Performance Study of Lowest Bidder Bid Awarding System in Public Construction Projects; in case of Jimma Zone

Abstract

In this 21st century where economic growth is fast, construction industry is highly competitive especially in developing country like Ethiopia. Public construction projects located in Jimma zone awarded using lowest bidder bid awarding system however, the contractor most of the time fails to complete and handover the project to the client due to lack of finance to complete the project. This research was conducted with the aim of analyzing performance of Lowest Bidder Bid Awarding System in Jimma Zone Public Construction Projects, through identify the challenges, impacts of Lowest bidder bid selection system, and by comparing with different bidding system. For this purpose, questionnaire survey conducted to identify the challenges and impacts while interview has conducted with stakeholders to compare lowest bidder bid awarding system with different bidding alternatives system. In addition, the finding was analyzed using SPSS version 25 software and Microsoft excel. The main six challenges were identified from the current study in lowest bidder bid award system; No site visit before bidding and no understanding of detail scope of work contractor, contractors’ perception on variation, contractors have to bid low to increase annual turnover, Short comings in professional’s contractors and Weak contract administration of client. The study also identified six impacts of lowest bidder bid award system where delay on project completion 87.5% happened, cost overrun 45% occurred, increase in number of change request/ orders, unsatisfactory quality of work and increase dispute and claims between contracting parties were the main concern. In addition, the research was comparing lowest bidder bid selection system with different biding alternatives to achieve organization objectives interims of achieving qualitative, technical and hitting the stetted objective of the project with best performance, more secured and less risk are multi parameter and competitive negotiated bidding method were ranked 1st and 2nd respectively. Therefore; from the study findings, it can be concluded that the lowest bidder bid awarding system needs to be improved and the alternative bid systems are more preferred to select qualified contractors and to achieve the stated project objectives. So, to improve the performance and to minimize the impacts of lowest bidder bid awarding system in public construction projects the following recommendations are forwarded; improve the current procurement system, Organized and summit post project auditing depends on reliable data and report to concerned policy maker to use as input, submit an estimated bid price by considering the current market condition and project cost variations to complete the project with agreed contract requirement. In addition, the consultant should take part effective advice for their client from contractor selection up to effective contract administration to reduce the risk awarding unqualified contractors and contractual problems during the construction stage.