An Assessment Of Factors Affecting The Selection Of Procurement Methods In Nigeria Construction Projects
TABLE OF CONTENT
Abstract
CHAPTER ONE
INTRODUCTION
1.1Background of study
1.2 Problem statement
1.2 Statement of the problem
1.3 Research questions
1.4 Aim and Objectives of the Study
1.5 Justification of the Study
1.6 Scope and Limitation of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1 The Nigeria Construction Industry
2.2 Construction Procurement Methods
2.3 Hallmarks of a good public procurement
2.4 Factors influencing the selection of procurement method
2.5 Factors for Measuring Project Performance
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Population
3.2 Sample Frame
3.3 Sample Size
3.4 Data Collection Method/Techniques
3.5 Data Analysis Method and Presentation
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Data presentation
4.3 Discussion of results
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
5.1 Conclusions
5.2 Recommendations
5.3 Areas of further research
REFERENCES
Abstract
The selection of an appropriate procurement method is becoming an increasingly important issue due to a complex decision-making that has to be made by clients early in the project lifecycle. The aim of this research is to analyse the factors that influence the choice of procurement method. An extensive literature review of various procurement methods and factors which influence the selection of an appropriate method for construction projects in Ondo was conducted. A survey questionnaire was carried out to elicit professionals’ views on factors that influence the selection of procurement method for their planned projects; a total of 20 respondents responded to the survey. The data was then analyzed using the Statistical Package for Social Sciences (SPSS) and the factors ranked according to their Relative Importance Index (RII). The results indicate that the top six significant factors that have most influence on the selection of procurement methods in Ondo state construction projects are: price competition; degree of project complexity; time constrains of project; project size; client’s financial capability and client’s experience in procurement methods.
CHAPTER ONE
INTRODUCTION
1.1Background of study
Construction project procurement has a scope which is quite immense. It deals with bringing together as well as organizing multiples of firms and organizations that are brought in to design, manage and build construction projects. Some of these projects include houses, shopping malls, office structures, bridges, roads etc. The processes and outcomes involved in construction projects affect all the people in the industralized world. The Nigerian construction industry contributes an average of 8.5% of its Gross Domestic Product (Nigeria Statistical Service, 2007), therefore the construction industry’s efficiency in this country is very important. Construction works in almost every country are procured through a number of methods be it open competitive, restricted, selective or negotiated. Project procurement can be described as processes whereby construction products are obtained by clients.
Procurement comes out of the word procure which literally means to obtain by care or effort to bring about and to acquire. Method is about “a procedure, technique, or way of doing something, especially is accordance with a definite plan”. In this context, project procurement focuses mostly on the processes, procedures and organized methods that are required to obtain or acquire a construction project. (Masterman, 1996) narrated project procurement as structures put together or designed as a blueprint which can be used to design and execute construction projects for clients. The importance of selection of a procurement method has been pointed out by (Chan, 1996), who ascertained that the procurement method have a great influence on the time performance when it comes to construction projects. A project which is driven by the different types of procurement methods always has a massive effect on time. Similarly, (Naoum, 1991) affirmed that the procurement method that were being used were having major effects on cost and time overruns. (Bowen et al., 1999) was also of the view that the selection of procurement methods inappropriately was the major cause of the construction industry’s poor performance. This brings about the effect on project delivery when choosing a particular procurement method type for a project. The choice of the best method for procurement for a particular project to be adopted by the client has a great effect on the performance of the project.
It has been observed however that many clients have been selecting procurement systems in a cursory manner, and some clients even use a specific procurement system by default without making a deliberate choice (Thomas, Duc Thanh Luu & Swee Eng Chen 2002); without proper consideration of the procurement method that will best suit their needs and that of the project. Others base it largely on their familiarity with a particular procurement method (Okunlola, 2012). This has resulted in the construction industry’s poor performance (Maizon, Mellisa, Tay, Shim, Ng & Ng 2006). Employing an inappropriate procurement system may also lead to project failure in terms of time and cost overruns (Thomas et al., 2002) which is presently a bone of contention in the Nigerian construction industry.
In addition, there are various procurement systems, as will be discussed later in the literature review, available in the construction industry now days and coupled with the rapid increase in number of differing procurement systems; there exists a need for more systematic method of selection (Hibberd and Djebarni, 1996). Also, since each procurement method has its distinctive characteristics in terms of pre-tender and post tender activities and processes, division of risks between client and contractors, and the effectiveness of project monitoring and control, advantages and constraints which will have effect on the cost, time and quality of the project i.e. the project performance (Rosli et.al, 2006). In the same vein, the selection of procurement system is a very important task for clients and its importance cannot be under-estimated. This statement becomes apt when viewed against the fact that despite the various and ever increasing number of procurement methods, no single system best satisfies the needs of a client in all situations and neither that of different clients in the same situation (Maizon et.al, 2006). Each project has its own characteristics and requirements. According to Al Hazmi and McCaffer (2000), for a project to be successful, the procurement method must address the technicality of the project alongside the client’s needs.
Also, various selection models have been derived to help clients and consultants in choosing the right procurement system. For example, the Project Procurement System Selection Model (PPSSM) (Al Hazmi and McCaffer, 2000), Multiple Criteria Decision Support System (MCDSS) (Mahdi, Riley, Fereig & Alex, 2002), Procurement Method Analysis (PROMA) (Okunlola, 2012). However, despite the usefulness of these models, they are highly accompanied by complex and comprehensive mathematical techniques and thus require a high level of user’s experience.
Thus, in view of the cursory manner that many clients have imbibed in choosing method of procurement, the ever-increasing variations of procurement method now available to choose from, talk less of the fact that no single procurement method best satisfy client’s need in all situations, it may be a daunting task for clients to carry out a study of the procurement method that best suit the project circumstances. It is thus important to evaluate the factors influencing the selection of a procurement method with a view to establishing a simple set of criteria that will help public clients in choosing a procurement method.
The following research questions will serve as a guide in the course of this research work:
- What are the criteria for the selection of procurement methods?
- What are the significant factors that affects the selection of procurement methods in construction projects?
- What are the effects of the factors on selection of procurement methods?
1.4 Aim and Objectives of the Study
This research aims to evaluate the factor that influence the choice of procurement method with a view to helping clients and consultants to be more selective in their choice of procurement system. In order to achieve this aim, the objectives of the study are to:
- To identify the criteria for the selection of procurement methods
- To identify the significant factors that affects the selection of procurement methods in construction projects.
- To evaluate the effects of the factors on selection of procurement methods.
1.5 Justification of the Study
Various researchers have made a lot of efforts on procurement method selection. For example, Love et al. (1998) concluded from an empirical research finding that similar clients do not in general have similar needs in their procurement objectives which may of course be due to the different nature of their individual projects. The study approached the topic from the client, consultant and contractors viewpoint. However, in its findings, contractor respondents were found to have a bias towards design and construct methods of procurement system and thus were excluded from the analysis. This is due to the fact that the perspective of client, contractor and consultants may vary when it comes to factors to be considered in choosing a procurement method. Thus, this study aims to narrow down its focus on clients only since an accurate identification of the client’s requirement largely determines the procurement method to be used. In a similar study, Maizon et al (2006) presented various factors influencing the selection of procurement systems by clients in Malaysia. The study took a holistic approach of these factors from client’s perspective. However, clients can be divided into two types. There are the public clients and private clients (Maizon et al, 2006). The public clients consist of Government Funded Agencies, Ministries and Local Authorities. The private clients consist of property developers, owner- occupiers and investors. Thus, this study aims to narrow down its focus on public clients only because they by far represent the largest procurer of projects in the country (Chima and Ofong, 1999).
Thus, this study aims at assessing the various construction procurement methods available in the Nigerian construction industry with a view to evaluating the factors to be considered before employing any type of procurement method.
1.6 Scope and Limitation of the Study
This study focuses on evaluating the factors that has to be considered in the choice of procurement method for clients. The area of work of the study focuses on government- funded organizations namely Ministries, Agencies, Local Governments and Tertiary Institutions in Ondo state responsible for carrying out the procurement of construction works through a procurement/project/works department within their organization. Ondo state was chosen as the scope due to its proximity to the institution where this research work is being carried out. Thus, projects executed or financed by individuals, property developers, owner occupiers and developers are not bounded by the findings of this research.
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