Model of Predicting Bidding Costs for Construction Projects in Nigeria using Public Procurement Act 2007
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Date
2020-02
Authors
Yahaya, M.L.
Umar, I.
Babalola, A.J.
Sani, M.
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Engineering Research & Technology (IJERT)
Abstract
The costs incurred by various stakeholders participating in the tendering process and their magnitude has attributed incongruity between government and contractors, economic drain and less competition in public
sector projects. The aim of the study is to develop model that predict the transaction cost of bidding construction projects based on Public Procurement Act 2007 (PPA 2007). To achieve this, quantitative survey design based on structured questionnaire was used. The data collected from 143 sampled contractors selected using stratified sampling techniques from the North-West states of Nigeria were analyzed using Partial Least Squares-Structural Equation Modeling software. The results from the analysis revealed three (3) major sources of transaction costs identified from the field as; eligibility documents, contract administration costs, and securing related documents methods. In addition, the three identified transaction costs sources were found to be significant determinants of transaction costs for contractors bidding for construction projects of various types. Moreover, bidding costs model was found to exhibit good forecasting power that can be used to predict the magnitude of costs incurred by
contractors in bidding projects in Nigeria. The study concludes that the transaction costs of contractors in bidding
construction projects on average is 8.21% of contract sum after validating the model with real life data, and it will
benefit incoming firms into the industry as a bidder by knowing their entry probable costs indicators for public
projects. The study recommends that further studies should be explore to identify some potential factors such as
Equipments, financial capability and professional staff strength which could provide new insights into bidding transaction costs incurred for construction projects.
Description
Scholarly article
Keywords
Transaction costs theory , PLS-SEM , Public procurement Act 2007 , Eligibility documents , Construction projects , Research Subject Categories::SOCIAL SCIENCES
Citation
Yahaya, M.L. Umar, I. Babalola, A.J. Sani, M. (2020). Model of Predicting Bidding Costs for Construction Projects in Nigeria using Public Procurement Act 2007. International Journal of Engineering Research & Technology (IJERT), 9(2), 234-244p.