BUIL03 - ASSESSMENT OF CRITERIA FOR CONTRACTOR SELECTION FOR PUBLIC PROJECT IN NIGERIA

CHAPTER ONE

1.0       Introduction

Arguably, objectivity in contractor selection for public construction projects is critical and imperative to the success of the project. The Due Process Policy is a popular public procurement reform in Nigeria. It was enacted in 2002, before the enactment of the Nigerian Public Procurement Law of 2007. The goal of this procedure is to entrench an effective contractor selection model that is based on world’s best practices. Evidently, adopting the ethos of transparency, objectivity and accountability in value-based public procurement systems had been given keen consideration in many countries (Abdul-Aziz, 1995; Wong and Holt, 2004; Salama et al, 2006). The contribution of the construction industry to the growth of the Gross Domestic Product (GDP) of Nigeria is steady and improving; from about 5% in 2001 to over 13% in 2007 (Central Bank of Nigeria - CBN, 2008). This growth is motivated by continued interest of government to reposition Nigeria’s economy as one of the top 20 largest economies in the world. Interestingly, the government is responsible for about 75% of infrastructural development in Nigeria (BMPIU, 2005). Evidently, there is very strong relationship between the Nigerian construction industry and larger economies, both in Nigeria and Africa at large. Thus, the government is not only keen to the development of the Real Sector of the economy but there is also critical interest for the government to improve the image of the country through the construction sector. Before the advent of the Due Process Policy, contract procurement process for public construction projects in Nigeria was facing a lot of challenges.

These challenges included the implication of project failures on the image of the Nigerian construction industry in terms of project abandonment, delay in project delivery, cost inflation, poor quality of work, high initial cost of projects and so on. Arguably, poor methods and procedures of selection of contractor could be linked to this. However, these methods are not only subjective; decisions on public contract awards are based on informal relationships between contractors, public officials and project teams. Thus, most of the models of assessment used for the selection of contractors are not based on value and merits of bids but on tender price and “initial” lowest bids, as well as other informal factors (Olatunji, 2007a). Therefore, this challenge triggers mismanagement of funds through public contract by erring contractors as well as unethical practices by construction professionals.

1.1       Statement of the Problem

According to Tran (2000) every prospective client aspires to attain a completed facility of the best possible quality within the specified time while keeping the final cost within the initial budget estimates. However, this aspiration is not always achieved sometime because of the prequalification criteria involved in selecting construction contractors. Ramani (2000) investigated prequalification criteria upon which the contractor screening was based on reducing subjectivity using analytical tool in Saudi Arabia. Ogunsemi and Aje (2006b) made use of only five criteria, out of enormous prequalification criteria identified, to developed a model for contractors' selection to ease clients' and consultants' burden in selecting competent contractor. Olatunji (2006) study revealed high contractor performance through prequalification selection. All these studies ignored the contributions and influences of project location on the prequalification. Previous studies on contractors' prequalification criteria in Nigeria were not location specific while studies on geographical peculiarities of contractors' prequalification with particular reference. The assessment criteria are similar to global standards and these have been applied to generate national models for selection of contractors for public works in Nigeria (Olatunji 2005). However, the principle of prequalification is to enact the ability of contract administrators to understand desires of clients and establish the best set of criteria to be used for assessing contractors (Bulama 2005). Thus, these criteria are not meant to be rigid because expectations of clients on performance and functional requirements of projects are dynamic and flexible (Herbsman and Ellis, 1992). Generally, prequalification is based on multivariate selection criteria like past performance records for similar projects, financial capacity, management capability, location factor, technical capability in terms of human and mechanical resources, general information about candidate firms, as well as other indices that might be very significant to the success of the project (Holt et. al., 1995).

1.2       Research Question

a.       What are the criteria for selecting contractors for public project in Nigeria?

b.      How adequacy are the criteria for selection for public project in Nigeria?

c.       What are the shortcoming of the criteria for selection contractors for public project in Nigeria?

 1.3       Aim of the Study

The aim of this project is to investigate the procedure of contractor selection for public project in Nigeria. With the view to know the process and procedure how contractors can be registered and the regulatory body required in doing the registration.  

1.4  Objectives of the study

a.       To identify the criteria for selecting contractors for public project in Nigeria.

b.      To determine the adequacy of the criteria for selection contractor for public project in Nigeria.

c.       To identify the shortcoming of the criteria for selection contractors for public project in Nigeria.  

1.5       Hypothesis

H₀:       There is no adequate criteria of selection contractor for public project in Nigeria.

H₁:       There is adequate criteria of selection contractor for public project in Nigeria.

1.6       Significant of the Study

The objective of the registration is to determine that an organization is qualified and capable to be registered as a contractor to meet the needs of the construction industry. The purpose of providing the required documents is to ensure that contractors have the necessary skills, experience and integrity to thoroughly complete the projects they are hired for. The amount of processing, registration and renewal fees that a contractor is required to pay to be a contractor and to undertake a contracting job both for government and private projects. Even though the amount is not huge, the requirement to register with various bodies and agencies before they can bid for a project creates unnecessary burdens to a contractor to do his business. The validity of the registration is between one to three years depending on the issuing agencies. The registration need to be renewed once its validity period has expired and each renewal involves processing and renewal fees.  In addition, it is costly for contractors to provide same or similar documents for all types of registration and to certify a number of these documents as true copies.  After the objective has been established once, by providing the required documents, additional requirements are redundant and impose an unnecessary cost on contractors in doing their business. Government could consider authorising one Ministry or Agency to issue one overarching licence for a contractor. The Ministry or Agency would set criteria for a contractor to be eligible for different types of contracting jobs. The licence issued would spell out the category of contracting jobs a contractor is eligible to undertake based on the criteria met.  The blanket approval would eliminate the requirements for a contractor to obtain multiple registrations as per current practice. Contractors would only need to provide one set of supporting documents, thus would save cost and time. This would also help improve industry productivity as contractors would no longer have to wait for approval from various agencies before they can participate in any project. On the part of issuing agencies, the present processing officers could be deployed to productive jobs, and hence improve the organisations’ productivity. The Nigerian Due Process Policy is administered by the Budget Monitoring and Price Intelligence Unit (BMPIU), Office of the President, Federal Republic of Nigeria. The goal of BMPIU is to ensure full compliance with laid down guidelines and procedures for the procurement of major and minor capital projects and associated goods and services. Also, it is to serve as official guide for public contract procurement and as administration system in Nigeria, prior to the enactment of Public Procurement Act (2007). It is designed to revamp the system as a disincentive to corruption and unethical practices, through purposeful focus on principles of integrity, transparency, competence-based selection, accountability and value-driven competition as national ethos in public contracting.

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