EFFECT OF CURRENT BID EVALUATION PROCESS ON THE PERFORMANCE

OF PUBLIC BUILDING PROJECT: THE CASE OF HAWASSA CITY

Msc. THESIS

SARA HAILU

HAWASSA UNIVERSTY, HAWASSA, ETHIOPIA

OCTOBER, 2019
EFFECT OF CURRENT BID EVALUATION PROCESS ON THE PERFORMANCE
OF PUBLIC BUILDING PROJECT: THE CASE OF HAWASSA CITY

SARA HAILU

A THESIS SUBMITTED TO THE

SCHOOL OF CIVIL ENGINEERING,
INSTITUTE OF TECHNOLOGY, SCHOOL OF GRADUATE STUDIES OF
HAWASSA UNIVERSITY
HAWASSA, ETHIOPIA

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF

MASTERS OF SCIENCE IN CIVIL ENGINEERING
(CONSTRUCTION TECHNOLOGY AND MANAGEMENT)

OCTOBER, 2019
 SCHOOL OF GRADUATE STUDENT

HAWASSA UNIVERSITY

ADVISORS’ THESIS APPROVAL SHEET

This is to certify that the thesis entitled “effect of current bid evaluation process on the
performance of public building project: the case of Hawassa city” submitted in partial
fulfillment of the requirements for the degree of Master of Science in construction technology
and management, the Graduate program of the institute of technology, and has been carried
out by sara hailu Id. No PG/CoTM/043/09, under our supervision. Therefore we recommend
that the student has fulfilled the requirements and hence hereby can submit the thesis to the
institute of technology.

1. BAHIRU BEWKET (Ph.D.)

Name of the major Advisor Signature Date

2. MESEFEN MATHEWOS (Msc) __________ ___________

Name of the Co-Advisor Signature Date

 SCHOOL OF GRADUATE STUDIES

HAWASSA UNIVERSITY

EXAMINER’S APPROVAL SHEET

We, the undersigned, members of the Board of Examiners of the final Open Defense by sara
hailu, have read and evaluated his thesis entitled “Effect of current bid evaluation process
on the performance of public building project: the case of Hawassa city”, and examined
the candidate. This is, therefore, to certify that the thesis has been accepted in partial
fulfillment of the requirement for the Degree of Masters of Science in Civil Engineering
(Construction Technology and Management).

Name of Major Advisor Signature Date

Name of Internal Examiner Signature Date

Name of External Examiner Signature Date

Name of Chairperson Signature Date

SGS Approval Signature Date

 DECLARATION

I hereby declare that this study entitled “Effect of current bid evaluation process on the
performance of public building project: the case of Hawassa city” Is my original work and
has not been presented for a degree in any other university, and all sources of material used for
this thesis / dissertation have been duly acknowledged.

Sara hailu
Name Signature Date
 ACKNOWLEDGEMENT
First of all, I would like to thanks my almightily God to help in my entire journey and do all
things that is important to me. Secondly I would like to forward sincere gratitude to my
advisor, DR Bahiru B. and Mesfin M. (M.Sc.) for them valuable advice, invaluable
suggestions, timely comments, and thorough guidance for the work of this paper. Then, I
would like to acknowledge ERA organization for the sponsor- ship of this study.

My appreciation meanders to my husband zelalemTeketel and families for their patience and
courage in finalizing my study. Furthermore, I would like to thank the organizations and
professionals who were willingly to cooperate and forward all the relevant data as well as
responding the questionnaires coupled with sharing ideas on research related issues during
interviews and data sheet, particularly it goes to Hawassa city construction office professional.
Finally, my special compliment goes to my dear friends and classmates.

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 ABSTRACT
The construction industries have a special role in the development of Ethiopia; there is no
development sector which construction not touched. In developing countries, the construction
sector generally operates with several limitations and unable to meet local demands. Even if in
Ethiopia, a construction project would construct under the required performance. numerous
factors that affect project performance. The selection of a proper construction contractor
increases the chance of successful completion of the construction projects. This selection
process requires necessary and sufficient criteria. Different researcher indicates the absence of
minimum bid evaluation technical criteria and sub criterions in the procurement manual has
lead the public procurement units to exercise different scope of requirements for similar
projects. Competitive low bid method of financial evaluation has been highly criticized for its
negative impact on disputes/claims, coordination, quality control, and project duration. This
research was undertaken to assess the effect of the current bid evaluation process on the
performance of public building projects: the case of Hawassa. Setup the research foundation
the researcher review varies objective related past work including thesis, books, journals, and
legal background. Standing from the literature review and interview results, questionnaires
have been developed and distributed to construction sector professionals who are related to the
selected project. Furthermore, to review the actual bid evaluation practice, desk study has been
studied in six selected public building projects. Desk study and part of the questionnaire result
would be analyzed qualitatively. Inappropriate and did not a strict use of the given criterion
goes to unsuccessful project completion. After the day of 3/5/2011 E.C, financial evaluation
criteria would be conducted based on the engineering estimation interval setup. The
questionnaire listed factor is analysis by using relative importance index formula and ranked
by excel software application respect to the effect of project performance. The result showed
that, selecting lowest bidder from least responsive offers by avoiding technical score, Not
evaluating in detail financial offered submitted by the contractor, Discrimination in providing
influential information and Less understanding for estimating the influence of contractor
selection to meet project objective have been included on critical faced problem and
challenges. Finally, the researcher provides a recommendation to minimize project
performance effects due to the bid evaluation process.

Keyword: procurement, bid, bid evaluation.

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 TABLE OF CONTENT

ACKNOWLEDGEMENT ................................................................................................V
ABSTRACT .....................................................................................................................VI
LIST OF TABLES ........................................................................................................... IX
LIST OF FIGURE ............................................................................................................ X
ABBREVIATIONS .......................................................................................................... XI
CHAPTER ONE ............................................................................................................... 1
1. INTRODUCTION ........................................................................................................... 1
1.1. Background............................................................................................................... 1
1.2. Statement of the problem.......................................................................................... 2
1.3. Objectives of the study ............................................................................................. 3
1.4. Research questions ................................................................................................... 4
1.5. Scope and Limitation of the Study ........................................................................... 4
1.6. Significance of the study .......................................................................................... 4
1.7. Organization of the paper ......................................................................................... 4
CHAPTER TWO .............................................................................................................. 6
2. LITERATURE REVIEW ................................................................................................ 6
2.1. Introduction .................................................................................................................. 6
2.2. Construction industry ............................................................................................... 7
2.3. Construction Procurement ...................................................................................... 11
2.4. Bid evaluation and contract delivery system. ......................................................... 22
2.5. Effects of bid evaluation practice on project performance ..................................... 24
2.7. Summary of literature review ................................................................................. 30
CHAPTER THREE ........................................................................................................ 31
3. MATERIAL AND METHODS ..................................................................................... 31
3.1. Introduction ............................................................................................................ 31
3.2. Description of study area ........................................................................................ 31
3.3. RSEARCH DESIGN .................................................................................................... 32
3.4. Target group ........................................................................................................... 33
3.6. Source of Data ........................................................................................................ 34
3.7. Data analysis and management techniques ............................................................ 35
CHAPTER FOUR .......................................................................................................... 37

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 4. RESULT AND DISCUSSION....................................................................................... 37
4.1. INTRODUCTION............................................................................................................ 37
4.2. PROJECT DESK STUDY.................................................................................................. 37
4.3. Questionnaire result and discussion ....................................................................... 45
4.3.2. Questionnaires Response Rate ............................................................................ 46
CHAPTER FIVE ............................................................................................................ 70
5. CONCLUSION AND RECOMMENDATION ............................................................. 70
5.1. Conclusion .............................................................................................................. 70
5.2. Recommendation .................................................................................................... 72
REFERENCES .............................................................. ERROR! BOOKMARK NOT DEFINED.
APPENDIXES I .............................................................................................................. 77
APPENDIXES II ............................................................................................................ 89
APPENDIXES III ......................................................................................................... 102
APPENDIXES IIII........................................................................................................ 103

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 LIST OF TABLES
Table 1: show Desk study project lists ..................................................................................... 35
Table 2: show Summary of number and response rate by participants. ................................... 47
Table 3: detail back grounded of the respondent ..................................................................... 47
Table 4: show Final result of client side respondent factor on bid evaluation process. ........... 52
Table 5: show final result of consultant side respondent factor on bid evaluation process ...... 60
Table 6: show final result of contractor side respondent factor on bid evaluation process ...... 66
Table 7: show the most top nine factors selected from the respondent .................................... 68

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 LIST OF FIGURE
Figure 1: show research design chart ........................................................................................ 33
Figure 2: show Hawassa city map (Finance, 2019). .................. Error! Bookmark not defined.
Figure 3 organization annual procurement plan percentage difference .................................... 48
Figure 4: bid evaluation effect on project performance. ........................................................... 48
Figure 5: mostly faced project performance indicator .............................................................. 49
Figure 6: strict use of legal bid evaluation criteria ................................................................... 49
Figure 7: member of bid evaluation team capacity................................................................... 50
Figure 8: time given for bid evaluation .................................................................................... 50
Figure 9: bid evaluation team trend .......................................................................................... 51
Figure 10: review of annual procurement plan ......................................................................... 54
Figure 11: mostly adopted bid evaluation procedure................................................................ 55
Figure 12: bid evaluation procedure status on professional thought. ....................................... 56
Figure 13: bid evaluation project performance effect ............................................................... 56
Figure 14: mostly faced problem .............................................................................................. 57
Figure 15: engineering estimation effect on project performance ............................................ 58
Figure 16: appropriateness of minimum qualification criteria for contractor eligibility .......... 58
Figure 17: project performance effect ...................................................................................... 62
Figure 18: member of bid evaluation team ............................................................................... 62
Figure 19: contractor challenge and problem. .......................................................................... 63
Figure 20: material price and company profile updating interval ............................................ 64
Figure 21: financial evaluation and project performance ......................................................... 64

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ABBREVIATIONS

BOQ-………………………..….. Bill of quantity

MoWUD- …………………….…Ministry of Works & Urban Development

GDP - ……………………………Gross Domestic Product

ITB- ………………………..…...Instruction to Bidders

PP RFP- ….....................................Request for Proposal RFQ-Request for Quotation A-Public

Procurement Agency

MoFED-……………………….…. Ministry of Finance & Economic Development Directive

PPAPM - ………………………….Public Property Administration and Procurement Manual

GFCF-……………………………..Gross Fixed Capital Formation

GVPC-…………………………….Gross Value of Production

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CHAPTER ONE

1. INTRODUCTION

1.1. Background
The Construction industry plays a vital role in socio-economic development. The industry is a
distinct sector of the economy, which makes its direct contributions to economic
growth (MoWUD, 2006). Now, the Ethiopian construction industry is booming in recent year,
in percentage contribution to GDP remains constant at 5.7% for three years spanning from
2005/06 to 2007/08. However, it showed a 5.8% contribution to the total GDP in 2008/09
(MoFED, 2010). According to the building dictionary, construction industry is the leading
industry in producing employment and contributes to the overall national development. A
construction project involves many various parties such as employers (client and consultant),
main contractors, subcontractors, and suppliers. Towards achieving a successful project, that
is, a project completed on time, on budget, and of the best or specified quality. Under a
design-bid-build contract delivery system, the direct relationship between these primary
stakeholders is a necessary interactive process for a successful project accomplishment. Fair
compensation, secure financial support, and cooperative working environment are expected
and required for the prosperity of the sector (roxene, 1998).

Those construction parties are engaged through the process of procurement. The construction
Industry involves procurement and contract management systems to ensure fair competition
and distributions of obligations and rights among stakeholders. Procurement is the process that
creates, manages and fulfills contracts (Clough 1996). Procurement procedures potentially
causing many problems in all stages of the buying process and hence procurement procedures
are one key improvement area and can contribute substantially to project success. The
selection of a proper construction contractor increases the chances of successful completion of
a construction project. It can also fulfill the client’s goals, and keep the schedule of the cost,
time and quality. So it is extremely critical to select an appropriate contractor in the process of
construction management. The selection of construction contractors are very often conducted
during bidding.

1
Bid evaluation criteria and requirements are significant parts of the bidding process.
(Eriksson,2007). According to the federal public procurement directive (2010), the client
should have to indicate the bid evaluation criteria. To select a successful bidder shall be
carried out either of setting the minimum technical requirement and selecting the lowest
evaluated bid from among the bidders that qualify such minimum technical requirement or
indicating clearly in the bidding document. The criteria to be applied to determine the
functional or economic value of the procurement and the relative weight to be ascribed to each
criterion and selecting the bidder with the highest cumulative result by conducting evaluation
based on these criteria.

Now a day Ethiopia procurement practice is largely based on selecting the lowest bidder from
least responsive offer bidder award (fitsum, 2018). But, January 2011 E.C southern nation,
nationality people’s regional state finance, and economic development bureau modify regional
procurement procedures. From this modified procedure is financial bid evaluation criteria are
included. Which means the financial evaluation is based on engineering estimation. The
minimum candidate value is between plus or minus 15% of engineering estimation. The
winner is the lowest price of those. This paper is to assess the effect of the current bid
evaluation process on project performance. Due to, Ethiopia’s present state of the
construction industry falls short meeting domestic and international quality standards
and the performance demand expected from the sector.

1.2. Statement of the Problem

Ethiopia construction industry is under booming condition, but according to different research
project faces low performance of completion Getaneh (2011) and Biyadglign (2017). And
huge projects are constructed by a foreign contractor as an example Hawassa industry park
and Mojo to Hawassa expressway. These all imply the construction industry falls under the
required performance. Practically, numerous factors affect project performance. Namely,
Contractor performance is the leading one from the fruit of the procurement process. Within
the Procurement process, bid evaluation criteria play an important role in a selection of
contractors to achieve their mandate.

2
Ajayi (2010) stated that, contractor’s selection is the crucial decision that needs to be taken by
the client and his representative, to ensure that projects are completed within cost, time and
quality standard. Due to Bid evaluation stage of the procurement process is the most
susceptible to corrupt practices.

In Ethiopia, bid evaluation categorized broadly technical and financial criteria. From current
researcher (fitsum,2018) states that there is an Absence of minimum bid evaluation technical
criterion and sub criterions in the procurement manual have to lead the public procurement
units to exercise different scope of requirements for similar projects. Also, laycheluh (2012)
states that the performance construction projects those awarded on the least bidder bid
evaluation and contract award have completed under the design standard. This all thing
implies the bid evaluation process has an impact on project performance. This means the
selection of a proper contractor increases the chances of successful completion of a
construction project. This is the reason, why this research was going on asses’ effect of the
current bid evaluation process on public building project Performance: the case of Hawassa.

1.3. Objectives of the Study

1.3.1. General Objective

To assess the effect of current bid evaluation process on the performance of public building
project in Hawassa city.

1.3.2. Specific Objectives:-Specifically the objectives of the study are:-

1. To detail review and study current bid evaluation practice in public building project of
Hawassa city.
2. To assess public procurement challenges and problem that is related current bid
evaluation process.
3. Identify impact of current bid evaluation process on building project performance in
the construction industry of Hawassa city.

3
1.4. Research Questions
In order to achieve the research objectives, this study would attempt to answer the following
questions:-

 What are faced challenges and problem in public building project performance related
to bid evaluation process?
 How bid evaluation process affect project performance in the construction industry?
 What will be done for future improvement to avoid challenges and problem?

1.5. Scope and Limitation of the Study

Scope of this paper was bid evaluation process effect on the project performance of Hawassa
city. The study is limited to assess the effect of the current bid evaluation process on the
performance of public building projects: the case of Hawassa. In this study, public building
projects located in Hawassa city were assessed, but Hawassa University and industrial park
projects are not included. Information is from clients, contractors, consultants and statutory
body which are related to those selected projects as a general study and desk study on the
selected projects.

1.6. Significance of the Study

The selection of a proper contractor has a significant effect on project success. Due to this, the
contributions of this research were asses a detailed bid evaluation process to identify its
problem and challenges. The study will help the client to obey own responsibility. The
consultants reduce bid evaluation problems and challenges to meet client objective. Develop
fair competition between Contractors to achieve good performance of the project. To visualize
the gap of concerned governing body. Finally, recommend modification for all stakeholders.

1.7. Organization of the Paper

This paper organizes in five chapters as described below: - Chapter one is an introductory part
containing background, research problems, objective of the research, significance of the
research, limitation of the research and organization of the research. Chapter Two presents a
literature review with general descriptions by different researchers on construction bid
evaluation related areas.

4
Chapter Three discusses the research material and method. Chapter Four presents results and
discussion of the research findings from the desk study and questionnaire. In the fifth chapter,
conclusions and recommendations discussed based on the previous chapter’s finding.

5
CHAPTER TWO

2. LITERATURE REVIEW

2.1. Introduction
The Construction project must be managed efficiently. During bidding the demands from
clients and competition have been growing rapidly (Crowley and Hancher, 1995).
Few of these demands directly contribute to the physical construction of the project; however,
a failure to properly manage them can lead to problems for the entire project and construction
team. The selection of a proper construction contractor increases the chances of successful
completion of a construction project. It can also fulfill the client’s goals, and keep the schedule
of the cost, time and quality. So it is extremely critical to select an appropriate contractor in
the process of construction management (Alhazmi and McCaffer, 2000). Promoting
competition amongst contractors is a clear benefit to the process. It compels the contractors to
lower their costs, usually through innovation, to ensure they win bids and maintain their profit
margins. Besides, the process is beneficial specifically to the public sector because of the
transparency, an important criterion of public policy. Prequalification provides a client with a
list of contractors that are invited to tender regularly. This is the approach most currently used
by many countries and in which many and different types of criteria are considered to evaluate
the overall ascertained of contractors (Photios,1993).

2.1.1. Terms Related to Public Procurement Process

The public procurement manual states definitions of specific terms that are related tothe public
procurement (PPAPM, 2011).

i. “Procurement” means the public body obtaining goods, works, consultancy or other
services through purchasing, hiring or obtaining by any other contractual means.
ii. “Public procurement” means procurement public by body using a public fund.
iii. “Bid” means a stage in the procurement process extending from advertisement of or
invitation to bid up to signing of contract;
iv. “Bidder” mean a natural or juridical person submitting bid

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 v. “Bidding document” mean a document prepared by a public body as a basis for
preparation of bid; which contains a specification of the desired object of procurement.
vi. “Bid proposal” mean a document submitted by bidder to participate in a bid on the
basis of the bid document prepared by a public body in respect of that procurement.
vii. “a special procurement” mean a procurement of sizable volume carried out in bulk by a
decision of the minister on account of the national significance of that procurement or
to fulfill similar requirements of a public body within a given period of time.
viii. “Pre-qualification” is a means for attracting potential bidders to participate, in which
potential bidders are invited by a public body to submit documentation that shows the
person/firm is capable of meeting the requirements of a specific future bid.
ix. “Post-qualification” is a process undertaken by a public body at the end of the bid
evaluation stage to ascertain the capability of the least evaluated bidder to perform
the contract. Post qualification assessment may be done for prequalified bidders. The
purpose of the post qualification is to ascertain that the lowest evaluated bidder is still
capable to perform the contract.

2.2. Construction Industry

The construction industry is a large sector of the economy that transforms various
resources into constructed physical economic and social infrastructure necessary for socio-
economic development. It embraces the process by which the said physical
infrastructures are planned, designed, procured, constructed or produced, altered,
repaired, maintained, and demolished (Hobday,2001). Also, the industry is complex in its
nature because it comprises large numbers of parties as owners (clients), contractors,
consultants, stakeholders, shareholders and regulators. The performance of the construction
industry is affected by national economies (Shaban, 2008). Construction products are
generally regarded as capital goods, and investment in construction constitutes about 50
percent of all investments in capital goods in many countries. In most sub-Saharan countries,
the construction industry constitutes less than 5percent of GDP. The corresponding average
for developed countries is 7 percent (WorldBank, 1994; Zawdie& Langford, 2000).

7
According to the World Bank (1994), a one percent increase in the stock of infrastructure is
associated with a one percent increase in gross domestic product across all countries
(Zawdie& Langford, 2000).

2.2.1. Construction Industry in Ethiopia

2.2.1.1. Background of Ethiopian Construction

Ethiopian construction history starts from the ancient Axumite Empire; Axum the wealthy
African trading empire had made magnificent construction prints that passed from the third
century till now. Today the former imperial capital Axum contains some of the best-preserved
examples of Axumite-style architecture (Phillipson, 2012). The rock-hewn churches of
lalibella are also another era magnificent endeavor of construction. The longer time pause of
construction again restart during the emperor Fasiledus since 1635, by building Gonders’
castles (Fetene, 2008). Modern construction industry in Ethiopia is a recent phenomenon.
Generally, evolution of Ethiopia Construction in summarized into four distinct periods
(MEDaC, 1999). Before the year 1968 included in the first period during those periods most
civil works (including roads) were carried out by foreign contractors through international
competitive bids. Also skilled manpower was largely employed abroad. The period b/n 1968 -
1982 considered as second period here, small domestic contractors started to emerge due to,
The government initiates them to help contractors participate in the construction of federal
road projects.

The period of the Derg regime was the third period in the evolution of modern construction
industry. This had brought the evolving domestic private construction companies under state
control in 1982. Additionally, state-owned construction companies were established. Due to
this, opportunity for the creation of a competitive construction industry in the country decline.
However, the capacity of Ethiopian Road Authority (ERA) increased and monopole the road
construction activities. The government construction companies were carried out Construction
projects those award contracts without any competitive bidding. The fourth period starts from
the time the EPRDF-led transitional government of Ethiopia/ May 1991/.

8
Due to Economic management has shifted from command to a free market system private
construction companies have been introduced (EEA, 2006/07).

Currently, the construction industry is being given special focus in the policies of the country.
The construction industry is one of the three sectors of the economy identified by the Ethiopia
government for special consideration to foster the country’s economic
development. However, the general state of the domestic construction industry in Ethiopia is
still characterized by inadequate capital base, old and limited numbers of equipment, low
levels of equipment availability and utilization, deficiencies in technical, managerial, financial
and entrepreneurial skills, limited experience and participation of the private sectors in
construction and consultation works, and insufficient and ineffective use of labor-based road
construction and maintenance technology. (Wolde. 2017)

The construction industry value added to the total GDP share capacity was less than 9.7 times
on the contribution of the agricultural sector to the GDP for the same period. For instance, in
the period 1996/97-2006/07 was on average, 4.6 percent of the total GDP is covered by
construction sector. Marginally, the share of construction has increased in recent years. Also
during the recent five years (2002/03-2006/07) the share increased to 5.2 percent – about 1.1
percentage point mark up from the previous five year period. This indicates the recent ongoing
extensive construction activities in the country (EEA, 2006/07).Also the construction industry
and infrastructure in the federal democratic republic of Ethiopia is characterized by a large
number of micro-entrepreneurs, the majority of whom operate in the country’s informal
economy.

Ethiopia’s construction sector comprises indigenous and indigenized firms, as well as

numerous major foreign civil engineering and construction companies. During the past decade
hearty public and private expenditure on infrastructure and other construction works has
served as a catalyst for Ethiopia’s rapid economic development. The country has consistently
invested more than 30% of GDP into Gross Fixed Capital Formation (GFCF) expenditure
since 2010 and as a result, Ethiopia has included as one of the fastest-growing economies in
the world.

9
According to the 2017 edition of African Economic Outlook, construction activities in
Ethiopia accounted for 15.9% of GDP at current prices during the 2015/16 fiscal year. This
include the conditions in the local sector and details current construction projects including the
Grand Ethiopian Renaissance Dam, the largest project under construction in East Africa.(c.
veitch, 2018).

Beside of creating employment opportunities especially in urban areas is becoming visible.

According 2005 labor force survey Out of Ethiopian employment 1.4 percent was included in
this sector. Though there are direct and indirect revenues that are generated from the
construction industry. the rental income tax is one of the major revenue sources which was
Birr 15.2 million in 1997/98 has increased to Birr 78.3 million in 2004/05 but lowered to Birr
32 million in 2005/06 generating nearly half a percentage point of the total government
revenue in the period 1997/98-2005/06. The total spent on construction activities from
government budget has increased from Birr 4.7 billion in 2003/04 to Birr 7.0 billion in
2004/05 and further to Birr 8.5 billion in 2005/06 predicting an average annual increase of
34.4 percent over the year (EEA, 2006/07). These operate in the different sub-markets
characterizing the construction industry.

2.2.2. The Performance of Ethiopia Construction Industry

According to report on Ethiopian economy, the Performance of the construction sector is
assessed in terms of its gross value of production, gross capital formation and value addition,
employment generation among other parameters.

When development of the construction industry can be measured using its Gross Value of
Production (GVPC). The GVPC, at constant market price increased from Birr 7.6 billion in
1996/97 to Birr 18.9 billion in 2006/07 depicting an average annual growth of 9.6 percent over
the period. (EEA, 2006/07)

Any construction project involves risk and the impact it causes can be very critical in
developing countries like Ethiopia. According to Hillson (2009), the most important thing that
can be done in projects is make sure that the inevitable risk associated with every project is at
a level which is acceptable by the organization and is effectively managed.

10
This statement implies that different organizations have different risk acceptance levels and
Ethiopia as a country or the organizations involved in construction can only afford to accept
small levels of risk due to their low capital. This implies risk management is especially
important in developing countries to avoid loss and make the projects more successful. The
Ethiopian construction industry consists of different types and size of firms. But, the average
contribution of construction in the national economy of Ethiopia, though less than 12 to 14%
in Japan and Korea (Gann, 2000), is comparable to some countries, such as India, for instance,
which was 5 percent in 2005 (Leonard, 2006). The other construction capacity measure is the
number and level of domestically operating national contractors. As per the available
information there were about 2671 contractors in 2005/06, of which road contractors, general
contractors and building contractors are 9, 1570 and 1092 respectively. This calls for
appropriate measures that strengthen the financial, technical and managerial capacities of
domestic contractors so as to enable them to become competitive in the market (EEA,
2006/07).

Budget overruns, schedule delays, poor quality, low customer satisfaction, and weak
productivity development. These are the words that have been, and still are, often
used to describe the construction industry, whatever the referenced country may be.
Despite the efforts of the construction practitioners in the field and scholars in
multiple disciplines, these challenges are far from being settled. (Alves, 2012)Also in Ethiopia
different researchers approved that including Getaneh (2011) states that the performance of the
local construction sector, construction management and contract administration practices do
not meet the standards stipulated in contract provisions. Fetene (2008) also states poor project
management, cost underestimation, time-delay, late site hand over and contractual provisions
among others are causes for cost overrun.

2.3. Construction Procurement

2.3.1. Introduction
The term Procurement Process is used to describe the process required to supply service,
equipment, materials and other resources required to carry out a project.

11
This process usually involves sub-processes such as acquisition, purchasing, logistics,
monitoring, quality assurance and contract administration (Stuckhart, 1995). Procurement is a
process of selecting individuals or organizations to carry out the intended services and / or
works. (Clough, 1996). Procurement means the purchasing, hiring, or obtaining by any other
contractual means of goods, works and services (PPA, 2011).A procurement system (or
sometimes known as delivery system) “is an organizational system that assigns specific
responsibilities and authorities to people and organizations, and defines the various elements
in the construction of a project” (Love.2022). Hughes (2005) defines Procurement as a process
that spans from identification of needs through to the end of a services contract or the end of
the useful life of an asset. It includes the design and delivery of those works, products or
services, the assessment of their quality, and the evaluations and reviews that will lead to
further procurement. Additionally, the word Procurement derived from the word ‘procure’,
which literally means “to obtain by care or effort”. Construction procurement has been
described as organized methods or processes and procedures to obtain or acquire construction
products (Abdul, 2006:92).
Procurement can be done strategically to identify the best way of achieving the objectives of a
construction project and value-for-money, taking cognizance of the risks and constraints,
leading to decisions about the funding mechanism and asset ownership for the project.
Construction Contract procurement strategy is help to achieve the optimum balance of risk,
control and funding for a particular project (Thomson & Jackson, 2007).Construction Contract
procurement for organizational structure it needed to design and build construction projects for
specific clients. An appropriate contract procurement strategy, typically developed during the
‘evaluation’ or ‘definition’ phases of a project, is a key determinant of successful project
delivery as it is more than just a high-level plan, it details, practically, The recommended
delivery model to be deployed in delivering a project while it also provides clear justification
for use on a value for money basis (Casey &Bamford, 2014).
By adopting an appropriate construction procurement method, clients can expect to achieve
best value for money outcomes as risks will be most effectively managed and the occurrence
of contractual disputes, cost and time overruns, as much as possible, will be
minimized.(Hughes, 2006).

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In the construction sector, contract procurement has become a complex matter. This is because
it refers not only to what is bought, but also to a diverse array of methods for acquiring a vast
range of construction products. Before developing a general view of the difference in contract
procurement methods, it is advantageous to identify the main features of existing procurement
approaches. Contract procurement practices in construction, generally speaking, are quite
diverse and complex in the sense that it is quite challenging to outline the various
arrangements available (Akram.2012).Construction Procurement procedures potentially
causing many problems in all stages of the buying process and hence procurement procedures
are one key improvement area and can contribute substantially to project success (Eriksson,
2007)

2.3.2. Bid Evaluation in Public Construction Project

Initially, Evaluation can be defined as American Association of Evaluation (2006), assessing
the strengths and weaknesses of programs, policies, personnel, products, and organizations to
improve their effectiveness. Evaluation is a very critical phase in the biding process involving
many activities such as receiving, opening, examination, comparison and classification of
bids, reporting and Public Procurement as a function of government includes decisions about
the services that will be delivered to local authorities and the communities they serve (Hughes,
2005). According to current researcher George (2013) states that from total of 30 factors that
influence procurement process significantly influencing whereby, 40% are related to bid
evaluation and qualification criteria. The first step in the evaluation of bids is the public
opening and reading of offers in the presence of all competitors. At this stage the names of
bidders offering bids are read out as written and recorded, with a general check on establishing
conformity with instruction to bid, completeness of bids, validity of bid, and check on the bid
security.
Next to this the client/consultant then starts the formal bid evaluation process (Akram,
2012).This qualification processes requires the development of necessary and sufficient
criteria. Qualification is a process used to investigate and assess the capabilities of the
contractors to carry out a job if it is awarded to them.

13
This is the approach most currently used by many countries and in which many and different
types of criteria are considered to evaluate the overall suitability of contractors. Contractor
qualification involves a screening procedure based on a set of criteria set forth by each
individual owner.

Evaluation criteria should be identified and set in the early stages of planning. The use of
selection criteria helps to ensure objectivity in assessing suppliers. Further, they act as a risk
management tool by identifying any weaknesses that a certain contractor or proposal may
have. Qualitative criteria can be scored on a weighted evaluation matrix. (Casey &Bamford,
2014).The bid evaluation process applies weighted scores for skills, quality, experience and
previous performance. According to different literature the most common criteria are:-

a) Financial Stability: Basically this criterion involves evaluating the financial condition of
each candidate contractor.(Casey &Bamford, 2014).
b) Experience: This criteria has been used in regular use for prequalification but has been
called by different names like past project performed, past performance, experience etc.
This involves evaluating the candidate contractor’s project records to determine whether or
not he has handled jobs of similar scope and complexity in the past or currently. (Casey
&Bamford, 2014).
c) Current Work Load (Capacity): This criterion also sometimes called as current projects on
hand involves the evaluation of the candidate contractor’s manpower, equipment and
financial resources vis-à-vis his ongoing work projects to determine if his current
commitment can impact this performance on the project for which he is being currently
prequalified. (Casey &Bamford, 2014).
d) Management and Manpower Qualification: Also known as experience of key personnel, it
is concerned with the qualification and skill of the management (administrative staff and
Engineering professionals and labor crew.
This is important as (Clough and Sears, 1994) remarked that the financial success of a
construction enterprise depends almost entirely on the quality of its management. (Russell,
1991) contended that 8 out of 14 projects studied failed because of lack experience of the
management and technical staff.

14
e) Contractor Organization: This seeks to evaluate the effectiveness of flow of information
and decision making process among the different levels of the company. (Birrell, 1985).
f) Knowledge of Geographic Location of Project: The lack of knowledge about the
geographic location, environment and local conditions of a project can be a reason for
contractor’s failure (Russell 1990). Lack of knowledge about the location increases the
contractor’s risk exposure and the probability of disputes arising.
g) Equipment Resources: Availability of equipment and their maintenance program are major
factors affecting contractor performance. In this criterion the available resources in terms
of personnel, plant and equipment are evaluated. Equipment cost control (maintenance,
repair and replacement) is an important element of contractor’s failure (Russell, 1990).
h) Procurement and Material Management: With material cost ranging between 30 to 60% of
total building project cost, procurement and material management are evidently essential
to project success. Contractor’s Procurement expertise and material management skills
will result in on-time delivery avoiding delay as well as the additional cost for storage and
double handling of early material delivery. (Russell, 1990)
i) Safety Record: Accidents at construction sites may not only result in a loss of life but also
result in increased insurance premium rates on the subsequent projects by the same
contractor. It also results in a loss of goodwill. The selection of a contractor with a good
safety record can minimize construction accidents and thereby save construction costs
(Gobali, 1994).
j) Claim Attitudes: This is a measure of trust and cordiality in the relationship between the
owner and contractor. Cooperation and coordination between the parties will lead to
reduced interface problems, delays and consequently cost. Past experience of contractors
can indicate their tendency towards litigation. Owners should avoid contractors who are
inclined to litigation as a way of making profit.
Hence, as part of the criteria the owner shall include the litigation history of the contractor
where the award decisions become against the contractor. (Russell 1990)
k) Quality Program: A quality program in place always increases the chances of a better
finished project. Hence Russell (1990) has included the existence of a quality program as a
criterion in the prequalification process.

15
Evaluation team would follow accordance with the relevant regulations, rules and procedures,
using the evaluation criteria and method pre-determined in the solicitation document in order
to conduct a fair and unbiased evaluation (UN, 2006).

2.2.3. International Practice of Bid Evaluation

For this research reviewing different contractor selection approaches practiced by various
clients around the world and identifying their relative strengths and weaknesses will be useful.
The following developed country practices are strongly based on prequalification criterion.
In USA, Many public clients use several prequalification ratings and these ratings are applied
to identify parameters such as the maximum dollar amount of work that can be allocated to a
prequalified bidder during the prequalification period and the maximum value of work that a
contractor can bid for a particular project. Based on evidence of wide efforts and research,
aimed at structuring and improving contractor prequalification

Contractor prequalification in UK in the construction industry can be classified into two

categories, that is, periodic prequalification for developing a standing list of contractors and
project prequalification for developing a project. The main difference between them is the
timing of evaluation and the detailed level of contractors’ data obtained. Periodic
prequalification, which can be used by a client for short listing or invitation to bid, is carried
out for certain periodic time frame. It has been found that standing lists of contractors in the
UK were reevaluated annually, or every 2, 3 o r 5 years. UK procurement regulations apply
the qualification principle to test the ability of bidders to perform the work required. The
contracting authority is required to list the qualification factors in the bid notice. The
qualification process acts as a green light or signal for bidders to be allowed to enter the
procurement process, and is required in the early stage of the tendering process.

The bidder who possesses full technical and financial capabilities may be selected as the
contractor (Mangitung and Emsley, 2002).

Also in Hong Kong prequalification practices that require only contractors on the approved
lists can bid for contracts.

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They are categorized into five categories (buildings, port works, roads and drainage, site
formation, and waterworks) according to their relevant expertise and managed by the relevant
Works Departments. The lists of approved contractors are in three groups (A, B and C) based
on their capacity. There are also two status levels termed `probationary' and `confirmed' in
each group. The confirmation after probation relies on the satisfactory completion of works
with good performance records. The promotion of contractors to a higher group depends on
meeting requirements of financial criteria, appropriate technical and management capabilities,
and continuous satisfactory completion of contracts under the present group. The lists of
approved contractors are published annually, and the amendments are published from time to
time. Every department keeps separate approved lists of contractors. The relevant Works
Department manages the respective category of contractors. (Palaneeswaran and
Kumaraswamy , 2001).

Australia government has followed defined system which called Prequalification Criteria
(PQC). All concerned contractors will have to be prequalified and registered on this system,
which is managed by the Department of Public Works and Housing, Queensland, Australia.
Contractors are evaluated against prescribed criteria including technical capacity, management
approach, business relations, and people involvement with commitment to continuous
improvement. The (PQC) is designed with the aim of streamlining the process of contractor
selection by ensuring a good match between the size and complexity of projects and the
abilities of contractors (Palanees waran and Kumaras wamy, 2001).

In Canada, especially in the public sector, the “lowest bidder” is selected, but a tender bond in
an amount equal to 10% of the tender price also has to be provided. In Scotland, it is a policy
to award contracts on the basis of Most Economically Advantageous Tender (MEAT),
evaluating both the price and quality of the tenders submitted. Quality can include a number of
factors including technical merit and functional characteristics (Scotish, 2008).

The French practice however, excludes tenders which appear to be abnormally low. In all
cases, tender prices are the sole basis for contractor selection and competition cited in (Zedan
and Martin, 1998).

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However argues that, governments are not and should never be obliged to accept the lowest
tender. Good reason may exist why the lowest tender should not be awarded. There may be
doubts, for instance, on the quality of product or service offered by bidder (Ngobeni, 2011).

According to the Procurement Procedures Manual of Nigeria (2011), the successful bid shall
be that submitted by the lowest evaluated cost bidder from the bidders responsive as to the bid
solicitation, but need not necessarily be the lowest bidder provided. Similarly, The Public
Procurement Act 663 of Ghana also states that, the lowest evaluated tender is selected and
recommended for the award of the contract. (Zedan and Martin, 1998).Based on the above
discussion many countries have introduced modifications, involving clearly defined
procedures for tender evaluation, to this lowest bidder criterion.

2.3.3. Bid Evaluation Practice in Ethiopia

2.3.3.1. Legal Background

Article 2610 of the civil code of Ethiopia defines a construction contract as “a contract of
work and labor is a contract where by one a party, contractor, undertake to produce a given
result, under his own responsibility, in consideration of a remuneration that the other party, the
client, undertakes to pay him.” In Ethiopia one of the eligibility requirements for contractors to
form contract is registered and licensed by Ministry of Construction and Urban Development.
The requirement for licensing and registration may vary from country to country. The present
rationale for licensing of contractor in Ethiopia is to ensure that applicants for a project have
the necessary capacity and capability. For contract work in other country this requirement is
meeting through the prequalification process. This requires information on the current status
and past performance of the contractor. The procedures of registration and issuance of graded
license relay on ownership of relevant equipment and number of staff.

These criteria for licensing and registration relate neither to past performance nor to the
contractor ability to lease or hire equipment, thus making it difficult for contractor with sound
technical and financial performance in other field, to enter new market (Cristian and Zewdu,
2009).

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The Minister registered contractors annually by grouping into three (Building, Road and
General Contractors) according to their relevant expertise. There are ten grades which are
categorized based on the construction cost of the project. Then each client has been set criteria
based on the specific requirements of each projects (MoWUD).According to federal public
procurement directive /2010/ “Bid” means a stage in the procurement process extending from
advertisement of or invitation to bid up to signing of contract. A public body must be prepared
procurement plan with a given content, approval and amendment and annual publication plan.
Any criteria applied in making procurement decisions must be made transparent to all
concerned parties. (Article 2/4/).The Federal Government of Ethiopia has statutes requiring
submission of competitive bids for construction projects. This statute requires public
organizations to award such contracts to the lowest evaluated bidder and found responsive
where responsiveness measures whether the bidder adequately meet the minimum qualifying
criteria set forth in the bid document. Such minimum qualifying criteria includes:-

i. Average annual volume of construction work (annual construction turnover)

ii. Experience as a prime contractor in the construction of similar contracts,
iii. Proposal of the timely acquisition of equipment (own, lease, hire, etc.)
iv. Personnel with specific qualification and experience
v. Liquid assets and/or credit facilities net of other contractual commitments and
exclusive of any advance payments which may be made under the Contract
These are the major qualification criteria stipulated in the tender document. In addition, a
consistent history of litigation or arbitration awards against the applicant or any partner of a
Joint Venture and non-performance of the contractor may result in disqualification. The detail
is determined by the nature of the construction project. According to the proclamation No
649/2009 article 43(3), the public body regards a bid as responsive only if it conforms to
salient requirements set forth in the bidding document. The Federal Public Procurement
Directive states that the criteria selected for conducting evaluation shall be objective and that
can, as far as possible, be expressed in monetary terms in respect of achieving maximum value
for money, ambiguous requirements are not acceptable and thus should not be used by the
employer and the criteria should not be unfairly discriminatory.

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According to federal public procurement directive /2010/ Procurement process ensure the staff
and head of the procurement unit have the required educational qualification, experienced in
the field, meet high ethical standards and responsible for authority and internal system (Article
5).According to procurement and property administration proclamation NO 649/2009, Any
candidate also has the responsibility of an intention to influence the decision or action of the
head or staff member of the public body to change its established practice of procurement and
property disposal, not to give directly or indirectly gift of any kind in the form of inducement,
not to promise to give gift, not to offer employment opportunity or anything of monetary value
or service, not to present a falsified document, not to convince with another candidate in an act
of false competition in order to get unfair advantage and report to the law of enforcement
agencies any intended or completed action of corruption which he come to know during the
procurement proceedings and contribute to the effort to fight corruption and malpractice.
According to federal public procurement directive /2010/, after the successful bidder is known,
it shall be stated in the bidding document that the quantity of goods to be supplied could
increase or decrease by 20% without the unit price offers for such goods or the term stated on
and conditions stated in the bidding document being changed.

2.3.3.2. Procurement Approved Methods

Standing from both federal public procurement directive /2010/ and property administration
proclamation No649/2009 the Following are the list of procurement approval methods:-

a) Open bidding: - Public bodies shall use open bidding as the preferred procedure of
procurement unless otherwise provided and the other method stipulated under
proclamation and procurement directive.
b) Restricted bidding:- public body may use A affirm that the required object or service
available only with limited supplier,
The cost of the total procurement does not exceed the entrance specified in respect of
restricted tendering in the directive to be issued by the minister and repeated
advertisement of the invitation to bid fails to attract bidders
c) Request for quotation: - the estimated value of the contract does not exceed an amount
stated in the procurement directive to be issued by the minister.

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 d) Single source /direct procurement/:- The only reason may public body use direct
procurement are when the absence of competition, when additional work is available
which have been not included in the initial contract, for new works consisting of the
repetition of similar works which an initial contract has been awarded on the basis of
open or restricted bidding, for continuation of consultant service, in which delay create
serious problem, where situation arise in which shopping becomes necessary to meet
the special procurement need of public procurement, and purchase of goods made
under exceptionally advantages conditions which only arise in the very short term.
e) Request for proposal: - Public body may conduct procurement by the way of request
for proposal when it seeks to obtain consultancy service or contracts for which the
component of consultancy services represents more than half percent of the amount of
the contract.
f) Two stage bidding: - When the condition of not feasible for the public body to
formulate detail specification for works and in the case of service.
2.3.3.3. According to Different Research

Ethiopian bid evaluation financial criteria based on; lowest price evaluated bid is selected and
recommended for the award of the contract. In different case the bids were awarded to the
least bidders whose offers were less than the average of all bidders price. There was no
engineers estimate for majority of the projects under the study. Only few projects’ engineers
estimate was higher than the winners’ offer. In most of the projects, the engineers’ estimates
were less than the average of all bidders offer. Due to this most of the projects have been
suffering in material and equipment shortages. Manpower shortage was also encountered in
many projects (laychluh, 20012).

Also According to (George 2013) awarding construction contracts is typically based on the
low bid method where the construction firm who fulfils the required qualification criterion and
submitting the lowest bid. He found that the existing evaluation and qualification criteria will
result in selection of unqualified contractor who do not have the capability, capacity and good
performance. This affects the overall performance and results in delays, cost overruns and
poor quality of projects.

21
In addition, incapable contractors as compared to the project scope might not have the
capacity to study the projects in detail before submitting their bids come up with unnecessarily
very low offer which results projects delays and poor quality.
Also other study shows that absence of minimum bid evaluation technical criterion and sub
criterions in the procurement manual has lead the public procurement unit’s to exercise
different scope of requirements for similar projects. As well as setting subjective criterion on
bid evaluation has become the most influential problem on the current bid evaluation and
contractor selection process non-residential public building projects. Absence of minimum
financially offer threshold on the public procurement regulation, projects are awarded to
abnormally low offer on least offer bases and apparently those projects are suffering financial
and quality problems. (fitsum, 2018). It is recommended to learn from the developed countries
experience and attempt to change the existing procedure in line with the development of the
country.

2.4. Bid Evaluation and Contract Delivery System.

Project Delivery, is “the process by which the aim or goal of a project is realized or achieved”.
Which means Successful project delivery must be supported by an appropriate contract
procurement strategy to ensure the essential works and/or services are not delayed or
otherwise poorly executed. (Casey and Bamford, 2013). Also project delivery system as the
way of project owners along with project regulators and financers determine the assignment of
responsibilities to project stakeholders along the construction process. It is often determined
during the basic planning phase of the construction project. Project delivery systems describe
how the project participants are organized to interact, transforming the owner’s goals and
objectives to finished facilities.

Generally, there are six types of Procurement and Contract Delivery systems. The party has to
select the right type of delivery system which incurs the smallest risk for his/her
project(Cristian and Zewdu, 2009).

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a) Design-Bid-Build Delivery Method (DBB):

DBB is the traditional method of delivery system. In this delivery method the designer
prepares a complete construction document for the client. The client then receives bids
from contractors based on the design documents and awards a construction contract to the
bidder. Some of the main criticisms of this method are lack of innovation, delayed
completion periods, and cost overruns (Ibbs, 2003). Also in this method, the client took
most of the risks of the design and the construction aspects, there need to be better
practices to assure the client’s requirements are met, including quicker project completion
times, and cost effective solutions.

b) Design-Build Delivery Method (DB): this type of delivery method the owner\client selects
an organization that will complete both the design and the construction of a project under
one agreement. The design-build delivery system was identified as offering, on average,
the best project performance (Marwa, 2004). In this method the main advantage is the
project period becomes shorter and errors and most of the risk is not passed to the owner.
The disadvantage includes the owner’s loss control during design and lack of designers’
representation of the owner’s interest and puts tremendous pressure on the owner to know
and clearly define criteria and quality at the very starting period.
c) Construction Management Delivery Method (CM): In this type of delivery method a
construction manager becomes an integral part of the team, at early stages in the
project, to oversee such elements as schedule, cost, and construction methodologies
and procurement strategies. CM method of project delivery is based on an owner’s
agreement with a qualified firm to provide leadership and perform management for a
defined scope of services. (Zewdu, 2009)
d) Design-Build-Operate-Transfer (BOT) Delivery Method: In this innovative delivery
methods a private company is responsible for the designs, construction, operation,
maintenance, and financing of the project for a specified concession period. The
contractor assumes the risks of financing until the end of the concession period. During
this concession period, the company collects revenues from operating the project to
recover its investment and to earn a profit.

23
 At the end of the concession period, ownership of the project is transferred to the
client/owner. Generally, there are different procurement delivery system chosen which
mainly depends on work done by the agency and the work that is contracted out to
consultant and/or construction contractors, degree of control the agency maintains over
how the work is done and the control transferred to contractors through contracting out and
assignment of risks associated with the project work undertaken by the agency and
contractors. Different procurement delivery system will have different effect on the cost,
time and quality of the project monitoring and control. Hence, selecting the suitable
project delivery based on the project strategy is crucial for successful completion of a
project (Zewdu, 2009 ).

2.5. Effects of Bid Evaluation Practice on Project Performance

According to (Clarke, 2004), performance is the accomplishment of a given task measured
against preset known standards of accuracy, completeness, cost, and time. The failure and
success of any project is influenced by numerous decisions made by, or on behalf
of, the client. Selecting a construction contractor is one of major decisions which may
influence the progress and success of any construction project (Bolumole, 2017). Success has
always been the ultimate goal of every activity, and construction project is no exception. Due
to the ambiguous definition of project success and the different perceptions of participants
towards this concept, it may be difficult to tell whether a project is successful as there is a lack
of consensus. Time, cost, human resources and materials to be used for construction project
have long been the success criteria used to evaluate the performance of any construction
project (Collins, 1996). The failure of any construction project is mostly related to the
performance problems and there are many reasons and factors which are attributed to such
problems.

Project performance can be measured and evaluated using a large number of performance
indicators that could be related to various dimensions (groups) such as time, cost, quality,
client satisfaction, client changes, business performance, health and safety (cheunget, 2000).

24
A key to achieving a sound social performance during the construction phase of capital
projects is to have high prequalification standards for social performance that encourage
prospective bidders to draw on their international experience in similar economic and social
host environments. The effectiveness of the construction contract procurement methods was
tested against key project parameters are project cost, time and quality and involved
construction stakeholder satisfaction (Bolumole, 2017).Financial shortage of client this shows
financial shortage is the main and major cause for poor performing contractors, which won the
project by lesser cost. Because in order to be the winner the cost must be lesser with other
bidders; this will be the challenge for contractors during execution of the project. The
Competitive average bidding winner price is closer to reasonable price, and helps for better
performance Both client and contractor are not beneficiating by lowest responsive contract as.
Financial shortage of contractors, Unreasonable (less) estimation of project cost, Awarding a
number of projects at a time for lower grade contractors, mismatching BOQ and design,
system of awarding by lowest responsive contract, Lack of initiative between the employees
were highly identified problems in building construction project sites. This creates dispute, the
quality of the project is compromised, and causes delays and failure of the project (Binyam,
Emera, Quezon, and Yolenteand Macarubbo 2016).

2.6. Contract-Award Procedures in Construction

Basically there are two types of bidding procedures which are competitive and negotiated. The
other procedures are either variation of, or somewhere between these two extreme types. In
pure competitive method, the contract is awarded to the least-bidder, if the bidder is found to
be responsive. In pure negotiated method the price is negotiated with a selected contractor. To
minimize the shortcomings of these two extreme types, modifications have been proposed and
tried in many countries (Irtishad, 1993). For this research, the following contract-award
procedures are considered:
i. Competitive Low Bidding (Price-based)
ii. Competitive Average Bidding (Price-based)
iii. Multi Parameter Bidding Method (Based on price and “other” factors)
iv. Competitive Negotiated Bidding

25
 v. Non-Competitive Negotiated Bidding
i. Competitive Low Bidding (Price-based)
Competitive bidding method is the most widely used for selecting contractors
in different construction projects. Also the public sector seems to be more comfortable with
this process because the bid evaluation is not complicated. In general, the purpose of price-
based competitive bidding is to obtain the lowest possible price. Competitive bidding believes
to give everyone an equal chance to bid, eliminates collusion, and saves taxpayers money. It
fosters honest competition in order to obtain the best work and supplies at the lowest possible
price. It is also necessary to guard against discrimination, imprudence, extravagance, fraud and
corruption. Its main advantage is that it forces contractors to continuously try to lower costs by
adopting cost-saving technological and managerial innovations (Sweet, 1989).

According Ethiopia property administration proclamation No 649/2009 there is a set of well-

defined criteria to help the officials determine that the bids are responsive and the bidders are
responsible. Under the competitive low-bid method, the qualified (responsive) bidder who
submits the lowest bid that meets the specifications must be awarded the contract. If a
contractor submits a bid that is significantly lower than the client’s estimate and the other
bidders, it is difficult to understand how that contractor could complete the job profitably
(Thomas, 2009).
The dark side of this traditional method is promoting inferior quality, causing too many
change orders, furthering adversarial relationships, time overrun, and increasing overall cost of
the project and Predatory pricing and unfair competition that distorts the market, negatively
affecting the other bidders . The competitive bidding process for awarding construction
contracts in Ethiopia is typically based on the low-bid method. According to this method, the
construction firm who is responsive and submitting the lowest bid receives the right to the
construction contract. (Photois, 1993).

ii. Competitive Average Bidding (Price-based)

In this method of awarding contracts is based on the principle that the best bid is which one
closest to the average of all bids, and not the bid which is highest or lowest.

26
Bids which fall too far below the mean are considered to be unrealistically underbid. Bids
which are much higher than the average are considered to be unrealistically overpriced.
(Irtishad, 1993). Different average-bid method use different procedures for calculating the
average, or use different criteria for determining the winning bid. For example, some use an
arithmetic average or a weighted average, while others use the average of the remaining bids
after all bids that differ more than a certain percentage from the average of all other bids are
eliminated. Similarly, the winner might be the contractor whose price is closest to the average,
or the contractor whose bid is closest to, but less than the average.
These methods are used mainly to ensure that the contractor is responsible, to avoid
contractor-failure, and to reduce disputes and claims. The underlying principle is that the
contractors should get a reasonable and realistic price for their work. It is assumed that with a
fair price they would conform to quality requirements of the project, would complete on time,
and would not have adversarial relationships with the consultant of the employer.
To address the problem of low-bid method is the possibility of awarding a construction
contract to a contractor that submits, either accidentally or deliberately, an unrealistically low
bid price. Often, such an occurrence works to the owner’s and contractor’s detriment by
promoting disputes, increased costs, and schedule delays, other countries have adopted the
average-bid method and award the contract to the contractor whose price is closest to the
average-bid method and explores its merits relative to the low-bid method (Photois, 1993). As
its advantage is that it safeguards an owner against signing a construction contract for an
unrealistically low bid price that almost certainly will lead to adversarial relationships during
construction and also pointed out that, under this method, contractors are protected from
having to honor a bid containing a gross mistake or oversight. (Ioannou et al, 1993) The basic
drawback of the average-bid method is that it does not necessarily promote price competition
that leads to lower costs for the owner. (Irtishad, 1993).

iii. Multi-Parameter Bidding Method (Based on price and “other” factors)

The other competitive method is based not only on cost but also suggest that the major
parameters should be cost, time and quality. Given that the amount of time a contractor
proposes to take to complete the project may have a major impact on costs.

27
Herbs man et al, 1992). In the Multi Parameter Bid Method, estimates of quality may be
measured by the type of materials proposed to be used, the previous experience/past
performance of the general contractor and the proposed subcontractors. Time and quality
concerns are each assigned a maximum attainable number of points. The bids are then
reviewed and ranked based upon these factors, as well as upon the contract cost. Other
parameters can also be added in this model as desired by the user. Bidders’ proposed project-
duration and past performance (quality of finished projects, safety records, etc.) can be
factored into come up with a “total combined cost” (Tarricon, 1993). The total combined costs
of all the bidders are then compared to select the best bid. Its advantage is buying time in order
to minimize those delays specially reconstruction of existing public facility. The common
denominator of all those procurement system is the ability of the contractor to procure the time
for completion of the project.

iv. Competitive Negotiated bidding

It starts from select group of contractors known to have the technical, financial and managerial
capability to complete a complex project. In such cases competitive price-based bidding may
not be appropriate. Pure sole-source negotiation, on the other hand, is very difficult to practice
in public sector since this process may easily lead to allegation of discrimination and
corruption. In order to avoid such problem many agencies and owners have using variations
that have in effect, features of both competitive and negotiated procedures. (Irtishad, 1993). In
making such determination, the public body shall conduct a detailed analysis of the cost of the
professional services required in addition to considering their scope and complexity.

The Ethiopian Federal procurement law allows restricted tendering provided that the required
object of procurement is available only with limited suppliers and the cost of the procurement
does not exceed the limit in the directive issued by the Ministry; or where a repeated
advertisement of the invitation to bid fails to attract bidders in respect of a procurement
subject to the directive to be issued by the Ministry. A typical example of this method is
request for proposal. Rank the participant for factors such as technical capability, project
schedule as well as cost.

28
These methods are usually employed when the project is planned to be built under a
design/build contract. Advantage of these methods save time, improve quality and reduce
number of claims. But the main points against this method are that the cost and time spent by
the contractor for preparing a proposal is higher; the system lends itself to a situation where
the contractor is reserved to propose any new or innovative ideas because they may not fit the
experience of preconceived ideas of the evaluators; contractors are required to disclose
confidential commercial and financial information that should not be released outside the
company; the owner may try to get cost-saving ideas from the competing contractors during
the interviews and yet may choose not to award the project to the contractor whose ideas
would later be utilized; and the processes of evaluation turns out to be subjective rather than
objective (Kelley, 1991).

v. Non-Competitive Negotiated Bidding

The procedure of this method is negotiating a bid with a single source, usually a preselected
contractor. The price to be paid, and the goods and services to be received by the owner are
usually the items of negotiation. The firm, that is known to have qualification and expertise,
can be chosen without any advertisement or notification, to save time but increases the
possibility of corruption.

According to Ethiopia property administration proclamation No 649/2009 direct procurement

is allowed when there is no competitions for technical reasons and if the required service can
be supplied or provided only by one supplier. Or when there is need of similar service or
repetition of works from one supplier and when the total contract value is not exceeding the
limit stipulated in the directives.

However, direct procurement is usually common in the form of variations in the construction
industry. The directive from Ministry of Finance and Economic Development limits the
volume of the additional requirements of works to procure directly to a maximum of 25% of
the initial contract volume.

29
2.7. Summary of Literature Review
The construction industry has both a direct and an indirect impact on a given national
economy. In this sector adopting an appropriate construction procurement method is essential
(Hughes E, 2006). Construction Procurement procedures potentially causing many problems
in all stages of the buying process and hence procurement procedures are one key
improvement area and can contribute substantially to project success (Eriksson, 2007). From
National practice procurement bid evaluation mostly starts prequalification of contractor
supported by updating clear capacity of contractor relating with project nature. In Ethiopia the
Minister register annually contractors by grouping into three (Building, Road and General
Contractors) according to their relevant expertise. Each group then categorized into ten based
on their capacity. Federal Public Procurement Directive/2010/ states that the criteria selected
for conducting evaluation shall be objective and that can, as far as possible, be expressed in
monetary terms in respect of achieving maximum value for money, ambiguous requirements
are not acceptable and thus should not be used by the employer and the criteria should not be
unfairly discriminatory (Article 19).

But, According to George (2013) states that from total of 30 factors that influence
procurement processes significantly influencing whereby, 40% are related to bid evaluation
and qualification criteria. Also laycheluh (2012) states that material shortage, equipment
shortage, cash flow shortage and manpower shortage are major factors that affect the
construction work progress and performance those are related bid evaluation procedure on his
research data. Absence of minimum bid evaluation technical criterion and sub criterions in the
procurement manual has lead the public procurement units to exercise different scope of
requirements for similar projects (fisum, 2018).

Based on the above research findings, this research mainly focus on searching additional effect
of current public bid evaluation process on project performance’s. A Pilot survey conducted in
the form of questionnaire and desk study.

30
CHAPTER THREE

3. MATERIAL AND METHODS

3.1. Introduction
The aim and purpose of this chapter is to outline the research method and material used utilize
in the study, to comment on how the research is controlled and monitored, and to ensure
validity and reliability of the research data and procedures associated with the subsequent
analysis and presentation of the data to explain how the objectives of this study can be
achieved. In addition, this section should describe the materials used in the study, explained
how the materials are prepared for the study, describe the research protocol, and explain how
measurements are made and what calculations were performed, and which statistical tests
were due to analyzing the data.

3.2. Description of Study Area

Generally, the study setting area is the projects executed in Ethiopia, south nation nationality
and people region (SNNPR). The specific settings area of the study is Hawassa city, Hawassa
city is the capital city of Southern Nations, Nationalities and Peoples Regional State
(SNNPR). The city is found in the South-East part of the country which is 275 km far from
Addis Ababa. Astronomically, the city is located between 38°24‟ - 38°33‟East Longitude
and 06 °54‟ - 07° 05‟ North Latitude and specifically located on the edge of Lake Hawassa.
The study is intended to assess the effect of the current bid evaluation process in the public
building project Performance of construction industry projects: the case of Ethiopia.

31
Figure 1: show Hawassa city map (Finance, 2019).

3.3. Research Design

The research plan, structure and strategy conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose designed in the following
procedure. The first one would be identifying and defining the problems. Establishment of the
objectives of the study would be the second procedure. Then after, search the literature review
included for detail search past work. And applied different methodologies collect the required
data. Analysis would be run by data management technique. Result and discussion of this
paper for desk study and a questionnaire was following the procedure. The last procedure of
the research includes conclusions and recommendations. In the following figure -1 each
procedure discussed.

32
 problem idntification
•low
low peroject performance that were relted to unsuccessful
contractor selection.

develop objective
•to
to asses effect of current bid evaluation practice on project
performance

review lietrature
•detail
detail search objective area related past works

design methedology
•set
set out the process of target group,sampling thecniqe,source
of data and the way of analaysis.

conclution and recomendation

•dicuess
dicuess the research finding

Figure 2: show flow of research design

3.4. Target Group

The target group was a public building projects those contract costs were
re above one million
ETB for the purpose of increasing the number of assessed projects. Also, those projects are not
completed in the year 2011 E.C.

3.5. Sampling Technique and Sample

S Size

In this paper applied sampling technique is a purposive method. According to Hawassa city
construction directive office data, the number of Hawassa city client were eleven those have
an incomplete project in 2011 E.C. From them selected sample 22 project those would be two
projects from each client.. The Participant groups were all parties related to those sel
selected
projects. Thus, client-side
side respondents are those who have been working on the tender
preparation and project follow up.

33
Consultant side respondents are professionals, who have been working at a position of contract
administration, a technical manager and general managers of public and private consulting
firms. The contractor side respondents are working at the position of general manager, project
manager, a technical manager, and office engineer.

3.6. Source of Data

Data collection methods selected for this study were both primary and secondary sources. The
questionnaire, desk study, datasheet and interview provide the primary data for this research
while the secondary data sources include; Books, Journals, previous researches, and internet
sources.

3.6.1. Questionnaire
Before the questionnaire develop interview could conducted on sampled three side
professional, Standing from the interview result the questionnaire should be designed in three
sections. Section I was about background information of the respondents, which helps to see
experience and exposure of the respondent that makes the research data trustworthy or
qualifying to precede further analysis. Section II was designed to collect bid evaluation related
information and to ascertain whether the listed factors are recognized by the bid evaluation
process participant. Finally, section III was designed to assess the degree of performance
effect and frequency of occurrence those listed factors on the current bid evaluation process.
Questionnaires would be analyzed in each section separately. Total of 81 questionnaires
distributed those fulfill sampling criteria.
3.6.2. Desk Study

This study also developed the desk study method of data collection. A desk study was
conducted to assess the case of Hawassa city, a public building project. In This desk study, 6
projects were selected purposively. Those selected project general statues on; not active, under
construction, terminated and on bid evaluation process from a different client. For more clarity
of the desk study, datasheet would distribute to selected project related professionals.

34
The datasheet was collect information about major difficulties encountered during the
construction, the financial and the physical status of the selected project. All selected projects
are listed on the following table.

Table 1: show Desk study project lists

N Project Name Special Client Status of the

O location project
1 Hawassa Haykdar sub office Haykdar sub Hawassa city Under
building city Administrative construction
2 Hawassa health department Mehal sub SNNPR state Not active
health centre building city health bureau
3 Hawassa city administration Mehal sub Hawassa city Under
G+5 police office building city police construction
4 Mesrak (G+2)shopping Mesrak sub Hawassa city Not active
centre building city trade and
industry
directive
5 Gudumale primary school Haykdar sub Hawassa city Terminated/On
G+3 building city administration second round
education bidding/
directive
6 Bahiladarash sub city tax and Bahiladarash Hawassa city On bidding
revenue office building sub city revenue process
authority

3.7. Data Analysis and Management Techniques

Questionnaire surveys have been conducted to gather the required information from
professionals. For each of the variables of delay, cost overruns and quality problems
respondents were requested to indicate the degree of impact and frequency of occurrence.

35
The degree of impact and the frequency of occurrence have been categorized into five scales.
Before start analysis, weightings have been assigned for each factor.

The procedure used in analyzing data aimed at the contribution of each of the determinant
factors on bid evaluation was examined and was processed with a simple statistical approach;
examining, tabulating and categorizing based on the rank of relative importance index value
by using Microsoft office excel (2007). To determine the ranking of different determinant
factors from the viewpoint of client, contractors and consultants with respecting project
performance parameters. The Relative Importance Index (RII) was computed using the RII
Equation.

∑ ∗ ∗ ∗ ∗ ∗
= = …………………………..equation 1
∗

Where, W = Weight given to each factor by the respondents

A = Highest weight (i.e., 5 in this case)

n1=, number of respondents for none

n2 = number of respondents for low,

n3 = number of respondents for medium,

n4 = number of respondents for high,

n5 = number of respondents for very high

N = the total number of respondent

The data which would be collected through desk study and part of the questionnaire would be
analyzed in relation to the theoretical propositions developed during the literature review of
the study. After the data analyzed, results were discussed. Finally, research conclusion and
recommendation drew.

36
CHAPTER FOUR

4. RESULT AND DISCUSSION

4.1. Introduction
This section of this paper should be broadly categorized in two sections. The section of Project
desk study part, compile with selected project bid evaluation criteria and result. Within this,
each project discussion and finding would be supported by datasheet result. Under The
questionnaire section of the paper the result of the three construction parties view have been
discussed. The analysis parts run with RII result of those defined factor. Standing from, the
results and discussion the researcher set points of finding to meet researcher objective.

4.2. Project Desk Study

According to Hawassa city construction directive office report above 200 million ETB from
the 2011 E.C annual budget is consumed by the public building projects. The client of
Hawassa-city building projects has a different department. The Municipality and urban
development, education, police, health, revenue, trade and industry, Youth & Sport,
Agriculture department, Security & Administrative, Hawassa city Administrative, Hawassa
city Transport & road and Hawassa city higher court have been included. All of them use one
loop finance system administration for the procurement process. The Selection of capable
contractors is one of the major activities run by Hawassa city administration finance and
economic development directive for those the above-listed department.

The consulting activity of any construction project is done by this municipality and urban
development /city construction directive/. Designing, tendering and supervision should be the
responsibility of these sector professionals. During tendering the duty of this sector is to
provide engineering estimation and participate in bid evaluation. The first step of the Bid
evaluation process is opening the technical document to differentiate fail and pass candidate.
The result is announced with a different ways of the organization’s choice. If there is no
objection the financial document is open with the attendance of every candidate delegated
person. The financial evaluation would conduct for technically responsive candidates.

37
Six projects were selected for desk study purposes. In this desk study, the researcher checks
numbers of project bid evaluation document are not properly associated with the given
desirable file. However, the selected project bid evaluation process would be discussed.
Technical evaluation criteria, Technical evaluation result and financial evaluation are
included. For more, clarification each project evaluation procedure discussed in the following
manner.

4.2.1. Hawassa Haykdar Sub Office Building (Project One)

From desk studied project Haykdar sub-city office building project considered as the first one.
Bid evaluation information here in appendix I (table 14, 15, 16 and 17). This project technical
evaluation criterion contains five general and sixteen sub-criteria. The general experience
evaluates only the past experience that not includes work on hand, might contractor capacity
not capable to an additional project. The contractor past experience would be two projects not
less than 1.5 million ETB with 3-year experience, the total cost of the project not always
indicates the nature of project complexity. The Site visit and way of methodology part did not
include safety and environment, Material delivery plan, Quality assurance and control
procedures. The third evaluation criteria are personnel, which include Project manager, Site
engineer, Office engineer, Forman. But, the required number of listed professional is not
acquainted. Electrical engineers, surveyor and bar benders are not included. The required
equipments are a dump truck, vibrator, concrete mixer and compactor. The loading capacity of
the dump truck and concrete mixer is not clear, also vibrator and compactor capacity.
Evaluation for financial capacity of contractor is based on Average annual turn over 3 million
ETB for the last three years, Audit report and Unconditional 3 million ETB credit facility.
Annual turnover not clear that certified or not by the appropriate revenue authority. Then the
above detail technical evaluations compile, the cumulative result should be announced, the
result which has above 70% is passing and below 70% is fail. Each criteria point value is not
considered but check only the total point /cumulative/ for each contractor. If the candidates
pass the technical evaluation have a chance for financial evaluation. No matter the rank of
technical result already equal for financial evaluation. Any candidate has a high score for
technical evaluation noting for contract awarding system.

38
The financial evaluation based on the lowest responsive bidder is the winner. The technical
result of the winner is 80% and financially the lowest responsive price to other candidates. But
the winner was not scored high in technical criteria.

From the datasheet the general status of the project is under construction. The project is
delaying for above two years with technical status 5% and the financial status no interim
payment (advance payment 30%). Cash shortage was Major challenge Encountered during the
Construction Progress.

4.2.2. Health Department Health Centre G+3 Building (Project Two)

All bid evaluation information of health department building was found in appendix I (table
18, 19, 21 and 21). In this project, technical evaluation criteria contain five general and sixteen
sub-criteria. One of the general experience sub-criterion was two projects not less than 4
million ETB. This criterion is not clear for the past experience or not on-hand projects. The
total cost of the project not always indicates the nature of project complexity. It can be better
using other criteria for understanding the experience of project complexity. The Site visit and
way of methodology part do not include safety and environment, Material delivery plan,
Quality assurance and control procedures. The third evaluation criteria are personnel, which
include Project manager, Site engineer and Office engineer. But, the required number of listed
professional not instruct. The required equipment includes dump truck, vibrator, concrete
mixer and total station. The loading capacity of the dump truck and concrete mixer is not
clear, also vibrator capacity. Evaluation for financial capacity of contractor is based on
Average annual turn over 3 million ETB for the last two years, Audit status for two years and
Unconditional 500,000 ETB credit facility. Annual turnover is not clear is that certified or not
by the appropriate revenue authority. Then the above detail technical evaluations compile, the
technical result would be announced, the point which has above 70% is passing and below
70% is failing. Each sub-criteria point value is not considered but check only the total result
/cumulative/ for each contractor. If the candidate qualified for the technical evaluation have a
chance for financial evaluation. No matter the rank of a technical result, already equal for
financial evaluation.

39
Any candidate has a high score for technical evaluation result noting for contract awarding
system. The financial evaluation based on the lowest responsive bidder is the winner. The
technical result of the winner is 72% and financially the lowest responsive price to other
candidates. But the winner was not scored high in technical criteria.

Based on the datasheet the project is not active and delay for two years after the completion
date. With the physical status 75% and the financial status 51 %( 30% advance payment is not
included). Cash shortage was the major challenge encountered during the construction
progress.

4.2.3. Hawassa city administration G+5 police office building (project three)
This project technical evaluation criterion contains five general and twenty-two sub-criteria
(appendix II table 22, 23, 24 and 24). Adequacy of technical criteria in responding to the
schedule requirement include Technical approach and methodology, Work plan and
scheduling, Organization and staffing and Site visit confirmation letter but, not include safety
and environment, Material delivery plan, Quality assurance and control procedures. The
general experience evaluate only the past experience not include work at hand might be the
contractors capacity is not a capable additional project. The contractor past experience would
be Two projects not less than 4 million ETB with 5-year experience, nothing was discussed
about the upper and lower closest value. The total cost of the project not always indicates the
nature of project complexity. The third evaluation criteria were qualification and competence
of the key professional staff engaged in the works, which include Project manager, Site
engineer, Office engineer, electrical engineer, sanitary engineer and Forman. But, the
experience of the listed professional and the required number is not defined. Surveyor and bar
bender is not included. The required Equipment types and characteristics are Dump truck 12
m3 and above 2, Excavator 0.25 m3 and above 1, Loader 1.6 m3 and above 1, Crane 30m,
Concrete mixer and Roller with vibrator capacity 5-8 ton at least 2.

40
Evaluation for financial capacity of contractor is based on the peak annual turnover calculated
as total certified construction work payments received for contracts in progress or completed
within the last five year (2004-2008) EC must exceed ETB 70 million (seven million),

The submitted value shall be accepted only if it is verified with supporting evidence by
external auditors and revenue agency and The bidder must demonstrate access to, or
availability of financial resources such as liquid assets, unencumbered real assets, lines of
credit and other financial means, other than any contractual advance payment ETB 15 million.
Then the above detail technical evaluation compile, the result is announced the point which
has above 70% is a pass for financial evaluation and below 70% is failing. Each criteria point
value is not considered but check only the total point /cumulative/ for each contractor. If the
candidates pass the technical evaluation have a chance for financial evaluation. The financial
evaluation based on the lowest responsive bidder is the winner.

The technical result of the winner is 75.5% and financially the lowest responsive price to other
candidates. But the winner was the least score in technical criteria. Based on the datasheet the
project is not active for the last five month and delay for one year after completion date with
physical status 7% and the financial status 15%. Cash shortage was the major challenge
encountered during the construction Progress.

4.2.4. Mesrak (G+2) Shopping Center Building (Project Four)

Project four technical evaluation criteria contain five general and sixteen sub-criteria; detail
information on appendix II (table 26, 27, 28 and 29).One of the general experience sub-criteria
should two projects not less than1 million ETB. This criterion is not clear for the past
experience or on-hand project. The total cost of the project not always indicates the nature of
project complexity. It can be better using other criteria for understanding the experience of
project complexity. The Site visit and way of methodology part do not include safety and
environment, Material delivery plan, Quality assurance and control procedures. Available
personnel would include in the third evaluation criteria, which include Project manager, Site
engineer, Office engineer, Forman. But, the required number of the listed professional was not
acquainted. Electrical engineers, sanitary, surveyor and bar bender are not included.

41
The required equipments were a dump truck, vibrator and concrete mixer. The loading
capacity of the dump truck and concrete mixer is not clear, also vibrator capacity.

Evaluation for financial capacity of contractor is based on Average annual turn of 1 million
ETB for the last two years, Audit status for two years and Unconditional 100,000ETB credit
facility. Annual turnover is not clear certified or not by the appropriate revenue authority.
Then the above detail technical evaluation compile, the result was announced above 70% is a
pass for financial evaluation and below 70% is failing. Each sub-criteria point value is not
considered but check only the total point /cumulative/ for each contractor. If the candidates
pass the technical evaluation criteria got to financial evaluation. The financial evaluation
based on the lowest responsive bidder is the winner. And also, an 82% score of the winner
technical result was not higher than the remaining candidates.

The datasheet result of this project show that the general status of the project is under
construction the project is delay for above two years with physical status 38% and the
financial status 37%.Cash shortage was a major challenge encountered during the construction
Progress.

4.2.5. Gudumale Primary School G+3 Building(Project Five)

In this project the first step of technical evaluation criteria was technical plan. It includes a
technical approach and methodology, Work plan and scheduling, Organizational staffing and
Site visit letter (appendix II table 30, 31, 32 and 33). This methodology criterion does not
include safety and environment, Material delivery plan, Quality assurance and control
procedures. The required experiences are General experience in five years and Specific
experience at least 7 million ETB with one project. The total cost of the project may not
always indicate the nature of project complexity. It can be better using other criteria for
understanding the experience of project complexity. The third evaluation criteria are the key
personnel, which include Project manager, project engineer, Surveyor, Forman and Steel
structure engineer. But, the required numbers of the listed professionals were not acquainted.
The requirement of a steel structure engineer is not clear. Electrical engineers, surveyor and
bar benders are not included.

42
The required equipment is dump truck 12-16 m3, concrete mixer and pick up. The loading
capacity of the concrete mixer is not clear.

Evaluation for financial capacity of contractor is based on Average annual turn of 5 million
ETB for the last five years, the Audit report for 5 years and Liquid asset 1.5million ETB.
Annual turnover is not clear certified or not certified by the appropriate revenue authority.
Then the above detail technical evaluations compile, and the result is announced as the point
above 70% is passing and below 70% is failing. Each criteria point value is not considered but
check only the total point /cumulative value/ for each contractor. If the candidate qualified the
technical evaluation has a chance for financial evaluation. Any candidate has a high score for
technical evaluation noting for contract awarding system. The financial evaluation based on
the lowest responsive bidder is the winner. The winner technical score 84% would medium
score relative to the candidates.

The datasheet showed that the general status of the project is on second-round bidding. The
project is delay for above two years with physical status was terminated at 21% /without
advance payment/ and the financial status21.44%. The client and the first contractor breach
the contract with negotiation. The project is transferred to Nefetalem general contractor
3,393,636.28 amounts of birr and the client loss 258, 433.00 amounts of birr. Cash shortage
was Major challenge Encountered during the Construction Process.

4.2.6. Bahiladarash sub city tax and revenue office building(project six)

This project bid evaluation is done after SNNPR procurement procedure modified. Technical
evaluation criteria have five general and twenty-four sub-criteria (appendix II table 34, 35, 36
and 37).The first technical criteria were proposed work methodology include Project approach
and construction methodology, Safety and protective measure, planned work schedule,
Material delivery plan, Manpower and equipment utilization plan, Quality assurance and
control procedures and Site visit. The general experience in the field of building construction
and the bidder has successfully completed at least one contract equivalent with the budget of
the project in the past five years [2006-2010].

43
Secondly Essential equipment were Dump truck 16-18 m3 [2pcs], Concrete mixer 500L and
above [2pcs], Pick up [1pcs], Metal scaffolding 320 m3, , Metal formwork , Concrete vibrator
[1pcs], Loader baket size 1.5 m3 [1pcs] and Compactor [1pcs]. The Required key personnel
are Project manager [1][general-6/relevant-3], Office engineer [1] [general -6/relevant-3], Site
engineer [1] [general -4/ relevant -2], Electrical engineer [1] [general -6/relevant -3,
Construction Forman [1][general-4/relevant-2] and Bar bender[1] [general-4/relevant -2].

Evaluation for Financial standing of firm contractor is based on Original document that shows
their financial status for the past 5 years and should be certified by appropriate revenue
authority that includes the audited balance sheets for the last 5 years along with certified
external audit report of the bidder and The bidder must demonstrate access to or availability of
working capital specifically for this project mounting ETB one million in the form of
unconditional credit facility.

Finally, the above detail technical evaluation compile, the result is announced the point above
70% is passing and below 70% is failing. Each criteria point value is not considered but check
only the total point /cumulative value/ for each contractor. If the candidate qualified the
technical evaluation might transfer for financial evaluation. The financial evaluation based on
the lowest responsive bidder is the winner. The technical result of the winner 71% was the
least score.

On the datasheet, the status of the project is on the of Advance payment processing.

4.2.7. Finding from Desk Study

Technical evaluation criterion of the above first five projects done on a subjective base.
General and sub-criterion were varied from project to another project. Those criterion point
value also varied. Past experience from the general background of a contractor did not too
much relate with project nature or complexity, it measure only project cost. Also, the current
workload capacity of a candidate would be not measured. Safety measure was not included on
the work methodology part. Essential equipment also has not on the same base. The total
summation of technical value was inapplicable for further evaluation. The result of all winner
technical evaluation was not sound compare to the candidates.

44
Engineering estimation and contractor profit not applied for financial evaluation. The lowest
price submitted contractor was award the biding. Due to These all situation all projects faced a
delay. Quality problems and cost overrun happened standing from a cash shortage of the
construction progress.

The technical evaluation criterion of the last project covered safety measures for evaluation
purposes. Also, the all sub-criterion was simple and more elaborate than the above.
Engineering estimation as part of financial evaluation but contractor profit was forgotten.
However, the technical result of the bidding winner has not the highest score. May engineering
estimation of financial evaluation make different in future project progress, it needs further
study.

4.3. Questionnaire Result and Riscussion

4.3.1. Introduction
The collected data from the questionnaire analyzed, to set point how the current bid evaluation
system affects project performance and to check the appropriateness of the given criteria.
Section one was analyzed based on the percentage of the respondent. For section two the
percentage analysis supported by charts. Section three also analyzed based on the relative
important index result. The first thing that comes to mind when sees data is to find patterns,
connection and relationships. From the interview factors that affect project performance were
categorized into five. Based on this factor the questionnaire would be developed.

i. Client-related factors
 Imperfect procurement plan
 Appropriateness of scope definition
 Less understanding for estimating the influence of contractor selection to meet
project objective.
 Less assignment of technically capable personnel in the bid evaluation team
ii. Consultant-related factors
 Evaluate based on Setting subjective criterions
 Poor estimation of the project time and cost.

45
  Selection of form of contract is not based on the specific project nature
 Ambiguities, mistakes and inconsistent in Tender Document including
Specification, Bill of Quantity and Drawing
 Not giving enough attention in evaluating contractor’s Equipment,
methodology and qualifications of contractor’s technical staff
 Completeness of bid and design document
iii. Contractor-related factors
 Be unethical or corruption in projects procurement process
 contractor ’s performance evaluation method is not proper
 Understand project scope and submit responsive offer.
 Confidentiality of submitted document.
 Poor estimation of the project time and cost
iv. Procurement policy related
 Public Using open bidding for most of large projects
 Selecting lowest bidder from least responsive offers by avoiding technical
score form further evaluation process
 Not Evaluating in detail financial offered submitted by contractor
 Not giving enough attention in evaluating contractor’s Equipment,
methodology and qualifications of contractor’ technical staff
 Selecting an unqualified bidder
 Only encourage open tender procurement tender
v. Ethics-related factors
 Discrimination in providing influential information
 Be unethical or corruption in projects procurement process

4.3.2. Questionnaires Response Rate

From the 81 questionnaires distributed a total of 55 responses were received, consisting of 8
(80%) from the client, 17 (94.4%) from consultants and 31 (58.5%) from contractors. The
overall response rate was 67.9% as shown in Table 2. Statistically, 67.9% Response Rate is
responsive to analyze further evaluation.

46
Table 2: show Summary of number and response rate by participants.

Distributed in Returned in Response

No. Participants
Number Number Rate in %
1. Contractors 53 31 58.5%
2. Consultants 18 17 94.44%
3. client 10 8 80%
Total 81 55 67 .9%

4.3.3. Back Ground Information of the Respondent

The respondent background information was an accumulation of different level of experience.
All of the respondents have procurement and bid evaluation related experience. Thus the
responsive data portion from the returned is acceptable to analyze the data and summarize the
result. The result should explain in the following table-3.

Table 3: detail back grounded of the respondent

Participant General experience Experience on procurement and

Parties bid evaluation
< 5 years 5-10 years >10 year < 5 years 5-10 years >10 year
Client 50% 25% 25% 62.5% 25% 12.5%
Consultant 41.2% 35.3% 23.5% 47.0% 35.5% 17.6%
contractor 19.3 61.3% 19.3% 25.8 58.0 16.1

4.3.4. Clients’ View

From client function in the construction industry, preparation Imperfect procurement plan,
Appropriateness of scope definition, Less understanding for estimating the influence of
contractor selection to meet project objective, Less assignment of technically capable
personnel in the bid evaluation team, are listed factor for the of cause problem and challenges
to bid evaluation obtained from interview. The researcher questionnaire section two client-side
respondent the following results were found out.

47
The researcher checked from section two the listed factors are recognized by client-side
professional. For example, client-side respondent 80% of professional organization
organizations would
prepare an annual procurement plan with the Procurement delivery system, Form of ccontract
and scope of the project. The result indicates the majority of client organization
organizations prepare
annual procurement plans.

Procurment plan
not prepar annual 0%
procurment plan 0%
20%

prepare annaul
procurment plan
80%

Figure 3: organization annual procurement plan percentage difference

From varies factor that affects

affect project performance, 91% of the respondent are agree
agreed bid
evaluation process directly affect project performance also 75% believe current bid evaluation
related problem affects project performance. The majority
ajority of the respondent
respondents accept bid
evaluation has an effect on project
p performance and the current proj
project performance is
affected by bid evaluation problems
problem and challenges.

Project performance effect

100%
80%
60%
40%
20%
0%
bid evaluation effect on peroject current bid evaluation effect on peroject
performance performance

agree not agree

Figure 4:: bid evaluation effect on project performance.

48
According to client-side
side professional respondents
respondent mostly faced impacts on project progress
includes Delay on completion of a project (80%), Cost overrun (17%)
%) and Quality problem
(13%). That implies a delay in
in project completion time was the first sever, cost overrun and
quality problem was clearly visible low project performance indicator.

project performance indicator

90%
80%
70%
60%
50%
40% mostly faced problem
30%
20%
10%
0%
delay cost overrun qualitiy problem

Figure 5:: mostly faced project performance indicator

The respondents were asked about current bid evaluation criteria, 70% are believed the legal
bid evaluation criteria are properly applied during current bid evaluation. The majority of the
respondents strictly use the legal bid evaluation criteria.

Legal bid evaluation criteria

no applied
30%
properly applied
70%

Figure 6:: strict use of legal bid evaluation criteria

49
The client-side
side respondent thought, from
f Members of bid evaluation team 80% are capable
against the technical
echnical capacity to the evaluation process, 95 % are having exposure to
construction bid evaluation and 70% are ethical to follow the criterion. This result show
shows that,
the bid evaluation team has the technical capacity and ethical to follow the given cri
criteria.

Member of bid evalution team

100%
80%
60%
40%
member of bid evalution
20% team
0%
technical having exposure ethical
evaluation
capacity

Figure 7:: member of bid evaluation team capacity

Respondent answer on time given for the bid evaluation process, 81% accept
accepts the time given
for the current bid evaluation process mostly is Sufficient, 5% excess and 14% short. The
majority of the respondent accepted the time given for the current bid evaluation was
sufficient.

time
short
excess 14% 0%
5%

sufficient
81%

Figure 8:: time given for bid evaluation

50
The client-side respondent states that, 51% of the evaluation team has no trend to document
previous bid evaluation process challenges for review and future reference. 96% has no
opportunity to have training or seminars on the bid evaluation process. From this, the members
of the bid evaluator have no trend on previous document review and training.

Trend of bid evaluation team

96%
50%

did not previous document review no training opportunity

Figure 9: bid evaluation team trend

Five client professional was set points about prequalification criteria. The government should
provide a common database in order to check the validity of the requirement; also the bid
evaluator should check the documents impartially.

4.3.4.1. Factors on Bid Evaluation Process that Affect Project Performance /Client-
Side/

According to client-side respondents from sixteen factors that affect project performance three
sever factors were selected.

Less understanding for estimating the influence of contractor selection to meet project
objective, Poor estimation of the project time and cost and Ambiguity, mistakes and
inconsistent in Tender Document including Specification, Bill of Quantity and Drawings have
been taken as the most critical cause for the delay on project completion time.

Corruptions, Poor estimation of the project time and cost, thirdly, Selecting an unqualified
bidder that was the most three critical cause of Cost overrun on project performance.

51
The Factor that affects the quality of the project, the selection of a form of contract is not
based on the specific project nature, Be unethical or corruption in the projects procurement
process and Poor estimation of the project time and cost were included in the most critical
factor. Detail client-side respondent results were explained on the following table 4.

Table 4: show Final result of client side respondent factor on bid evaluation process.

No Factor under evaluation Effects on Impact of bid Frequency of

Projects evaluation occurrences
Performanc

Quality rank

Quality rank
e

Delay rank

Delay rank
Cost rank

Cost rank
RII

RII
1 Imperfect procurement plan. Delay 3.63 9 3 9
Cost 3.13 13 2.38 16
overrun
Quality 3.43 11 3.33 6
Inappropriate project scope Delay 2.88 15 2.88 14
2 definition. Cost 2.63 15 2.86 14
overrun
Quality 3.14 15 3 11
3 Less understanding for estimating the Delay 4.50 1 3.36 2
influence of contractor selection to Cost 2.75 14 3 10
meet project objective. overrun
Quality 3.25 12 3.43 4
4 Less assignment of technically Delay 2.50 16 3.13 7
capable personnel in the bid
Cost 2.38 16 3 10
evaluation team.
overrun
Quality 3.22 14 3 11
5 Evaluate based on Setting subjective Delay 3.14 14 3 9
criterions Cost 3.38 10 3.25 4
overrun
Quality 3.13 16 3 11
Selecting lowest bidder from least Delay 3.63 9 3.29 3
6 responsive offers by avoiding
Cost 3.25 12 3.25 4
technical score form further
overrun
evaluation process.
Quality 3.50 9 3.38 5
7 Discrimination in providing Delay 3.75 8 3.13 7
influential information Cost 3.63 7 3.14 7
overrun
Quality 3.50 9 3 11
8 Poor estimation of the project time Delay 4.29 2 3 9
and cost Cost 4.14 1 3.14 7
overrun
Quality 3.86 3 2.86 16

52
9 Selection of form of contract is Delay 4.14 4 3.14 5
not based on the specific project Cost 3.86 4 2.71 15
nature overrun
Quality 4.14 1 2.86 16

10 Using open bidding for most of large Delay 3.43 12 2.8 16

projects Cost 3.43 8 3 10
overrun
Quality 3.83 4 3 11
11 Ambiguities, mistakes and Delay 2 3 9
inconsistent in Tender Document 4.29
including Specification, Bill of Cost 4 3 10
Quantity and Drawings overrun 3.86
Quality 5 3.29 7
3.71
12 contractor ’s financial standing and Delay 4.00 6 3 9
cash flow requirement is not properly Cost 3.71 6 3.14 7
evaluated overrun
Quality 3.71 5 3.5 3

Not Evaluating in detail financial Delay 3.29 13 2.86 15

offered submitted by contractor
13 Cost 3.40 9 3.33 3
overrun
Quality 3.57 8 3.14 8
3
14 Not giving enough attention in Delay 3.50 11 3.25 4
evaluating contractor’s Cost 3.38 10 3.25 4
Equipment, methodology and overrun
qualifications of contractor’s Quality 3.25 12 3.62 2
technical staff 5
15 Be unethical or corruption in projects Delay 3.86 7 3.14 5
procurement process Cost 4.14 1 3.5 1
overrun
Quality 3.86 2 3.14 8
16 Selecting an unqualified bidder Delay 4.14 4 3.86 1
Cost 4.00 3 3.43 2
overrun
Quality 3.71 4 3.67 1

53
4.3.5. Consultants View
Among different function of consultant through each stage of construction, Evaluate based on
setting subjective criterions, Poor estimation of the project time and cost, Selection form of
contract is not based on the specific project nature, Ambiguities, mistakes and inconsistent in
tender document including specification, bill of quantity and drawing,

contractor ’s financial standing and cash flow requirement is not properly evaluated, Not
giving enough attention in evaluating contractor’s equipment, methodology and qualifications
of contractor’s technical staff, completeness of bid and design document,

Capability to lead or guide the procurement process, be unethical or corruption, contractor ’s

performance evaluation method is not proper and Availability of technical evaluation criterion
on procurement manual was listed factor as problem and challenges for current bid evaluation
Obtained from interview. Result of section two consultant side respondent analyzed in the
following method.

The researcher checked from section two the listed factors are recognized by consultant side
professional. Because, The consultant side respondent on an annual procurement plan, 75% of
consulting company review client procurement plan for the project hired and 67%
Procurement method needs adaptation. The majority of the respondents were reviewed annual
procurement plan and adoption was acquainted.

procurment plan
procurment plan

75%

67%

consulting company review client percentage of need adaptation

procurment plan

Figure 10: review of annual procurement plan

54
The respondents were asked about bid evaluation procedure, 33% of bid evaluation procedure
Based on bid price only, 25% based on bid price and responsiveness and 17% based on the bid
price, responsiveness and another
an factor. The result shows that mostly adopt
adopted bid evaluation
procedure has been based on only the price.

based on price
bid evaluation procedure
and
responsiveness
23% based on price
only
44%

based on price
, responsiveness
and other
33%

Figure 11:: mostly adopted bid evaluation procedure

The consultant
sultant side respondent thought the most frequent contract award from project delivery
and bid-award method is Competitive (Conventional method of awarding the contract to the
lowest responsive bidder). The second one is Negotiated (Negotiation with one or more
preselected contractors) and (Request for Proposal/Request for Qualification is the third one.

Also the respondent’s perception of current bid evaluation procedure, 41% were satisfied, 25%
were not
ot satisfied with the currently
current used bid evaluation procedure and 34% are somewhat
satisfied. The majority of the respondents accept the current
current bid evaluation procedure has been
satisfied.

55
 Crrent bid evaluation procedure

somewhat
34% satisfied
41%

not satisfied
25%

Figure 12:: bid evaluation procedure status on professional thought.

The respondents were asked about project performance effect, 75% of the respondent accept
the bid evaluation process directly affect project performance and 67% of the respondent
believes there is current bid evaluation related problem that affects project performance.

The majority of the respondent blieves bid evaluation process has a significant effect on
project performance.

Bid evaluation project performance effect

bid evaluation project performance effect

75%

67%

generally bid evaluation current bid evaluation

Figure 13:: bid evaluation project performance effect

The consultant side respondentmostly

respondent faced problemson project performance that related to
the bid evaluation process, 75% were relatedNeglecting
Neglecting technical evaluation after screening
least responsive bidders affect contractor selection.

56
34% believe the legal bid evaluation criteria are not properly applied during the current bid
evaluation process.35% of the bid evaluation team is not ethical to follow the given ethical
criteria and 25% have not technically capable of the evaluation process. The results show that,
neglecting technical evaluation after screening least responsive. Unethical bid evaluator was
the most severe one, not a strict use of bid evaluation criteria and incapable technical evaluator
share the responsibility decreasing order.

Faced problem and challenges

faced problem and challenges
75%
34% 35% 25%

neglecting technical not strict use of bid bid evaluation team bid evaluation team
evaluation evaluation criteria are not ethical have not technically
capable

Figure 14: mostly faced problem

From the open-ended question of consultant side professional, above 80% of the respondent
recommend consider engineering estimation to screen out unnecessary least offer. 92%
Construction companies incapable to complete the project on time, 75% to executing the work
to the required standard and 50% execute each item within or under its price when they get the
project on least bases. Run financial evaluation standing on engineering estimation was
recommended for successful project completion.

57
 screen bidder without engineering estimation related
problems
100%
80%
60%
40%
bidde screen without
20%
engineering estimation
0% related problems
incapable to incapable to excute under its
excute on the excute on the price
scheduled time required standard

Figure 15:: engineering estimation effect on project performance

The respondents were asked about the ministry of construction minimum qualification criteria
appropriateness, 25% of the respondents strongly agree Ministry of Constructio
Construction minimum
qualification criteria on contractor eligibility are appropriate
propriate for evaluation of public building
construction bid, 50% are somewhat agreed
agree and 17% has complained.

The result was the ministry of construction minimum bid qualification criteria somewhat
appropriated.

Ministry of Construction minimum qualification criteria

approprateness
0% highly agree
25%
not agree
25%

somewhat agree
50%

Figure 16: appropriateness of minimum qualification criteria for contractor eligibility

58
Corruption is the major facing problems in the existing procedures of identifying and selecting
the right contractor. During prequalification, the government body should select bidder based
on their prior performance and contractor tried to leave cheating.

4.3.5.1. Factors on Bid Evaluation Process that Affect Project Performance

/Consultant Side/

The consultant side respondent from sixteen factors that affect project performance three sever
factors were selected.

The most severe factors that cause project delay on the completion time would be, selecting
an unqualified bidder, Imperfect procurement plan and Poor estimation of the project time and
cost.

Discrimination in providing influential information, Poor estimation of the project time and
cost and, be unethical or corruption in project procurement process were imply the cause of
cost overrun.

Poor estimation of the project time and cost were, less assignment of technically capable
personnel in the bid evaluation team and not evaluating in detail financial offered submitted by
the contractor were the top three critical factors that cause the quality problem. Detail
consultant side respondent results were explained on the following table 5.

59
Table 5: show final result of consultant side respondent factor on bid evaluation process
No Factor under evaluation Effects on Impact of bid Frequency of
Projects evaluation occurrences
Performance

Quality rank

Quality rank
Delay rank
Delay rank

Cost rank

Cost rank
RII

RII
1 Imperfect procurement plan. Delay 4.00 2 3.19 5
Cost overrun 4 2.53 16
3.69
Quality 3.63 4 3.81 2
2 Inappropriate project scope Delay 3.41 11 3.12 9
definition. Cost overrun 3.19 14 2.93 13
Quality 3.18 15 2.86 15
3 Less understanding for estimating the Delay 3.88 4 3.07 10
influence of contractor selection to Cost overrun 3.40 10 3.13 9
meet project objective. Quality 3.53 6 3.25 8
4 Less assignment of technically Delay 3.35 13 3.07 11
capable personnel in the bid
Cost overrun 3.47 9 3.20 7
evaluation team.
Quality 3.67 2 3.07 13
5 Evaluate based on Setting subjective Delay 3.27 14 2.87 15
criterions Cost overrun 3.12 16 3.13 9
Quality 3.50 10 3.13 10
Selecting lowest bidder from least Delay 3.56 8 3.15 7
responsive offers by avoiding
Cost overrun 3.50 8 3.21 6
technical score form further evaluation
6 process. Quality 3.27 13 3.29 7
7 Discrimination in providing influential Delay 3.50 10 3.21 4
information Cost overrun 4.67 1 3.43 3
Quality 3.39 12 3.36 4
8 Poor estimation of the project time Delay 3.93 3 3.67 1
and cost Cost overrun 3.94 2 3.29 4
Quality 3.82 1 3.33 5
9 Selection of form of contract is Delay 3.09 16 3.13 8
not based on the specific project Cost overrun 3.17 15 3.13 9
nature Quality 3.23 14 2.88 14

10 Using open bidding for most of large Delay 3.27 14 2.64 16

projects Cost overrun 3.20 13 2.60 15
Quality 3.07 16 2.63 17
11 Ambiguities, mistakes and Delay 7 3.19 5
inconsistent in Tender Document 3.59
including Specification, Bill of Cost overrun 12 3.24 5
Quantity and Drawings
3.35
Quality 9 3.13 12
3.53

60
 12 contractor ’s financial standing and Delay 3.67 5 3.27 3
cash flow requirement is not properly Cost overrun 3.53 7 3.47 1
evaluated
Quality 3.53 6 3.14 9

Not Evaluating in detail financial Delay 3.56 8 3.00 13

13 offered submitted by contractor
Cost overrun 3.38 11 2.88 14
Quality 3.64 3 2.86 15
14 Not giving enough attention in Delay 3.38 12 3.06 12
evaluating contractor’s Cost overrun 3.67 5 3.47 2
Equipment, methodology and Quality 3.53 6 3.73 3
qualifications of contractor’s
technical staff
15 Be unethical or corruption in projects Delay 3.60 6 3.40 2
procurement process Cost overrun 3.70 3 3.18 8
Quality 3.47 11 3.33 5
16 Selecting an unqualified bidder Delay 4.23 1 3.00 13
Cost overrun 3.60 6 3.12 12
Quality 3.59 5 3.13 10

4.3.6. Contractor View

From contractor function, be unethical or corruption in the projects procurement process,
Understand project scope and submit a responsive offer, Confidentiality of submitted
document and Poor estimation of the project time and cost are listed factor for the cause of
problem and challenges to current bid evaluation process obtained from the interview.
From the questionnaire section two part of the contractor side respondent, the researcher
checked the listed factors are recognized by the contractor professional. Because contractor
side respondent result on project performance effect due to the bid evaluation process.
That 85% of the respondent thought bid evaluation processes directly affect project
performance. And 79% agree that all tender documents submitted by a contractor are not truly
confidential. 82% are not satisfied with currently used bid evaluation procedure.
Additionally, 91% of respondent believe that there is current bid evaluation related problem
that affects project performance and 86% accept the legal bid evaluation criteria are not
properly applied during the current bid evaluation process. The majority of the respondent
stated that the bid evaluation process has a direct effect on project performance, UN
confidential bid document; unsatisfied bid evaluation procedure and not strict use of
evaluation criteria have been visible drawback.

61
 project performance effect
92%
90%
88%
86%
84%
82%
80%
78%
76%
74% project performance effect
72%
general did current bid contractor not strict
evaluation evaluation submitted use of legal
process process document bid
evaluation
procedure

Figure 17:: project performance effect

The respondent also asked about a member of the bid evaluation team, From Members of bid
evaluation team 29.41%
% are not Technical capacity to the evaluation process
process, 34.8%have no
exposure to
o construction bid evaluation and 35.8% are not ethical to follow the given criterion.
The reason of the above less capability the nature of bid evaluation is need
needed specific
qualifications and deep experience in addition to ethics. 79% of Technical qualifications
criterion are put by the client’s subjective criterion. Through subjective client criterion, the bid
evaluator team has no exposure to construction bid evaluation, they were not ethical to follow
the given criterion and they have not technical capacity.

member of bid evaluation team not technically

not ethical capable
36% 29%

have no exposure
to bid evaluation
35%

Figure 18:: member of bid evaluation team

62
The contractor
or side respondent states that 40.7%
% of Contractor Company incapable to meet
Timely completion, 39.2%
% face Quality related problem of work to the required standard and
20.1% are executed each item under own price. The result would be that the contractor
company faced delay, quality problem and cost overrun as decreasing order.

contractor challenges and problem

excute each item
under own price
20%

project delay on
time
41%

quality related
problem
39%

Figure 19:: contractor challenge and problem.

The respondents were asked about company profile updates,

updates 10%
% of different company
updates material and labor market price every month,
month, and 41% are between 3 to 6 months and
39% only on bidding time. 92% has an exercise of updating company profile and another
technical document at regular intervals.
interval
The majority of respondent updates their material price 3 to 6 month and only on bidding time
was the second follower. Their profile also updated at regular intervals.

63
 contractor update material and labor market price
monthly
11%

only bidding
time
43%
3 to 6 month
46%

Figure 20:: material price and company profile updating interval

The contractor
tor side respondent states that97%
that97% Contractor Company often won projects on
bases of the least responsive bidder and 55% of the project has not progressed or completed by
its own financial budget. Financial constraint and Meeting the required quality are factors that
mainly affect project progress. 56%
6% accept technical offer submitted for bid evaluation are not
confidently pass post evaluations qualification criteria and 40% are related less financial
standing of the company. The result would be contractor won the project based on the least
responsive
ve bidder, due to this different project not completed own financial budget and quality
problem. Those are related to unoffered technical capacity and less financial standing of the
contractor.

financial evaluation and project performance

financial evaluation and project performance

97%

55%

contractor won the project based on the financial project progress faced cost overrun
least responsive bidder

Figure 21:: financial evaluation and project performance

64
From the open-ended question three respondents accept prequalification of contractor is good
for higher grades contractor but, below grade-5 contractors the prequalification is not neat and
clear it shall be updated by using professional experts. Also, the pre-qualification comply with
honesty and avoid corruption.
4.3.6.1. Factors on Bid Evaluation Process that Affect Project Performance
/Contractor Side/

The contractor side respondent also differentiates three sever factors from listed sixteen factors
that affect project performance.

The most severe that causes project delay on completion time, thus selecting the lowest bidder
from least responsive offers by avoiding technical score for further evaluation process, Less
understanding for estimating the influence of contractor selection to meet project objective and
not giving enough attention in evaluating contractor’s equipment, methodology and
qualifications of contractor’s technical staff have been included.

Also, the most severe factor that causes cost overrun would be selecting the lowest bidder
from least responsive offers by avoiding technical score for further evaluation process,
Selecting an unqualified bidder and Be unethical or corruption in the projects procurement
process were included.

Not evaluating in detail financial offered submitted by the contractor, be unethical or

corruption in the projects procurement process and selecting an unqualified bidder were
selected as the cause of the quality problem. Detail contractor side respondent results were
explained on the following table 6.

65
Table 6: show final result of contractor side respondent factor on bid evaluation process

N Factor under evaluation Effects on Impact of bid Frequency of

o Projects evaluation occurrences
Performan

Quality rank

Quality rank
Delay rank
Delay rank
ce

Cost rank

Cost rank
RII

RII
1 Imperfect procurement plan. Delay 4.03 10 3.71 5
Cost 13 16
overrun 3.84 1.29
Quality 3.58 15 3.77 3
Inappropriate project scope Delay 4.00 11 3.55 17
definition. Cost 9 13
overrun 4.17 3.57
Quality 4.17 9 3.59 13
3 Less understanding for estimating the Delay 4.90 2 3.61 10
influence of contractor selection to meet Cost 12 10
project objective. overrun 4.03 3.61
Quality 4.07 10 3.67 8
4 Less assignment of technically Delay 4.00 11 3.61 10
capable personnel in the bid
Cost 11 8
evaluation team.
overrun 4.03 3.63
Quality 4.20 8 3.62 11
5 Evaluate based on Setting subjective Delay 4.00 11 3.59 14
criterions Cost 14 12
overrun 3.79 3.59
Quality 3.74 13 3.53 15
Selecting lowest bidder from least Delay 5.00 1 3.73 3
responsive offers by avoiding technical
Cost 1 4
score form further evaluation process.
overrun 5.00 3.70
6
Quality 6 2
4.34 3.77
7 Discrimination in providing influential Delay 4.53 6 3.72 4
information Cost 5 5
overrun 4.61 3.68
Quality 4.30 7 7 3.70 6
8 Poor estimation of the project time and Delay 3.94 14 3.70 6
cost Cost 8 3
overrun 4.23 3.73
Quality 4.00 11 3.73 5
9 Selection of form of contract is Delay 4.40 8 3.67 8
not based on the specific project Cost 10 7
nature overrun 4.1 3.65
Quality 1 10
2
3.87 3.63
10 Using open bidding for most of large Delay 3.90 15 3.57 15
projects 1

66
 Cost 15 15
overrun 3.68 3.56
Quality 1 16
3.57 6 3.50
11 Ambiguities, mistakes and Delay 16 3.60 12
inconsistent in Tender Document 3.60
including Specification, Bill of Quantity Cost 16 11
and Drawings overrun 3.61 3.60
Quality 1 14
3.65 4 3.58
12 contractor ’s financial standing and cash Delay 4.40 8 3.65 9
flow requirement is not properly Cost 7 8
evaluated overrun 4.48 3.63
Quality 5 9
4.53 3.65
Not Evaluating in detail financial offered Delay 4.50 7 3.57 16
submitted by contractor
13 Cost 4.50 6 13
overrun 3.57
Quality 4.92 1 3.60 12
14 Not giving enough attention in Delay 4.90 3 3.60 12
evaluating contractor’s Cost 4 1
Equipment, methodology and overrun 4.7 3.93
qualifications of contractor’s Quality 4 1
technical staff 4.74 3.94
15 Be unethical or corruption in projects Delay 4.74 5 3.74 2
procurement process Cost 3 2
overrun 4.81 3.78
Quality 4.87 2 3.74 4
16 Selecting an unqualified bidder Delay 4.81 4 3.67 7
Cost 2 6
overrun 4.94 3.68
Quality 4.81 3 3.68 7

4.3.7. Summary of Questionnaire Finding

From a questionnaire to collect general information and ascertain whether the listed factors are
recognized by professionals’ part, all listed factor absolutely recognized as problem and
challenges by the respondent of the construction parties.

Besides, they recommend providing common technical criteria and engineering estimation
financial criteria. And eligibility of the contractor should one of the improvement required
areas.

67
From part of the questionnaire, to Assess the degree of performance effect and frequency of
occurrence the listed factors on the current bid evaluation process, the most sever nine factors
that affect project performance would be selected respected to each performance measurement
parameter.

The most critical factors which have impacts on project performance from each construction
party’s view were summarized in the following table 7 blow.

Table 7: show the most top nine factors selected from the respondent

N Factor under bid evaluation Effects on Impacts on bid Frequency of

o project evaluation occurrence
performanc
Parties
view

e
RII Rank RII Rank
1 Less understanding for estimating the delay 4.500 1 3.375 6
influence of contractor selection to
meet project objective.
2 Be unethical or corruption in projects Cost 3.5 1 3.5 4
Client view

procurement process overrun

3 Selection of form of contract is not Quality 4.143 1 2.857 9
based on the specific project nature

4 Selecting an unqualified bidder Delay 4.231 1 3.00 8

Consultant

5 Discrimination in providing influential Cost 4.667 1 3.43 5

information overrun
view

6 Poor estimation of the project time and Quality 3.824 1 3.33 7

cost
7 Selecting lowest bidder from least delay 5.00 1 3.733 1
responsive offers by avoiding technical
Contractor view

score form further evaluation process.

8 Selecting lowest bidder from least Cost 5.00 1 2
responsive offers by avoiding technical overrun 3.70
score form further evaluation process. 0
9 Not Evaluating in detail financial Quality 4.917 1 3.600 3
offered submitted by contractor

68
From those the most severe nine listed factor, Selecting the lowest bidder from least
responsive offers by avoiding technical score form further evaluation process, Not evaluating
in detail financial offered submitted by the contractor, Not Evaluating in detail financial offered
submitted by contractor, Be unethical or corruption in projects procurement process and
Discrimination in providing influential information would the most five top frequent problem and
challenge.

69
CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1. Conclusion
This research was conducted to assess the current bid evaluation effect on project
performance. Conclusions that conform to the research specific objective and
Recommendations will also be forwarded to improve those effects and highlighting topics for
future further study.

1. The current technical evaluation criteria have been not appropriate and strictly applied.
Those minimum bid evaluation criteria passed on the subjective way.
2. The financial evaluation criteria of the lowest responsive bidder and also modified criteria
were inappropriate for the successful computation of performed contractors.
3. According to client view, the delay was happened due to Less understanding for estimating
the influence of contractor selection to meet project objective, be unethical or corruption
in projects procurement process the cause of project cost overrun and selection of a form
of contract is not based on the specific project nature that develops the consequence of
quality problem.
4. According to the consultant view, selecting an unqualified bidder was a critical factor that
causes delay problem, also discrimination in providing influential information affect
project performance by increasing project cost and, quality problems visible on the project
due to poor estimation of the project time and cost.
5. According to the contractor view, selecting the lowest bidder from least responsive offers
by avoiding technical score for further evaluation process was the main factor that strongly
related to delay and cost overrun of the project performance. Not Evaluating in detail
financial offered submitted by the contractor also provide an opportunity for quality
problem in the project progress.
6. Delay of project completion time, quality problem and cost overrun have been strongly
related to bid evaluation related problems and challenges that cause an impact on project
performance.

70
7. No treatment mechanism of inflation during bid evaluation would found as an additional
challenge of project performance.

71
5.2. Recommendation
The following points are the researcher’s recommendation to the concerned body.

1. Regulatory bodies shall set the standard procedure for minimum technical criterions
required for public building bid on the procurement manual related to project nature that
helps to avoid subjective criterions.
2. The current modified financial evaluation that based on engineering estimation taken as
best practice but, it easily opens the way of corruption. The concerned body is responsible
and sound measurement is a constraint.
3. To achieve a successful construction project the three parameters of cost, time and quality
should be considered concerning attaining the client’s objective. So, a Tenders evaluation
audit should be done by the regulatory body to avoid the impact of bid evaluation on
project performance by minimizing problems and challenges. The concerned body shall
include the appropriateness of criterions as well as procedure followed should be checked.
4. Training and seminar shall be provided for capacity building to bid evaluation team and
also the contractor. Specific proclamation or manual of construction procurement is a basic
issue for the regulatory body.
5. Set up a given cost for health and safety purposes is requiring attention during bid
evaluation to minimize related risk.
6. The prequalification practice of contractors would be one of the attention required areas in
the construction industry; it depends only on eligibility on the ministry of works and urban
development.
7. The inflation rate should be treated as the country level and the construction sector.
5.2.1 Recommendation for further study should be conducted on:-
 Improvement mechanism of bid evaluation criterion and strict use of appropriate
criterion.
 Minimization of bid evaluation related to corruption in the construction industry.
 The Magnitude of bid evaluation related problems and challenges on project
performance.

72
 Prequalification of contractor eligibility in the construction for the reduction of bid
evaluation effect on project performance.

73
REFERENCE
Abebe, D. 2003. Construction Management and Finance. Addis Ababa University Printing
Press. Addis Ababa.
Abebe, D.,NinatubuL. and Alfred N. 2007. Fundamentals of Civil Engineering Construction
Management, AAU Printing Press. Ethiopia. P.205
Abebe,W. 23 February 2017. Ethiopia: Construction Sector Key to Ensure Intended
Development. The Ethiopian Herald 112: 15-16

Aschalew, Y. 2017. Performance Assessment of Public Building Construction projects in

Addis Ababa. M.Sc. Thesis. Addis Ababa University, Ethiopia.

Bolumole,L. 2017.Contract procurement strategies for project delivery towards

enhancement .M.Sc. Thesis. Cape Peninsula University of technology,South Africa.
50 p
Binyam, L., Emer, T. And Quezon, N.2016. International Journal of Scientific & Engineering
Research, volume7:p60

Biyadglign, T. 2017. Assessment of construction performance challenges in selected

University building the construction projects. M.Sc. Thesis. Addis Ababa University,
Ethiopia.
Cristian, P. and Kyle, C. 2009. Contract Management for International EPC Projects,
Faculty of the Worcester Polytechnic Institute, China. p.111

Clough, R.H., 1996.Construction Contracting, 4th edition, John Wiley & Sons, USA.15p

Collins, Jr. And Frank. C. 2006. Quality: The Ball in your Court (New Delhi, India: Tata
McGraw-Hill), International Journal of Project Management, volume 12(3), 133-135

Clarke, T. 2004. Theories of corporate governance.Routledge.London:

Carole, Veitch. 30 January 2018.African business information-construction condition in

Ethiopia.Who own who 215: 18-21

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David, W. Phillipson.2012. Foundations of Axumite civilization and its Christian legacy: 1st-
8th century, Co published with Addis Ababa University Press. Ethiopia. p 2014

Ethiopian Economic Association (EEA.2006/07, Report on the Ethiopian economy. Ethiopian

Economic Policy Research Institute, Ethiopia. 233p

Fetenen, N. 2008. Causes and Effects of Cost Overrun on Public Building Construction
Projects in Ethiopia, Msc. Thesis, Addis Ababa University, Ethiopia.

Fitsum, G . 2018.. Bid Evaluation Process on Non-Residential Public Building Projects in

Addis Ababa. MSc Thesis. Addis Ababa University. Ethiopia.

Federal public procurement directive (2010)

Getaneh, G. (2011). Assessment of Conditions of Contract Problems in Ethiopian

Construction Industry. Msc Thesis. Addis Ababa University. Ethiopia.
Chitkara, KK. 2000. Construction Project Management. ZSL press. America 222p

Kevin, R. Miller and Provo, Utah. 2003. Bid shopping, Brigham Young University press.
China: p39

Love, P., Skitmore, R., and Earl, G. 1998. Selecting a suitable procurement method for a
building project.bra press. 16(2).p221 -233.

The Ethiopian Federal Government Procurement& Property Administration ProclamationNo:

649/2009
Roxene, M. 1998. Efforts to Manage Disputes in the Construction Industry: A Comparison of
the New Engineering Contract and the Dispute Review Board Virginia: Virginia
Polytechnic Institute and State University. America. 15p

Russell, J.S. and Skibniewski, M. 1988. Decision criteria in contractor prequalification. J of

Mangt in Engrg press. ASCE, 4/2/. 148-64pp.

75
Wang H.J., Zhang J.P., Chau K.W. and Anson M. 2004. 4D dynamic management for
construction planning and resource utilization, Automation in Construction, 13, 575-
589

Zewdu, Tefera.2004. Construction law: Engineering contracts law. Msc Thesis. Addis Ababa
University. Ethiopia.

76
Appendixes I

Project 1 information
The client of Hawassa Haykdar sub-office building project is Hawassa city municipality.
Awarded contractor name is Nefetalem Yesuf General Contractor within the national
competitive bidding tender award type.

Table 1: Project information 1 detail information

Contract amount project start Substantial Time extension Financial Physical

cost date Completion status status

3,216,664.91 10/10/2008 10/2/2009 Above 2 years 30%/ 5%

Table 2: Technical evaluation criteria of project 1

No Criterion Sub criterion Rate

1 General experience 10pt
Two project not less than 1.5 million
birr with 3 year experience [ 10 pt]

2 Site visit and way of 20pt

methodology

Site visit [5pt]

Methodology [7pt]
Work schedule [5pt]
Completeness [3pt]
3 Personnel 20 pt
Project manager [6pt]
Site engineer [5pt]
Office engineer [5pt]
Forman [4pt]
4 Equipment 20 pt
Vibrator [4 pt]
Dump truck [6pt]
Concrete mixer [6pt]
Compactor [4 pt]
5 Financial related 30 pt

77
 Average annual turn over 3 million
for the last three years [10 pt]
Audit report [10 pt]
Unconditional 3 million birr credit
facility [10 pt]

Table 3: Technical evaluation result of project 1

No Bidder Technical value result Remark

1 Contractor 1 75 Pass
2 Contractor 2 97 Pass
3 Contractor 3 - Disqualify Not renewed commerce permission
4 Contractor 4 81 Pass
5 Contractor 5 59 Fail
6 Contractor 6 18 Fail
7 Contractor 7 80 Pass
8 Contractor 8 60 Fail
9 Contractor 9 65 Fail
10 Contractor 10 91 Pass
11 Contractor 11 64 fail

Table 4: Financial evaluation and result of project 1

No Bidder name Total cost with vat After arithmetic check Rank Remark
with vat
Birr price Birr price
1 Contractor 1 3,286,728 54 3,823,238 20 5
2 Contractor 2 4,88,813 35 4,598,803 37 7
3 Contractor 4 3,888,933 4 3,888,933 93 4
4 Contractor 7 3,216,661 14 3,216,664 91 1 selected
5 Contractor 10 4,263,428 33 3,801,888 22 3
6 Contractor 3 3,803,917 14 3,803,997 38 2
7 Contractor 5 4,257,435 35 4,288,111 92 6

Project 2 information
The client of the health department health center G+3 building is the Hawassa administration
health bureau. Awarded contractor name is Biruk Abera General Contractor within the
national competitive bidding tender type.

78
Table 5: Project 2 detail information

Contract amount project Substantial Physical Financial Time extension

cost start date Completion status status
13,789,866.37 28/07/2008 28/2/2009 75% 51% Above 2 years

Table 6: Technical evaluation criteria of project 2

No Criterion Sub criterion Rate

1 General experience 10pt
Two project not less than 4 million birr
[ 10 pt]
2 Site visit and way of 25pt
methodology
Site visit [4pt]
Complexity of work understanding [6
pt]
Methodology [7pt]
Work schedule [5pt]
Completeness [3pt]
3 Personnel 15 pt
Project manager [6pt]
Site engineer [5pt]
Office engineer [5pt]
4 Equipment 15 pt
Vibrator [2 pt]
Dump truck [6pt]
Concrete mixer [5 pt]
Total station [2 pt]
5 Financial related 35 pt
Average annual turn over 3 million for
the last two years [10 pt]

Audit status for two years [5pt]

Unconditional 500,000 birr credit
facility [20 pt]

79
Table 7: Technical evaluation result of project 2

Bidder Technical value result Remark

1 Contractor 1 82 Pass
2 Contractor 2 80 Pass
3 Contractor 3 81 Pass
4 Contractor 4 90 Pass
5 Contractor 5 87 Pass
6 Contractor 6 91 Pass
7 Contractor 7 92 Pass
8 Contractor 8 90 Pass
9 Contractor 9 72 pass
10 Contractor 10 57 fail
11 Contractor 11 59 fail
12 Contractor 12 69 fail

Table 8: Financial evaluation and result of project 2

No Bidder name CPO Total cost with vat Cost After arithmetic Ra Remark
check with vat nk
Birr price Birr Price
1 Contractor 1 200,000 15,202,039 84 17,9375,543 22 7
2 Contractor 2 170,000 16,005,240 20 15,904,212 07 3
3 Contractor 3 207,000 20,606,578 44 21,052,326 489 9
4 Contractor 4 156,700 16,045,442 25 17,102,366 15 5
5 Contractor 5 - - - - - -
6 Contractor 6 200,000 16,339,353 73 16,952,604 03 4
7 Contractor 7 250,000 15,589,175 399 17,193,021 - 6
8 Contractor 8 187,027 18,702,790 90 18,144,761 065 8
9 Contractor 9 130,000 13,770,883 89 13,789,866 37 1 selected
10 Contractor 12 160,000 14,083,183 96 13,997,111 679 2
The financial document of contractor 5 is filled jinka zone document.

Project 3 information
The client of Hawassa city administration G+5 police office building is Hawassa city
administration. Awarded contractor name is Man General Contractor within the national
competitive bidding tender type.

80
Table 9: Project 3 detail information

Contract amount project start Substantial Physical Financial Time extension

cost date Completion status status
89,967,738.70 19/6/2009 19/10/2010 7% 15% Above 1 years

Table 10: Technical evaluation criteria of project 3

No Name of Criterion Sub criterion Proportional

points
1 Adequacy of technical in Technical approach and methodology 8 pt
responding to the
schedule requirement Work plan and scheduling 3
[15] Organization and staffing 2
Site visit confirmation letter 2
Two project not less than 4 million birr [ 10
pt]
2 Experience of the bidder General experience: minimum of 5 years’ 5
relevant to the schedule experience in construction supported by
of requirement [11] testimony
Specific experience: the bidder has 6
successfully participated as contractor or
subcontractor, in at least [5] one contract
within the last five [5] years, value of at
least 80 million birr that have been
successfully and substantially completed

3 Qualification and Project manager 5

competence of the key Site engineer 4
professional staff Office engineer 4
engaged in the works.[20] Electrical engineer 3
Sanitary engineer 2
4 Equipment types and Dump truck 12 m3 and above 2 5
characteristics [30] Excavator 0.25 m3 and above 1 5
Loader 1.6 m3 and above 1 5
Concrete mixer [5 pt] 5
Crane 30m 1 5
Roller with vibrator capacity 5-8 ton at least 5
2
5 Financial standing of the Submission of audited balance sheets and 4 pt
bidder [24] other financial statements as required in the
BDS clause 17,

81
 the peak annual turnover calculated as total 6
certified construction work payments
received for contracts in progress or
completed within the past five year (2004-
2008) EC must exceed ETB 70 million
(seven million)

The submitted value shall be accepted only 10

if it is verified with supporting evidence by
external auditors and revenue agency

no evaluation points will be given without

the original direct auditor’s report or
authenticated auditor report document and
evidence from revenue
The bidder must demonstrate access to, or 4
availability of financial resources such as
liquid assets, unencumbered real assets,
lines of credit and other financial means,
other than any contractual advance payment
ETB 15 million

Table 11: Technical evaluation result of project 3

Bidder Technical value result Remark

1 Contractor 1 89 Pass
2 Contractor 2 61.67 fail
3 Contractor 3 94 Pass
4 Contractor 4 66 fail
5 Contractor 5 75.56 Pass

Table 12: Financial evaluation and result of project 3

No Bidder name CPO. Total cost with vat After arithmetic Rank Remark
check with vat
Birr price Birr Price
1 Contractor 1 250,000 88,338,139 34 98,967,738 70 2
2 Contractor 3 250,000 101,956,49 10 108,947,892 174 3
9
3 Contractor 5 250,000 90,292,319 40 89,967,738 70 1

82
Project 4 information
The client of Mesrak (G+2) shopping center building is Hawassa city trade and industry
directive. Awarded contractor name is Neftalem Yesuf General Contractor within the national
competitive bidding tender type

Table 13: Project 4 detail information

Contract amount project start Substantial Physical Financial Time extension

cost date Completion status status

2,251,701.50 22/10/2009 22/04/2010 38% 37% Above 1years

Table 14: Technical evaluation criteria of project 4

No Criterion Sub criterion Rate

General experience 10pt
Two project not less than1 million
birr [ 10 pt]
2 Site visit and way of 25pt
methodology
Site visit [4pt]
Complexity of work understanding
[6 pt]
Methodology [7pt]
Work schedule [5pt]
Completeness [3pt]
3 Personnel 18%
Project manager [6%]
Site engineer [5%]
Office engineer [5%]
Forman [2%]
4 Equipment 13 %
Vibrator [2 pt]
Dump truck [6pt]
Concrete mixer [5 pt]
5 Financial related 35 pt
Average annual turn over 1 million
for the last two years [10 pt]

Audit status for two years [5pt]

Unconditional 100,000 birr credit
facility [20 pt]

83
Table 15: Technical evaluation result of project 4

Bidder Technical value result Remark

1 Contractor 1 82 Pass
2 Contractor 2 80 Pass
3 Contractor 3 81 Pass
4 Contractor 4 90 Pass
5 Contractor 5 87 Pass
6 Contractor 6 91 Pass
7 Contractor 7 92 Pass
8 Contractor 8 90 Pass
9 Contractor 9 72 pass
10 Contractor 10 87 pass
11 Contractor 11 89 pass
12 Contractor 12 69 fail
13 Contractor 13 91 pass

Table 16: Financial evaluation and result of project 4

No Bidder name CPO Total cost with vat After arithmetic Rank Remark
check with vat
Birr price Birr price
1 Contractor 1 20,000 2,237,231 67 2,251,701 50 1 Selected
2 Contractor 2 20,000 2,911.188 73 2,865,759 70 10
3 Contractor 3 20,000 3,095,472 - 3,0864,666 05 12
4 Contractor 4 20,000 3,017,284 - 3,019,171 13 11
5 Contractor 5 20,000 2,882,664 92 2,761,637 95 8
6 Contractor 6 20,000 2,703,940 24 2,603,877 08 6
7 Contractor 7 20,000 1,723,224 34 2,833,376 60 9
8 Contractor 8 20,000 3,867,050 - 2,736,132 26 7
9 Contractor 9 20,000 2,727,905 90 2,418,142 47 3
10 Contractor 10 20,000 2,261,947 94 2,466,995 70 4
11 Contractor 11 20,000 2,224,416 88 2,403,293 20 2
12 Contractor 13 20,000 2,54,846 97 2,541,976 64 5

Project 5 information
The client of Gudumale primary school G+3 building is Hawassa city administration
education directive. Awarded contractor name is Tefra Kachisa General Contractor within the
national competitive bidding tender type.
84
Table 17: Project 5 detail information

Contract project start Substantial Time extension Financial Physical status

amount cost date Completion status

5,592,094.54 7/7/2009 7/9/2010 Above 1years 21.44% At 21% terminated

Table 18: technical evaluation criteria of project 5

No Criterion Sub criterion Rate

Technical plan of [25%]
Technical approach and [8 %]
methodology
Work plan and scheduling [6%]
Organizational staffing [4%]
Site visit letter [5%]
2 A) General experience in five year [5%]
B) Specific experience at least 7 [8%]
million birr with one project
3 Key Personnel 30 %
Project manager [8%]
Project engineer [6 %]
Surveyor [5 %]
Forman [7 %]
Steel structure [4 %]
4 Equipment 13%
Dump truck 12-16 m3 [6%]
Pick up [3%]
Concrete mixer [4%]
5 Financial standing 18 %
Average annual turn over 5 [6 %]
million for the last five years

Audit report 5 years [6 %]

Liquid asset 1.5million [6 %]

85
Table 19: Technical evaluation result of project 5

Bidder Technical value result Remark

1 Contractor 1 60.5 Fail

2 Contractor 2 90 Pass
3 Contractor 3 84 Pass
4 Contractor 4 55 Fail
5 Contractor 5 75 Pass
6 Contractor 6 82 Pass
7 Contractor 7 71 Pass
8 Contractor 8 84 Pass
9 Contractor 9 56 Fail
10 Contractor 10 53 Fail
11 Contractor 11 78 pass
12 Contractor 12 84 Pass
13 Contractor 13 72.5 pass

Table 20: Financial evaluation and result of project 5

N Bidder name CPO. Total cost with vat After arithmetic Rank Remark
o check with vat
Birr price Birr price
1 Contractor 2 35,000 5,670,806 82 7,371,506 29 5
2 Contractor 3 35,000 4,443,167 - 5,592,094 54 1
3 Contractor 5 35,000 8,919,415 87 8,804,474 85 7
4 Contractor 6 35,000 10,278,431 32 10,278,43 32 9
1
5 Contractor 7 35,000 6,189,460 15 8,227,644 52 6
6 Contractor 8 35,000 7,869,558 15 5,739,299 16 2
7 Contractor 35,000 9,575,358 77 9,676,152 8
11
8 Contractor 35,000 8,144,256 50 6,212,359 21 6
12
9 Contractor 35,000 7,019,273 08 6,987,777 4
13

86
Project 6 information
The client of Hawassa city Bahiladarash sub-city tax and revenue office G+2 building is
Hawassa city tax and revenue. Awarded contractor name is Derje Dukamo construction within
the national competitive bidding tender type.

Table 21: Project 6 detail information

Contract Engineering project Substantial Time Financial Physical

amount cost estimation start date Completion extension status status

7,389,017 7,814,520.30 25/11/2011 25/6/2012 - Advance 0%

payment

Table 22 technical evaluation criteria of project 6

Contractor Name_____
Project’s Name______

NO Description Req. point Evaluation Remark

point
1 Proposed work methodology [17%]
1.1 Project approach and construction methodology 3%
1.2. Safety and protective measure 2%
1.3 Planned work schedule 2%
1.4 Material delivery plan 2%
1.5 Manpower and equipment utilization plan 3%
1.6 Quality assurance and control procedures 2%
1.7 Site visit 3%
2. General experience [8%]
2.1 General experience in the field of building
construction and the bidder has successfully
completed at least one contracts equivalent with the
budget of project in the past five years [2006-2010]
3. Essential equipment [25%]
3.1 Dump truck 16-18 m3 [2pcs] 5%
3.2 Concrete mixer 500L and above [2pcs] 4%
3.3 Pick up [1 pcs] 2%
3.4 Metal scaffolding 320 m3 4%
3.5 Metal form work m2 4%

87
 3.6 Concrete vibrator [1pcs ] 1%
3.7 Compactor [1pcs] 1%
3.8 Loader baket size 1.5 m3 [1pcs] 4%
4. Key personnel [25%]
4.1 Project manager [1][general-6/relevant-3] 7%
4.2 Office engineer [1] [general -6/relevant-3] 5%
4.3 Site engineer [1] [general -4/ relevant -2] 4%
4.4 Electrical engineer [1] [general -6/relevant -3 4%
4.5 Construction Forman [1][general-4/relevant-2] 3%
4.6 Bar bender[1] [general-4/relevant -2] 2%
5. Financial standing of firm [25%]
5.1 Original document that shows their financial status 15%
for the past 5 years and should be certified by
appropriate revenue authority that includes the
audited balance sheets for the last 5 years along
with certified external audit report of the bidder
5.2 The bidder must demonstrate access to or 10%
availability of working capital specifically for this
project mounting ETB one million in the form of
unconditional credit facility.

Table 23: Technical evaluation result of project 6

Bidder Technical value result Remark

1 Contractor 1 90 Pass
2 Contractor 2 72 pass
3 Contractor 3 71 Pass

Table 24: Financial evaluation of project 6

N Bidder CPO Total cost with vat After arithmetic Rank Remark
o name check with vat
Birr price Birr price
1 Contract 100,000 5,598,476 93 5,598,73 11 Below 15%%
or 1 5 engineering
estimation
2 Contract 100,000 7,389,757 25 7,389,01 67 1 Selected
or 3 7
3 Contract 100,000 6,591,940 10 6,441,01 83 Above 2%
or 5 1 difference

88
Appendixes II
Questionnaire Survey

General Information
This research survey is designed to fulfill an academic research paper requirement for the
partial fulfillment of M.Sc. degree in Construction Technology and Management at in
Hawassa University. I can assure you that the research data will only be used for academic
purposes. Particular mentioning of names will not be required anywhere. Your open and
prompt response is highly grant value of the survey.

I would like to confirm you that your response will be kept strictly confidential and it will be
used exclusively for the purpose of this research. Besides, your quick response is vitally
important in order to finalize the research timely and I would appreciate if you complete and
return it within one week of your receipt of same. Thank you very much for your time and
cooperation, and looking forward to receiving your response. For any clarification on this
questionnaire, please contact the researcher on +251 9 12453787 (Sara Hailu)
Section I. General background
Questionnaire to respondents: - which help to see experience and exposure of the respondent
that makes the research data confidential or qualifying to analyses further.
1. Name of organization: _____________________________________________

2. Construction party of respondents organization:

Client Contractor Consultant

Other (please specify)__________________________________

3. Your general work experience on construction industry

< 5 years 5 – 10 years > 10 years

89
4. Your work position in your organization
______________________________________________________________
5. Your work experience in relation to construction project procurement and bid
evaluation process?

<5years 5 – 10 years >10 years

Section II
Questionnaire to client side professionals: - which help to collect general information and
ascertain whether the listed factors are recognized by client professionals
1. Do you prepare annual procurement plan?

Yes No
2. Does your organization procurement plan specifies or contained the following
elements?

 Procurement delivery system Yes NO

 Form of contract Yes NO
 Scope of project Yes NO
3. Do you think bid evaluation process directly affect project performance?
Yes No
4. Do you believe there is current bid evaluation related problem during procurement that
affects project performance?

Yes No
5. In your company which problem is mostly faced?
 Cost over run
 Delay completion of project
 Quality problem

90
6. Do you think the above (q. 4) problem and challenges are related to current bid evaluation
process?

Yes No
7. Do you believe the legal bid evaluation criteria are properly applied during current bid
evaluation process in your company case?

Yes No
8. Members of bid evaluation team are capable against
 Technical capacity to evaluation process Yes No

 Having exposure to construction bid evaluation Yes No

 They are ethical to follow the criterion Yes No

9. From the above question (q. 9), if you choose No from the list, please write the reason
_________________________________________________________________________
_________________________________________________________________
10. Time given for the current bid evaluation process mostly is

Excess Sufficient Short

If any other specify_____________________________________________________

_____________________________________________________________________

11. The evaluation team has a trend to document previous bid evaluation process challenges
for review and future reference?

Yes No

12. Is there an opportunity to have training or seminars on bid evaluation process in the
organization?

91
 Yes No

13. What do you think about prequalification of contractor? What expect from concerned
government body and bid evaluator?
________________________________________________________________________
________________________________________________________________________
____________________________________________________________.

Section II.

Questionnaire to consultant side professionals, which help to collect general information and
ascertain whether the listed factors are recognized by consultant professionals

1. What type of construction is your organization involved in?

 Public buildings
 Private building
 Other (Please Specify): ______________________________
2. Have you ever been involved in bid evaluation as a team member forthe evaluation and
selection process in your company?

Yes No
3. Does your company try to review client procurement plan for the project hired?

Yes No
4. If your answer is yes, which area needs adaptation more?
Project scope
Procurement method
Any other please specify______________
5. How would you describe your organization’s bid evaluation procedure?
 Based on bid price only
 Based on bid price and responsiveness
 Based on bid price, responsiveness, and

92
  Other factors, (Please Specify): ______________________________
6. Set rank the frequency of your organization’s work awarded from the following project
delivery and bid-award methods
A. Competitive (Conventional method of awarding contract to the lowest responsive
bidder)
B. Negotiated (Negotiation with one or more preselected contractors)
C. RFP/RFQ (Request for Proposal/Request for Qualification- Inviting proposals from
contractors for prequalification and/or negotiation. Schedule, Quality Control and
Cost Control techniques are considered in addition to the cost.)
D. Other. Please specify ______________________________________________

1. 2. 3. 4.

7. Are you satisfied with the bid evaluation procedure currently used in your organization?

Yes No Somewhat

8. Do you think bid evaluation process directly affect project performance?

Yes No
9. Do you believe there is current bid evaluation related problem during procurement bid
evaluation that affects project performance?

Yes No

10. What types of procurement method you used in most public building
construction tender?
 Open bidding with two envelopes and two stage bidding
 Open bidding with two envelopes and single stage bidding
 Single envelope and single stage
 Tender with prequalification and short listing

93
11. Neglecting technical evaluation after screening least responsive bidders may affect
contractor selection?
Yes No
12. On which qualification criterion of technical evaluation subjective criterions avail most?
 Technical qualification Yes No
 Financial qualification Yes No
 Management qualification Yes No
 Health and safety Yes No
13. Do you believe the legal bid evaluation criteria are properly applied during current bid
evaluation process?

Yes No
14. Members of bid evaluation team are capable against
 Technical capacity to evaluation process Yes No

 Having exposure to construction bid evaluation Yes No

 They are ethical to follow the criterion Yes No

15. From the above question (q. 13), if you choose No, please write the reason
_________________________________________________________________________
_________________________________________________________________________
___________________________
16. What strategic perspective you follow to screen unreasonable least offer?
_________________________________________________________________________
_________________________________________________________________________
________________

17. On which project objectives do construction companies incapable to meet when they get
project on least bid bases?
 Complete project on time Yes No
94
  Executing the work to the required standard Yes No
 To Execute each item within or under its price Yes No
18. Do you think about Ministry of Construction minimum qualification criteria are
appropriate for evaluation of public building construction bid?

Strongly medium less

If any other specify
_________________________________________________________________________
___________________________________________________
19. . What are the problems facing the existing procedures of identifying and
selecting the right contractor?
_________________________________________________________________________
_____________________________________
_________________________________________________________________________
____________________________
20. What do you think about prequalification of contractor? What expect from government
body and bid evaluator?

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

Section II.

Questionnaire to contractor side professionals:-which help to collect general information and

ascertain whether the listed factors are recognized by contractor professionals

1. What type of construction is your organization involved in?

 Public buildings
 Private building
 Other (Please Specify): ______________________________

95
2. Do you think bid evaluation process directly affect project performance?

Yes No

3. Do you agree that all tender documents submitted by a contractor are truly
confidential?
Yes No
4. On which offer you work hard to prepare competent document?

Financial Technical Both

5. Are you satisfied with the bid evaluation procedure currently used in you participated
organization?

Yes No Somewhat

6. Do you believe that there is current bid evaluation related problem during procurement bid
evaluation that affects project performance?

Yes No
7. Do you accept the legal bid evaluation criteria are properly applied during current bid
evaluation process?

Yes No
8. Members of bid evaluation team are capable against
 Technical capacity to evaluation process Yes No

 Having exposure to construction bid evaluation Yes No

 They are ethical to follow the criterion Yes No

96
9. From the above question (q. 8), if you choose No for the list, please write the reason,
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________-
10. On which qualification criterion of the technical evaluation, clients put more
subjective criterion?
 Technical qualifications Yes No
 Financial qualification Yes No
 Management qualification Yes No
 Health and Safety Yes No

11. On which project objectives do your company incapable to meet most

 Timely completion yes No
 Quality of work to the required standard Yes No
 To execute each item within or under its price Yes No
12. If there is any other than the above (q. 11), please specify__________________________
_________________________________________________________________________
__
_________________________________________________________________________
__
13. How often your company updates material and labour market price?

Every month 3 to 6 months only on bidding time

14. There is an exercise of updating company profile and other technical document at regular
interval?

Yes No

97
15. If it is not updated regularly, please write the reason not to do so
_________________________________________________________________________
______________________________________________________________________
16. In which bidding system your company has better chance to win the bid
participated.
 Open bidding with two envelopes and two stages bidding…………..
 Open bidding with two envelopes and single stage bidding………….
 Tender with prequalification and short listing…………………………
17. Does your company often won projects on bases of least responsive bidder?
Yes No
18. If your answer is yes (q.12), does the project has progressed or completed by its own
financial budget?
Yes No
14. What factors mainly affect project progress that had been secured on least
bid bases?
 Financial constraint Yes No
 Meeting the required quality Yes No
19. Do your technical offer submitted for bid evaluation, confidently pass post qualification
evaluations?
Yes No
20. If your answer is No, on which technical section you will expect to fail?
 Qualification of management & key staffs of the organization……
 On qualifications of proposed site staffs.………………………….
 On proposed equipment & machinery to be used………………..
 Financial standing of the company………………………………..
 In all of the above…………………………………………………….

21. How do you determine minimum qualification criteria in preparing public

building construction tender? ______________________________________________

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 _________________________________________________________________________
_________________________________________________________________________
______________
22. What do you think about prequalification of contractor? What expect from government
body and bid evaluator?

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
_________________

Section III.

Questionnaire to client/consultant/contractor side professionals, which help to assesses degree

of performance effect and frequency of occurrence the listed factors on current bid evaluation
process.

The following factors are numbers of performance related problems in stages of bid evaluation
in building construction projects. From your experience, please express your opinion on rate
of occurrences in public building construction projects based on the representative numbers
listed below towards the project poor performance and success. Please tick (√) in the column
representing your selection

Note!!
That delay in this research refers to time exceeding beyond the original contract period; hence,
all extensions of time granted to the original time for completion were considered as delays.
Similarly, Cost overrun refers to the additional money required beyond the original contract
amount agreed between the owner and the contractor at contract signature.

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Quality refers how the final product and its function meet the specification and quality of end
product with regard to users’ satisfaction with the finished construction and critical success
factor.
No Factor under evaluation Effects on Degree of Impacton Frequency
Projects bid evaluation of
Performan occurrence
ce

Very high

Very high
Medium

Medium
High

High
Low

Non

Non
low
1 Imperfect procurement plan. Delay
Cost
overrun
Quality
2 Inappropriate project scope Delay
definition. Cost
overrun
Quality
3 Less understanding for estimating Delay
the influence ofcontractor selection Cost
to meetproject objective. overrun
Quality
4 Less assignment of technically Delay
capable personnel in the bid Cost
evaluation team. overrun
Quality
5 Evaluate based on Setting Delay
subjective criterions Cost
overrun
Quality
6 Selecting lowest bidder from least Delay
responsive offers by avoiding Cost
technical score form further overrun
evaluation process. Quality
7 Discrimination in providing Delay
influential information Cost
overrun
Quality
8 Poor estimation of the project time Delay
and cost Cost
overrun
Quality
9 Selection of form of contract is Delay
not based on the specific project Cost

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 nature overrun
Quality

10 Using open bidding for most of Delay

large projects Cost
overrun
Quality
11 Ambiguities, mistakes and Delay
inconsistent in Tender Document
including Specification, Bill of Cost
Quantity and Drawings overrun
Quality

12 contractor ’s financial standing and Delay

cash flow requirement is not Cost
properly evaluated overrun
Quality
13 Not Evaluating in detail financial Delay
offered submitted by contractor Cost
overrun
Quality
14 Not giving enough attention in Delay
evaluating contractor’s
Equipment, methodology and Cost
qualifications of contractor’s overrun
technical staff Quality
15 Be unethical or corruption in Delay
projects procurement process Cost
overrun
Quality
16 Selecting an unqualified bidder Delay
Cost
overrun
Quality

Thank you for your cooperation!!

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Appendixes III
Interview Question

1. Personal information, what is your name? Your organization name? Your position?
2. You have worked on procurement process? How long? How was it run?
3. What are the major factor considered as challenge and problem for bid evaluation
process?

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Appendixes IIII
Datasheet
Performance Progress Evaluation for Desk Study Selected Public Building Construction
Project:
Organization name ------------------------------------------------
1. Fill the financial and physical status of the given project.

N Project Name Special Client Financial Physical

O location Status of the Status of the
project project
1 Hawassa haykdar sub Haykdar Hawassa city
office building sub city Administrative
2 Hawassa health Mehal sub SNNPR state
department health centre city health bureau
building
3 Hawassa city Mehal sub Hawassa city
administration G+5 police city police
office building
4 Mesrak (G+2)shopping Mesrak sub Hawassa city
centre building city trade and
industry
directive
5 Gudumale primary school Haykdar Hawassa city
G+3 building sub city administration
education
directive
6 Bahiladarash sub city tax Bahiladaras Hawassa city
and revenue office h sub city revenue
building authority

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2. Major Difficulties Encountered During the Construction Process

Major Difficulties By Type Yes/No/Unknown

Material Shortage
Equipment Shortage
Cash Shortage
Man Power Shortage
Employer Interference
Design/Drawing related
Supervision Related
Other’s

3. If any information on those project related to bid evaluation

____________________________________________________________________________
____________________________________________________________________________

THANK YOU FOR YOUR COOPERATION!!

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