Factors influencing the cost of tendering for work by contractors in Ghana

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November, 2014
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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. iv 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.
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.
Tendering, Cost of tendering, Tendering process