluded that tendering and associated costs need to be understood in greater detail.
It is recommended that further studies should be carried out to extend the scope to
solicit the views of other contracting firms and co-operate bodies responsible for
tendering in the country. This will give a much wider perspective of the issue and how
to address it.
Description
A dissertation presented to the Department of Building Technology,
in partial fulfillment of the requirement for the Master of Science
degree in the Construction Management Programme.
Keywords
Tendering, Cost of tendering, Tendering process