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Factors Affecting Selection of Procurement Method in Public Sector

Construction Projects

Conference Paper · February 2019

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10th International Civil Engineering Conference (ICEC-2019)
“Technological Transformation of Civil Engineering”
February 23-24, 2019, Karachi, Pakistan.

Factors Affecting Selection of Procurement Method in Public Sector

Construction Projects
Izhar Hussain Bhutto, Nafees Ahmed Memon
Mehran U.E.T., Jamshoro, Sindh, Pakistan
e-mail address: izharhussainbhutto@yahoo.com, nafees.memon@faculty.muet.edu.pk

Ali Raza Khoso

Mehran U.E.T., Jamshoro, Sindh, Pakistan
e-mail address:engr.aliraza23@gmail.com

Muhammad Aslam Leghari, Shabir Hussain Khahro

NESPAK Consultancy, Hyderabad, Sindh, Pakistan., Mehran U.E.T., Jamshoro Sindh, Pakistan
e-mail address:leghariaslam@gmail.com, shkhahro@gmail.com

Abstract
Selection of procurement method for the award of public sector projects is a complex process and has a
direct effect on project performance. Since different procurement methods are available for construction
projects, hence the right selection of a method for carrying the work is not an easy task. Procurement
selection factors can assist the client to choose the best procurement methods among different
procurement methods. In this research major factors of selection criteria have been worked out initially
from literature and then by conducting several unstructured interviews from experts involved in public
sector construction projects. A questionnaire survey was done to collect the data from several
professionals working at different projects. Most of the data were collected from professionals engaged in
the procurement process. The gathered data was analyzed using SPSS software and average index
technique. Identified most influenced factors affecting selection of procurement method as per findings
of this study are: client capacity, time and cost overrun, quality certification and control, risk issues,
nature and size of project, and government policy issues. Study concludes that the consideration of
identified important factors will help public sector clients in the better selection of procurement method
for different projects.

Keywords
Construction Industry, Public Sector, Procurement Method, Important Factors, Pakistan.

1. Introduction

Procurement method is a flow of activities starting right from identification of the need to completion of
the project. There are many project procurement systems that have been introduced for effective, efficient
and better performance and outcome of the system. It has been observed that major stakeholders need the
desire to execute their project on fast track aiming to get fast delivery with the early start of work and
ensuring better performance in term of cost and time, value for money invested the minimum possibility
of risk, early confirmed design and prices. There are many procurement methods but the most commonly
used methods of procurement are: traditional method also known as Design-Bid-Build method and non-
traditional method also known as Design-Build method. Besides this, Management oriented and Public-
Private Partnership (PPP) is also accessible (Davis.P et al., 2008). and used to some extent. The use of
procurement methods vary from country to country. The procurement difference is based on cultural
differentiation and reflects the relationship between procurement system and clients' interest (Zeljko.S et
al., 2016). Project effectiveness and efficiency are greatly affected by the type of procurement method and
it helps to handle the project. It has been felt that the research conducted in Sri Lanka (2007) so far is
lacking some aspects with the special reference that how and up to what extent the procurement methods
actually impact on project delivery. The use of procurement method helps to avoid problems and it is the
key to the attainment of project-specific goals. An approach for procurement selection is essential to
achieve the project success and ensure value for the client’s interest (Shiyamini.R et al., 2007). Mostly
construction projects use local procurement methods but research had been studied in Nigeria (2015) has
revealed that project does suffer delays in project efficacy & efficiency due to defects in procurement
methods. Hence, it is imperative to improve the procurement methods by focusing and optimizing all the
variables involved in project performance viz. cost and time. Also, the same research study has revealed
that project delivery is hampered due to defects in procurement methods. It also concludes that the
delivery of the design-build method is better than the traditional method (design-bid-build) in terms of
cost, time and quality of construction works (Idiake.J.E et al., 2015). Different researchers have suggested
different procurement selection factors that can help the client to choose and adopt the best procurement
method. For better delivery and maintain the conducive environment in a construction project, it is
essential to have effective, efficient and transparent procurement method. To evaluate the efficacy of
procurement variables on project delivery revealed that procurement selection criteria of cost, time,
quality, quantity, and environmental aspects have a great influence on project delivery (Ogunsanmi.O.E et
al., 2013). Research work carried in Nigeria (2013) for exploring the significant impact of procurement
method on abandoned projects revealed that there is dire need of adopting innovative procurement
methods so as enhance the project delivery to a greater extent (Akilano.J.A et al., 2013). The research
study conducted in Nigeria (2013) manifested that the traditional procurement system has been commonly
employed in project execution (Oladinrin.O.T et al., 2013).
Above cited literature indicates that the selection of procurement method mostly affects the project
performance due to difference in level of importance of different factors in the selection of procurement
methods. Many selections criteria factor affect on choosing the appropriate procurement method among
conventional and non-conventional method. For finding and selection of appropriate method
understanding level of importance of different factors will provide a helping hand to public sector clients.

2. Factors Affecting Selection of Procurement Method

A study was conducted on factors affecting the performance of public procurement in Kenya. The study
focused on three major aspects of public procurement. These aspects were information technology,
competency of staff and ethical issues. From the study, it has been adduced that the use of information
technology, deployment of competent staff and using the fair transparent mechanism in procurement has
enhanced the delivery of all procurement organizations (Wanyonyi and Muturi, 2015). Research focused
on factors affecting the implementation of procurement policies in Kenya, in which study reveals about
delay in procurement is due to lack of competence in staff, different procurement policies, estimated cost,
size of economic projects, responsibilities of client (Kimote and Kinoti, 2018). Manthonsi and Thwala
(2012) conducted study on factors influencing the selection of procurement method in construction
industry of South Africa in which the identified factors were: knowledge and influence of client in life
cycle of project, nature of client, political consideration, corruption and self enrichment, size and
technical complexity of project, delivery time and time related constraints, funding arrangement,
familiarity of procurement method, government policies and competition, risk allocation, client
requirement and cash flow, lack of sources, market condition, unskilled labour, technology
globalization. A research conducted on an appraisal of project procurement method conducted in
Nigerian construction industry in which identified factors having an effect on selection of procurement
were reported as: estimated cost and time at project completion, minimum time of design and
construction, quality assurance, financial management and control, complexity and flexibility of design
and techniques to entertain the client requirement, consultancy offered, risk avoidance, available
information at project inception, nature of project and client (Babatunde et al., 2010). A research work
conducted by Nabil & Osama (2017) in Gaza on the selection of accurate procurement strategy for
construction of projects. In this study, it is indicated that the most affected six factors involved in the
adoption of accurate procurement methods in the construction of projects are cost competition, degree
level of complexity project, time criteria of the project, size of a project, financial capability of client and
experienced client in procurement system. Furthermore studies conducted by Osama and Nabil (2013),
Oladrin et.al (2013), Shirley.C.J.L et.al (2013), Ogunsanmi.O.E (2013) Akilano et.al (2013), Devis et.al.
(2008) also address to the selection of procurement. Based on literature cite above and unstructured
interview with industry experts, this study considered forty nine factors which mainly affect the selection
of procurement method. The factors were distributed into seven main categories which include: Client
characteristics, Time, Cost, Quality, Risk, Project characteristics and External environment for further
investigation in context of set objective.

3. Research Methodology and Data Collection

From literature review and published researches, factors affecting the selection criteria of the procurement
method have been studied. And at the initial stage, few unstructured interviews were conducted with
relevant experts to verify and arrange the factors of literature and past studies in the context of the
construction industry of Pakistan. Then a questionnaire was designed and 150 questionnaires were
distributed among different professionals involved public sector construction projects. Out of 150, 80
questionnaires were received and considered for further analysis. Table 3.1 shows the frequency and
percentage of background of respondents.

Table 3.1: Background of Respondents.

Respondent Frequency Percentage

Engineers 28 35
Procurement Specialists 11 13.75
Project Managers 10 12.5
Site Engineers 10 12.5
Management Officers 7 8.75
Teachers/Scholars 6 7.5
Building Inspectors 5 6.25
Assistant Directors 3 3.75
Total 80 100

Experience of the respondents is portrayed in Figure 3.1

Figure 3.1: Experience of respondents

The rank of the factors was obtained with the help of SPSS and average index method. Rogers (1995)
innovation diffusion theory (Adoption of Rogers classification) was then used to clarify the degree of the
important factors. The adoption of Rogers classification in Likert scale is shown in Table 3.2
(Rogers.E.M, 2003).

Table 3.2: Interpretation of Adoption of Rogers classification based on 5 pointsLikert scale.

Likert Description Value Range Allocation Roger Innovation Adoption Status

Not Effective 0.1-1.0 Laggard
Less Effective 1.1-2.0 Late Majority
Moderately Effective 2.1-3.0 Early Majority
Effective 3.1-4.0 Adopters
Highly Effective 4.1-5.0 Innovators
Source: Alston and Miller (2002); Moohammad et al. (2014); Owusu-Manu (2017)

Based on analysis, the factors considered as effective and highly effective are presented in the table 3.3.

Table 3.3: Identified main factors affecting selection of procurement method

Relative Importance
Factors Mean Value
Index (RII)
Category-1: Client characteristic related factors
Financial capability of client 4.64 92.75
Client experience in procurement method 4.25 85
Availability of qualified personnel 4.22 84.5
Integrated Design and Construction 4.19 83.75
Catgory-2: Time related factors
Project completion at estimated time 4.59 91.75
Construction time 4.31 86.25
Delivery time Schedule 4.26 85.25
Catgory-3: Cost related factors:
Project completion at estimated cost 4.55 91
Level of Price competition in industry 4.23 84.5
Price certainty 4.21 83.75
Catgory-4: Quality related factors
Quality Certification 4.31 86.25
Experience of project contractor 4.25 85
Required level of quality control 4.24 84.25
Expected performance of project 4.19 83.75
Catgory-5: Risk related factors:
Complexity in project construction 4.26 85.25
Allocation of responsibility to project stakeholder 4.21 84.25
Economic condition 4.20 84
Catgory-6: Project characteristics related factors
Nature of Project 4.33 86.5
Size of project 4.26 85.25
Available resources 4.24 84.75
Catgory-7: External Environment related factors
Procurement policy 4.27 85.5
Material availability 4.25 85
Environment impact 4.23 84.5
4. Results and Discussions

This part consists of results and discussion of factors affecting the selection of procurement method. And
the results of this study provide an indication of the relative importance index and rank of the factors. The
generated output (mean) of the responses from public sector was taken, and effective y affected factors
based on the Rogers innovation classification were selected to determine the status of factors’
consideration. These factors were separated into seven groups.

4.1 Client characteristic related factors:

This group contains overall nine factors as shown in figure 4.1. Identified main factors as: financial
capability of client with RII (92.75%) and Mean (4.64), client experience in procurement method with RII
(85%) and Mean (4.25), availability of qualified personnel with RII (84.5%) and Mean (4.22) and
integrated design and construction factor with RII (83.75%) and Mean (4.19). This outcome can be
justified since the factors most considered in the choice of procurement are the likelihood of having
financially capacity of client which is on first priority and then experienced procurement specialist and
qualified manpower, also integrated design and construction is an important factor from the client side

Figure 4.1: Client characteristic related factors

4.2 Time related factors:

This group contains seven factors. Identified important factors include: project completion at estimated
time with RII (91.75%) and Mean (4.59), construction time with RII (86.25%) and Mean (4.31) and
delivery time schedule with RII (85.25%) and Mean (4.26). This group finding show the factors most
considered in the selection of procurement are the likelihood of having no time overrun during project
execution, which is on first priority and no any delay during construction at the site and proper
maintenance and delivery of material and manpower are prepared activity wise.

4.3 Cost related factors:

This group contains six factors. Identified main factors are: project completion at estimated cost with RII
(91%) and Mean (4.55), level of price competition in industry with RII (84.5%) and Mean (4.23) and
price certainty with RII (83.75%) and Mean (4.2). This finding can be explained that the factors most
considered in the selection of procurement if having no any cost overrun during project construction at the
site and. And competition level of price in construction industries, which makes competition between
different organization to get projects and certainty of price/cost are also the most important factors.
4.4 Quality related factors:

This group includes seven factors. Identified main factors are: quality certification with RII (86.25%) and
Mean (4.31), experience of project contractor with RII (85%) and Mean (4.25), required level of quality
control with RII (84.25%) and Mean (4.24) and expected performance of project with RII (83.75%) and
Mean (4.19). This finding can be explained as the factors most considered in the selection of procurement
if having, ISO certification and project contractor experience to maintain and control quality control at the
site are affected factors, also better performance in the project to improve skills are important factors in
case of quality.

4.5 Risk related factors:

Project risk group consists of eight factors. As per analysis the main factors are: complexity in project
construction with RII (85.25%) and Mean (4.26), allocation of responsibility to project stakeholder with
RII (84.25%) and Mean (4.21), economic condition factors with RII (84%) and Mean (4.20) and level of
risk responsibilities with RII (75.75%) and Mean (3.79). The output of this can be considered in the
adoption of procurement having the complexity of construction project is the important factor,
responsibilities of stakeholder and economic condition of the construction project are also the most
influential factor for achieving goals.

4.6 Project characteristics related factors:

This group consists of six factors. Identified main factors are: nature of project with RII (86.5%) and
Mean (4.33), size of project with RII (85.25%) and Mean (4.26) and available resources with RII
(84.75%) and Mean (4.24). This result can be justified as the factors most affected considered in the
selection of procurement are having proper nature of the project means what types of the project is. And
projects are based on, having proper size of the project because big projects take more time and also it
takes to much cost and it must be taken in mind that site will be nearer to recourse as material and
manpower are easily access their needs.

4.7 External Environment related factors:

This last group related to external environmental consists of six factors as shown in figure 4.2. Based on
analysis, the identified main factors are: procurement policy with RII (85.5%) and Mean (4.27), material
availability with RII (85%) and Mean (4.25), environment impact with RII (84.5%) and Mean (4.23). It
can be explored as the factor most influenced in the choice of procurement method is procurement policy
by government authorities like Public Procurement Regulatory Authority (PPRA), Pakistan. Further
material availability at site and the impact of material usage on surrounding environment are the most
important factors which influence successful delivery of construction projects.

Figure 4.2: External Environment related factors

5. Conclusion

The factors affecting the selection of an appropriate procurement method in public sector construction
project is vital to project success. It has been observed that the procurement strategies of the project have
not been changed significantly in the last two decades. Successful procurement strategy requires initially
proper consideration of relevant factors. To help the clients in choosing the appropriate procurement
method, a number of factors are to be considered. An exploratory investigation of factors affecting the
selection of procurement method was conducted in this research to determine the level of importance of
factors. The results from the survey of this study show that there are some most influential factors
affecting the selection of procurement method in public sector construction projects of Pakistan. This
study has divided the identified forty nine factors in seven main groups. Rogers innovation diffusion
theory for classification of factors was then used to clarify the degree of the importance of identified
factors. Some of the most effective factors to be considered in selection of procurement method as
identified in this study are: financial capability and experience of the client, project completion at
estimated time and cost, level of price competition in industry, quality certification, experience of
contractor, construction complexity, allocation of responsibility to project stakeholders, nature, and size
of the project, procurement policy, and material availability. Public sector clients usually ponder to adopt
suitable method aimed at achieving tangible and sustainable project results. Based on the findings, this
study concludes that consideration of identified main factors presented in table 3.3 will help public sector
clients in the selection of appropriate procurement method.

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