Comparative estimation of the impact of transaction cost of traditional and design-build procurement systems in public construction works

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NOVEMBER 2015
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The study set out to compare the magnitude of transaction costs for the design-bid-build and design-build procurement methods in construction works in district assemblies in Central Region of Ghana. The study adopted a quantitative approach and to that effect, a descriptive design was adopted to study 42 purposively sampled employees from six district assemblies including Cape Coast Metropolitan Assembly, Mfantseman Municipal Assembly, Ekumfi District Assembly, Ajumako District Assembly, KEEA Municipal Assembly and Abura Dunkwa District Assembly. Questionnaires were used to collect data from the sampled respondents and the statistical tools used to analyse the data collected included descriptive tools such as means, medians, frequencies, and percentages. Paired sample t-test was used to compare the differences in transaction costs for pre-contract phase and post-contract phases. The independent sample t-test was also used to compare the differences in transaction costs between the traditional and design-build procurement systems. The study found that the respondents were of the opinion that the Public Procurement Acts 663 was not efficient and convenient for procurement in the district assemblies. This assertion was mainly due to politicisation of the processes involved in the procurement, poor staffing, poor implementation and ambiguity in the clauses of the Act. The study also revealed that the estimated TC for the traditional procurement system was higher than that of the design-build system over a six-month period. In most cases, the pre-construction TCs incurred by all the other district assemblies were higher than the post-construction costs. The study recommended streamlining vendors for competitive bidding of contracts, computerising transactions, and building stronger relationships with service providers and vendors.
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A thesis submitted to the Department of Building Technology, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the Degree of Master of Science in Procurement Management.
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