Bid or no-bid decision factors of indigenous contractors in Nigeria

Article


Olatunji, Oluwole Alfred, Aje, Olaniyi Isaac and Makanjuola, Sina. 2017. "Bid or no-bid decision factors of indigenous contractors in Nigeria." Engineering, Construction and Architectural Management. 24 (3), pp. 378-392. https://doi.org/10.1108/ECAM-01-2016-0029
Article Title

Bid or no-bid decision factors of indigenous contractors in Nigeria

ERA Journal ID41005
Article CategoryArticle
AuthorsOlatunji, Oluwole Alfred (Author), Aje, Olaniyi Isaac (Author) and Makanjuola, Sina (Author)
Journal TitleEngineering, Construction and Architectural Management
Journal Citation24 (3), pp. 378-392
Number of Pages15
Year2017
PublisherEmerald
Place of PublicationUnited Kingdom
ISSN0969-9988
1365-232X
Digital Object Identifier (DOI)https://doi.org/10.1108/ECAM-01-2016-0029
Web Address (URL)https://www.emerald.com/insight/content/doi/10.1108/ECAM-01-2016-0029/full/html
Abstract

Purpose: The decision to bid or not to bid for new projects determines contractors' propensity for business success or failure. The purpose of this paper is to investigate the factors that affect the decision of indigenous construction contractors to bid or not to bid in Nigeria. Design/methodology/approach: Analysis was conducted on data from questionnaires received from 64 engineering management employees of leading construction companies which are members of Nigeria' s Federation of Construction Industry. The study identified 41 significant decision factors often considered by Nigerian indigenous contractors before the bid. Mean item scores were obtained for each of the factors. Principal component analysis was used to point out the most significant decision factors. Findings: Results revealed significant orthogonal relationships between the factors. Only 11 of the 41 factors are statistically significant to influence contractors' decision to bid or not to bid. Most of the significant items were amongst the least rated items by the participants. The post hoc decision factors include consultant' s interpretation of project specifications, previous relationship between the intending bidder and client, availability of other projects at the time of bidding, technological complexity of the project under consideration and prequalification requirements. Others include the propensity for resource price fluctuation, business capacity of partners, amount of own work vs subcontracted work, required rate of return on investment and difficulty in obtaining finance. Originality/value: The practical implication of these findings are as follows: the orthogonal relationship between the decision factors implies non-linear relationship between the factors and actual decision to bid or not to bid, and that bid success is often not predictable by bid behaviour; many of the bid decision factors rated highest by indigenous contractors seldom impact the contractors' actual bid decisions; local and international players can adopt the significant decision factors elicited in this study for managing their structures for inter-organizational partnerships.

KeywordsBidding; Performance monitoring; Sub Saharan Africa; Subcontracting; Supply chain management; Tendering
ANZSRC Field of Research 2020330299. Building not elsewhere classified
330207. Quantity surveying
330203. Building industry studies
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Byline AffiliationsCurtin University
Federal University of Technology, Nigeria
Institution of OriginUniversity of Southern Queensland
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