STUDY OF PERFORMANCE AND IMPLICATIONS OF LOWEST BIDDING BID AWARDING SYSTEM IN PAKISTAN

Abstract

Construction industry participants have started recognizing that accepting the least price bid does not guarantee maximum value. Achieving a value-based procurement approach is a challenge, particularly for the Pakistani public sector clients, who are limited in their ability to evaluate the competitive bids based solely on the lowest-bid award system. In the current economic climate, it is increasingly likely that construction organizations will submit abnormally low tenders to win new work. Persisting problems of inferior quality of constructed facilities, high incidence of claims and litigation, and frequent cost and schedule overruns have become the main features of Pakistan’s public construction works contracts. This research was undertaken to assess the performance of public owned construction projects awarded on a lowest bidder bid awarding system. Also, the objective was to seek construction professionals’ opinions about the traditional bidding procedure and other alternative systems for evaluation of bids and awarding contracts. An extensive literature search was carried out to identify different practices and a questionnaire survey was conducted among the different groups that make up the construction industry in Pakistan. Five alternate bid evaluation and contract award methods are discussed and presented in this research. Few of these methods are in use in some countries and others are emerging. Related regulations of Federal Government of Pakistan are reviewed to develop understanding for the current research. A questionnaire survey was conducted to investigate weaknesses, performance, opportunities and implications of the public owned construction projects awarded on the basis of lowest bid system in Pakistan. Additionally, the questionnaire was meant to investigate existing bid selection and awarding system and to provide a comparative study of different alternative bidding systems in construction. Initially, a draft questionnaire was prepared and a pilot survey was conducted. In pilot study, 12 questionnaires were completed and 5 construction professionals were interviewed. The items included in the questionnaire were finalized on the basis of these interviews and surveyed questionnaires. In first part of the questionnaire, it was supposed to measure the performance of the lowest bidder and gather opinion of the construction experts about the lowest bid system. In second part, five alternate methods of bidding namely, (1) competitive average bidding, (2) multi parameter bidding, (3) competitive negotiated bidding, (4) non competitive negotiated bidding, and (5) A+B i.e. Time + Cost methods were selected for comparison with the lowest bidding method.