Assessment of factors affecting contractors tender for

construction project in Nigeria

A PROPOSAL PREPARED

BY

17/31QS013

BY ADAMS TAIYE KAMALDEEN

SUBMITTED TO THE DEPARTMENT OF QUANTITY SURVEYING, FACULTY OF

ENVIRONMENTAL SCIENCE, UNIVERSITY OF ILORIN
Table of content

1.0 Background to Study

1.1 Purpose
1.2 Research Questions
1.3 Objectives
1.4 Justification for the Study
2.0 Literature Review
2.1 Tendering process
2.2 Factors affecting contractors decision to tender for construction project
2.3 Empirical review
Research Methodology

INTRODUCTION

1.0 Background to the study

 Construction sector accommodates a host of complex, multiple and interrelated activities
comprising of considerable varieties of operational skills and conditions from one project to the
other. According to Al-Sabah and Abdulrahim (2021), the construction sector is characterised by
the leading and most influential industries in world and is a major player in the world economic
growth. Tendering is a major aspect of construction project that is fundamental to the project
outcome especially in Nigeria. As outlined by Odusami & Onukwube (2008), tendering is the
process of inviting suppliers or contractors to submit tender for the supply, execution and
procurement of a given project. Likewise, Onifade (2011) states it to be the bringing together of
varieties of contractors or suppliers for the same construction project in the construction contract
market. The process of tendering in Nigeria is tedious, inefficient and is hardly done right, and is
therefore affected by several factors which often ensue to unqualified tenders being awarded,
outright cancellation of the process or sometimes, repetition the process (Skitmore&Picken,
2000). Oyeyipoet al. (2016) contend that client’s financial aptitude ,construction materials
availability, political consideration are some of the factors affecting contractors tendering success
in Nigeria. The damages caused by an unsuccessful and challenging tendering process in
developing nations, led to numerous small and medium construction firms ceasing to exist within
the first five years of their existence as a result of unsuccessful tendering process (Ajeetal.,2016).
This makes their finances to become less and as such becomes unsustainable leading to staff
retrenchment and subsequent closure of firms.

Several countries also experiences challenges in tendering process which has caused
restrictions to project award and subsequently construction project success. In New Zealand, Ji et
al. (2014) suggest that insufficient tender documentation, construction design complexity and
inadequate project information as fundamental to contractors tendering success. Similarly,
Enshassi et al. (2013) posit that contractors’ ability to achieve successful tendering is influenced
by project complexity, communication ineffectiveness and contractual obligation as the major
factors in Gaza strip while the least of these factors are materials availability, project duration and
financial situation of the contractor. Furthermore, Alsaedi et al. (2019) assert that company’s
strength, job type and job size are some of the factors affecting contractors tendering success in
Saudi Arabia. Alghonamy (2015) also agrees that design complexity, lowest price, improper
planning, and period between design and execution are some of the factors affecting the success
of the tendering process. Ibrahim and Elshwadfy (2021) see vague drawings, skill level and
experience of estimator, specification and project documentation, cost information completeness
(accuracy, details and quality), materials (availability, prices, imports and quality) as well as the
experience acquired from similar project as the top factors affecting contractors success in Jordan.

Consequently, tendering process in Nigeria almost always have an emphatic influence on the
operation of the construction firms in both short and long terms which can sway the
performances of the construction firms. Strategic decision of any construction firm is instituted by
the tendering phase which is normally the first phase of any project undertakings (Jarkas et al.,
2014). This decision is crucial to contractors progress and survival (Yan et al., 2018), in the
Nigerian construction sector owing to the increasing level and number of competitors
vyingly for a particular project. On the side of the contractor, inappropriate or incomplete
tender documents, indecision as to their capabilities, inconsistent market prices of materials,
experiences ensuing from previous projects, contractor’s perception of client and political
factors were perceived by Mahamid (2016) as factors affecting contractors tendering success.
Olatunji et al. (2017) agree with Alumbugu et al. (2014) that revealed that consultant’s
interpretation of project specifications, previous relationship between the intending bidders
and clients, availability of other projects at the time of bidding, technological complexities
of the project under consideration and prequalification requirements are the influencing
factors in contractor’s decision to tender from consultants perspective. Furthermore, client’s
perception of projects and contractors, previous experiences, competencies of procurement
staff and political consideration are the factors influencing clients’ decision during tendering
process. Ultimately, there is little harmony between the stakeholders (client, consultants and
contractors) as to the top most factors affecting tendering success. Taking into
consideration the divergent perception of the construction stakeholders on the factors
affecting contractors tendering success, this study will therefore, assess the factors affecting
contractors tendering success in construction projects with the view to harmonizing the
perception of the construction stakeholders in Nigeria.

1.1 Purpose
 Designing and implementing an effective tender is a huge challenge for most contractors
who seek government contracts in Nigeria. A study conducted by Obuji (2003) in some West
African countries including Nigeria, revealed that some small-scale contractors are not favoured
during a tendering process by prospective clients because, they neglect various factors that affect
the success and failures of submitting a tender for a contract. Some contractors do not structure
and draft their tenders in an appropriate manner; hence their chance of being contracted is
reduced.

Construction industry has complexity in its nature because it contains large number of
parties as clients, contractors, consultants, stakeholders, shareholders, regulators and others.
Construction projects in Nigeria suffer from many problems and complex issues in
performance because of many reasons and factors. This project is very important to
identify and to evaluate the main factors affecting contractors tenders in construction
projects in Nigeria. The practices concerning with Tenders such as time, cost, project owner
satisfaction and safety checklists will be analyzed in order to know the main practical
problems of contractors who do not win tenders as well as practical solutions to help enhance
the chances of our indigenous contractors in kwara state in winning Federal government and
foreign contracts.

1.2 Research Questions

 What challenges do contractors in Nigeria face when submitting tenders for

projects/contracts?
 What are the factors that affect contractors tender for construction projects?

1.3 AIMS AND OBJECTIVE

The aim of this research is to analyze and assess the local factors that account for the
success or failure of tenders submitted by contractors when applying for a construction
project in Nigeria. The aim of this research can be broken down into the following
objectives:

 Identify the factors hindering construction contractors tendering success in Nigeria

construction project.
 Evaluate the level significance of these factors.
 Provide ways of improving contractors tendering success in Nigeria construction project.

1.4 JUSTIFICATION FOR THE STUDY

This study will give a clear insight into the various ways in which profit and efficiency from
contracts and contracting can be increased and how the challenges facing contract tendering can
be properly tackled. The study also gives a clear insight into the various factors affecting tenders
and their effects on contractor efficiency and chances of winning a contract in Nigeria. The
findings and recommendations of this research will help in building a strong and better contract
policy and tendering guideline for contractors, especially small-scale contractors in Kwara state
and other construction companies in Nigeria.

2.0 LITERATURE REVIEW

2.1 Tendering Process

Tendering, according to Faizal (2010), entails the situation of when the contract type that is
requisite for a specific project has been realized and the focus is now on the contractors’
selection. The adopted technique in choosing and accepting a tender is based on some measures
which encompass project nature ,least tender evaluated, client wishes and reasonably accepted
time of completion. Similarly, the procurement process in construction is made up of sequence of
actions or operations used in attaining the anticipated targets of construction project procurement
(Anyadike, 2000; Harris & McCaffer, 2005). The process of tendering comprises the following
actions (Anyadike,2000;Harris&McCaffer,2005):

1.Tendering Planning
This is the first phase of the tendering cycle which basically entails identification of
requirements. Therefore, procurement process starts with there cognition of
needs(goods,worksandservices),which could be for the entire year(Shonhe&Bayat,2017).

2.Procurement Set-up and Solicitation

This phase requires individual procurement setup and imploration of tenders. It makes up the
period of bringing about service or product provisions. This enhances the need for the
communication of requirement and typifies suitable procurement method for the
implementation of the project (Shaw,2010). Source of funding and estimation of budget for the
project is also part of this stage.
3.Contractor Solicitation
Here, advertisement is made based on inviting potential tenders to submit tender for the
project. Tender evaluation criteria are explicitly stated in the tender document and enough
time is allowed for the tenders to complete and submit their tender (Bainson, 2018).
4.Bid Appraisal
The submitted bids are usually opened at a fixed time and date, and afterwards, appraisal
is made based on the condition initially stated. This is crucial to contractor’s selection and
award of contracts as assessment of the submitted tenders are done at this stage
(Shonhe&Bayat,2017).
5.Documenting ,Selection and Negotiation
their decision; a contractor is selected to carry out the project mostly based on the least
bid accepted (S A brief report is ready for record keeping purposes after the appraisal and
centred on haw, 2010). Prior to project commencement and during contract formation, the least
evaluated tender is chosen for negotiation.
6.Contract Preparation
The client goes into contracting with the successful contractor. Here, preparation of contract
documents are done and evidently posit each party’s rights and obligations (Shonhe & Bayat,
2017). The selected contractor to handle the contract process ensures the attainment of the
aim of the procurement process which is basically on the success of the project. At this stage,
the means of payment and structure of progress payment (terms of contracts or agreement) is
stated at this stage and the contractor goes into action.
7.Project Execution and Delivery
The project is carried out by the project team in accordance with the guidelines and
templates provided during the contract preparation process. Project monitoring and evaluation,
work package scheduling as well as progress payment are mostly applied at this stage.
8.Assessment and Approval
Once the project is completed, it is inspected by the designated professionals who report the
quality of work to the client whether it conforms to the required specifications or not (Bainson,
2018). Once the confirmation is made, then procedure for final payment begins.
9.Final Payment
Final payments are made by the client to the contractor depending on the terms of the contract
agreement.
10.Post-Mortem Analysis
This is done to assess the process performance, ascertain the efficiency and effectiveness of the
process. It also ensures that every issue involving the project as well as the project itself is
appraised and lessons are learnt for future use.

2.2Factors Affecting Contractors’ Decision to Tender for Construction Projects

Tendering provides a competitive way of getting contract award (Kog& Yaman, 2016). Open
tendering system is the most used tendering system while carrying out construction
procurement tendering (Bohari et al., 2021). According to Kog and Yaman (2016), there are
fundamental tendering procedures which are open, negotiation and selective tendering. These
systems provide efficiency and ensure value for money is attained. But tendering processes are
in many cases tedious and complex as many responsibilities are involved requiring the
participation of individuals and groups with varying targets and priorities (Jarkas, 2017).
Varieties of contractors have varieties of reasons and objectives to tender for construction
projects (Loosemore & Richard, 2015), but principally on profit-making (de Araújo et al., 2017).
However, tenders are mostly awarded to the lowest bidder (Loosemore & Richard, 2015).
Instances are that an accurate decision made by the contractor to tender make his chances of
success to be higher based on the maximum use of his financial capabilities as well as his
administrative and technical expertise (Bohari et al., 2021). Contractors decision to tender are
affected by several factors which are considered to be tendering skills and devising buyer
engagement strategies as well as pricing strategies, as typified by the study of Urquhart et al.
(2017),are integral to contractors decision to tender. Olatunji et al. (2017)opine that previous
relationship with prospective client, consultant’s project requirement interpretation, availability
of other projects at the time of tendering, complexities arising from technological
advancement and the requirement for pre-qualification are the factors affecting contractors
tendering success. Similarly, materials availability, profit level and labour productivity are
crucial to contractors tendering success (Aje et al., 2016). In consonance, Bagies and Fortune
(2006), Olatunji et al. (2017) and Biruk et al. (2017) posit that construction project size,
difficulty levels, procurement method types, project location, condition of site, special
requirements of project, relationship with previous project, company’s reputation, business
continuity, materials availability and growth in organization expertise as integral to
contractors tendering success. Flynn and Davis (2017) assert that tender document price,
tender submission, previous experience from similar projects, pre-qualification, completeness of
document and other tenderers ’strength as essential to contractors success of a construction
project award
.
2.3 Theoretical Review
Gray (2010) sees theory as the formation of the association concerning things. Thus, it is
essential for every study to be guided by some theories which can assist the researcher in
realizing the research aim. The study is however ,underpinned by the following theories:

2.3.1Resource-Based Theory and Procurement

Initially introduced in 1959 and developed by Penrose, the aim of the resource-based theory
is principally on the need for businesses and firms to achieve competitive advantage through the
use of assessable physical and non-physical resources deposited in their organization (Tuvi &
Noor, 2021). It is strategically based on the application of methods applicable in supporting the
will of an organization to attain competitive power (Goh & Loosemore, 2017). It is obvious that
tendering is fundamental to contract award and challenges continues to arise from the process
(Qazi et al., 2021). It is the philosophical belief of this theory that competitive advantage of the
contractors must be achieved when applying or putting to use all resources of the organization
(Mahoney, 2015). This requires the continuous improvement of the skills set of the
organization’s staff in order to properly plan for tendering process. However, without such, it
could easily result into unsuccessful tendering by the contractor. This is related to this study in
the area of better performances of the contractors in tendering process as this study sought to
establish those tendering success factors, analyze them and provide improvement measures in
order for the firms to achieve competitive advantage through successful tendering process.
2.3.2Dynamic Capabilities Theory
Proposed by Helfat et al. (2007, p. 1), dynamic capabilities theory is defined as “the capacity of
an organization to purposefully create, extend and modify its resource base” in order to gain an
economic value considerably higher than its counterparts. Tuvi & Noor (2021), postulate that
dynamic capabilities are often seen as a tool for resource conversion into better-quality
performances. Teece (2017) opines that dynamic capabilities form the basis for enterprise-level
competitive advantage particularly in a period of continuous and constant technological changes.
Furthermore, dynamic capabilities are fundamental to sustaining superior performances of an
enterprise in an increasingly dynamic environment (Tuvi & Noor, 2021). This relates to the
objectives of the study such that improved contractors tendering performances ensuing from
their resource improvement and internal growth are required to continually win tenders. In a
highly dynamic and challenging environment such as the north-central region of Nigeria, there is
need for better-quality tendering performances tenable from the contractors most especially, as
well as the clients and consultants who significantly make up the large chunk of the tendering
process.
2.4 Conceptual Framework
This study examines tendering success factors prevalent for contractors successful tendering for
construction projects. It is a known fact that the fundamental aim of any project tendering
process is for the successful award of contracts and subsequently, successful completion of
projects on time, cost and scope. This study identified these factors from literature and used them
to practically retrieve information from the selected construction professionals of Nigeria.
Resource-based theory and procurement as well as dynamic capabilities theory influence the
direction of this study through the flow from their level of significance to the improvement
factors to promote firm’s strategic application of the top ranked factors in attaining competitive
tendering advantage which are integral to the success of contractors tendering process and
subsequently, the success of the project. The selected data were analyzed and the level of
significance established for improvement purposes of tendering success for contractors, clients
and consultants. The connection between these theories is emphasized clearly by their scope on
continuous improvement of firms’ capability to tender successfully which they can use to
achieve competitive advantage and growth.

3.0 RESEARCH METHODOLOGY

Research methodology is the specific procedures or techniques used to identify, select, process,
and analyze information about a topic. In a research paper, the methodology section allows the
reader to critically evaluate a study's overall validity and reliability.

This chapterdeals with the general strategy and logistics that will be employ to conduct the study,
it will examine the procedure and other vital information needed for answering research question
formulated to direct the study.

3.1 Study Area

The data for this research will be obtain within Ilorin, Kwara State of Nigeria. Ilorin is the capital
city of Kwara in North central Nigeria and the current metro area population of Ilorin in 2022 is
1,000,000. Kwara state shares boundary with Kogi State, Niger state, Oyo state and Ekiti state.
Ilorin has a population of 908,490 making it the biggest city in Kwara. It operates on the WAT
time zone.

3.2 Research design

The research design refers to the overall strategy that you choose to integrate the different
components of the study in a coherent and logical way, thereby, ensuring you will effectively
address the research problem; it constitutes the blueprint for the collection, measurement, and
analysis of data

The study will adopt method that will be designed to sample opinions of respondents, which is
the Quantitative research approach.

Quantitative research design is aimed at discovering how many people think, act or feel in a
specific way. Quantitative projects involve large sample sizes, concentrating on the quantity of
responses, as opposed to gaining the more focused or emotional insight that is the aim of
qualitative research.
Therefore, this research will use questionnaire in data collection in which this questionnaire is
one of the tools used in quantitative research approach.

3.3 Population of the Study

This is the source material from which a sample is drawn. It is a list of all those within a
population which can be sampled. A total number of 15 questionnaires will be distributed to
quantity surveyors and contractors in the construction industry, which includes architect,
builder, and civil engineers, operating on site and offices in Ilorin metropolis.

3.4 Instrument of Data collection

Instrument of Data collectionmeans tests, questionnaires, inventories, interview schedules or

guides, rating scales, and survey plans or any other forms which are used to collect information
on substantially identical items from 10. For the purpose of this research, primary data will be
acquire fresh for the research topic. Primary data can further be sub-divided into the following:
Interview method, questionnaire method and Observation method.

3.5 Method of Data Collection

Data for this study will be collected through questionnaire design. For primary data, a well
structure multiple choice questionnaire will be administered to professionals in construction
industry, private firms and public sectors establishment in the study area.

3.6 Data Analysis

Descriptive statistics method will be used for analyzing the result to determine the direction of
study. This includes mean,median, mode. This will be used because of their simplicity and also
to give over view of the analysis.
Since section A of the questionnaire will focus on the general information of the respondents it
will be analyzed using pie chart, and bar chart.