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Implementing e-tendering to improve the efficiency of public construction

contract in Saudi Arabia

Article  in  International Journal of Procurement Management · January 2018

DOI: 10.1504/IJPM.2018.091666

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Implementing e-Tendering to Improve the Efficiency of Public

Construction Contract in Saudi Arabia

Eng. Moath Al-Yahya, , Saudi Arabia, Moath.Alyahya@gmail.com

Dr. Kriengsak Panuwatwanich, Griffith School of Engineering, Griffith University, Australia,

k.panuwatwanich@griffith.edu.au

1 Abstract

This paper presents an e-Tendering model developed for the public construction contract in

Saudi Arabia to improve its efficiency. The research addresses the dilemma of traditional

tendering and recommends the use of practical tools in order to improve the efficiency of the

process. The demand from governments and the construction industry for paperless business

processes has generated many commercial e-Tendering systems around the world. E-Tendering

systems can be quite complex since they involve many stages or phases to meet the needs of both

the public and private sectors. In the current study, numerous e-Tendering systems have been

evaluated to provide background information to assist with the development of the proposed

model. The proposed model is developed based on literature review, ten interviews, a focus

group, and 52 questionnaire participants. The model allows a contractor to be involved during

the design stage and participate officially during the design process. This feature seek to

minimise the project’s time and maximise the quality and transparency of e-Tendering in the

construction industry. The challenge, thus, revolves around adapting the Saudi construction

contract into the form of e-Tendering.

The implementation expectations are common across the government and the contracting

industries. All participants can envisage an improvement in efficiency with the implementation

of e-Tendering. The results also showed that the majority of the participants consider the

distribution and receipt of the bids to, or from, the sub-contractors and suppliers as the factor that
can most easily be influenced by the efficiency of the e-Tendering process. Further, the findings

highlight the importance of developing and maintaining ‘best practice’ for the IT requirements

and for the configuration of the whole e-Tendering model. The inclusion into the proposed

model of relevant insights obtained from the interviews, the questionnaire, and the focus group

ensures that the model has both theoretical and practical validity.

2 Introduction

Nowadays, tendering is considered one of the fairest means of awarding government contracts,

and one that is most likely to secure a favourable outcome for a government in spending public

money. Tendering processes are considered a suitable mechanism for governments to fairly

assign contracts for construction projects. The demand for efficiencies to be created in the

process has resulted in a significant number of governments implementing e-Tendering systems,

and demand from governments and the construction industry for paperless business processes

has generated many commercial e-Tendering systems around the world.

Indeed, e-Tendering is a growing area of interest for a number of reasons, two of which are the

development of IT (Information Technology) technologies, and the needs of technologies in the

projects. Moreover, e-Tendering is attracting the attention of both the user and IT developer

sectors. The continuous growth and expansion of e-Tendering in the construction industry

provides opportunities for improved processes to increase efficiency and reduce reliance on

paper transactions. This efficiency leads to a reduction in cost and time. Importantly, this

outcome can be achieved through the implementation of e-Tendering and the use of the

electronic environment.

The practice of e-Tendering already exists, although it does vary from country to country, and

sector to sector. Further, a number of studies have developed e-Tendering frameworks in

different construction industries to improve the performance of construction contracts. However,

studies into implementing e-Tendering for construction contracts have focused mainly on
document management, from a managerial perspective, without considering the complete cycle

of tendering. In the current research, the focus is on addressing a range of concerns that will

provide broad benefits to the construction industry from effective e-Tendering implementation.

The current research illustrates how improving strategies to implement e-Tendering for the Saudi

construction contracts will ensure better practices within the IT industry. In addition, this paper

provides a comprehensive method for continuous improvement of the public construction

contract. These goals are achieved through the following objectives:

• Addressing practical issues constituted in the adaptation of an e-Tendering model for

the Saudi Arabian construction sector;

• Identifying the benefits that can be achieved from implementing e-Tendering in the

construction context; and

• Detailing critical success factors, barriers, and drivers to achieving effective and

efficient utilisation of e-Tendering in the construction sector.

3 Literature Review

2.1 The Concept of e-Tendering

A large number of Electronic Procurement (EP) forms have received much research attention.

Some EP forms are quite well defined and relatively well developed; others have still not

reached the maturity stage; some will mature, while others will never reach that stage. This

section focuses on one of six EP forms that are quite well defined and relatively well developed,

namely (Boer, Harink, & Heijboer, 2001): E-MRO, Web-Based ERP, E-Sourcing, E-Informing,

E-Reverse Auctioning and E-Tendering.

2.2 E-Tendering: Relevant Definitions

According to Boer et al. (2001), Electronic Procurement (EP) can be defined as the use of

Internet technology in the purchasing process. This definition excludes old purchasing

applications, such as ordering by telephone or by fax. At the same time, the definition is
relatively wide, encompassing the use of Internet applications in the purchase process, as well as

the use of the intranet and extranet applications. An example of an EP form is ordering office

supplies by using a supplier’s website catalogue.

E-Tendering is defined by Betts et al. (2006) as, “the procurement process simply conducted

online, i.e., supplier registration/expression of interest, contract download, submission of bid

document, evaluation of tenders”. Importantly, e-Tendering is a growing and developing system

that is available to both the public and private sectors of the construction industry for the

efficient procurement of goods and services. Traditionally, the tendering process has been a

paper-based system; however, three main factors have led to the growing application of

electronic tendering, including (Betts et al. 2006):

• The increasing use of technology within the construction industry;

• The exchange of information between parties; and

• Concern for the environment (minimizing the use of paper and materials).

Another definition for e-Tendering relates to the issue and receipt of tender documentation

through electronic means, which facilitates the procurement of construction work and the

awarding of contracts (Tindsley & Stephenson, 2008). Dawson et al. (2006) also recognises the

demand for a legally compliant and secure e-Tendering system within the construction industry.

Additionally, Betts et al. (2006) defines e-Tendering as the “electronic publishing,

communicating, accessing, receiving and submitting of all tender related information and

documentation via the internet, thereby replacing the traditional paper-based tender processes,

and achieving a more efficient and effective business process for all parties involved”.

Thus, e-Tendering electronically manages a construction tender; this includes sending the tender

documents via email, contacting and notifying bidders, downloading documents, drafting, and

responding to tenders through the website. Numerous e-Tendering systems and programs are

available to the construction industry. These systems offer similar communications capacity,
document management abilities, and auditing tools. Their functionality and processes are

comparable to and reflect the paper tendering system. Betts et al. (2006) compares the general

steps adopted in the tendering and e-Tendering process.

As noted above, the e-Tendering process is a “suitable mechanism for governments to fairly

assign contracts for construction projects and procurement” (Betts et al. 2006). The increasing

demand for efficiency in the construction industry has created a shift toward implementing e-

Tendering in government sectors. As a consequence, the electronic environment presents solid

prospects for improved communication and interaction between tender parties.

2.3 Public Construction Contract and e-Tendering

The construction industry is moving away from the traditional paper tendering process, and

towards e-Tendering, which efficiently utilises the electronic media. The electronic environment

allows for data and information to be shared and distributed between the relevant parties. This

approach reduces the costs of production by eliminating the materials and resources used when

following the paper tendering process. Amit and Sott (2001) posit that, “E-business has the

potential to generate huge new wealth”, specifically by altering the way that the business and

tendering system was conducted for the paper tendering system (Lou & Alshawi, 2009).

Importantly, the continuous growth and expansion of the e-Tendering process in the construction

industry provides further opportunities for improving the processes. Consequently, there will be

an increase in efficiency and a reduction in the industry’s reliance on paper transactions. Overall,

through the implementation of e-Tendering and the use of the collaborative electronic

environment, there will be a reduction in both cost and time (Betts et al. 2006).

The collaborative nature of the electronic environment permits construction industry personnel to

communicate and work together to address the project’s requirements and needs. Importantly,

the electronic environment offers an equal advantage to all parties wishing to be involved in the
tendering process. The elimination of previous difficulties, such as geographical location (or the

tyranny of distance), is a positive advantage of e-Tendering. Four tender applications that benefit

from the use of electronic processes are Communication, Data and information exchange, Data

storage, and Archiving (Lou & Alshawi, 2009).

2.4 E-Tendering Environments

The main driver behind the e-Tendering environment is competitive advantage achieved through

improved work processes; efficient information sharing and reuse; better returns on investment;

strategic partnerships (“win-win” culture); availability of project information management

strategy; improving “build ability” and whole life costs with the supply chain; as well as public

and private initiatives. Further, by harnessing the benefits of e-Tendering environments,

competitive organizational advantage improves efficiency, speed, data accuracy, and

effectiveness in everyday business processes and management (Lou & Alshawi, 2009).

The largest barrier to the adoption of e-Tendering environments is the employees themselves, as

opposed to technological barriers. These employee-related barriers include a lack of awareness,

no quantifiable measurements or indicators of success, limited skilled workers, transparency in

the CI, poor cross-disciplinary communication, a fragmented supply chain, and poor industry

standards for information interchange (Lou & Alshawi, 2009). Overcome by their traditional

mindset, industry players are reluctant to adopt or consider changes to everyday processes and,

therefore, pay less attention to the advantages and benefits of IT. To date, there are no recognised

quantifiable methods to measure and quantify the benefits of IT systems in organizations. This

situation reflects the perception that IT is complicated and high risk (Lou & Alshawi, 2009).

Further, the transparency of work processes in the CI remains questionable, particularly as

project information is not being shared, resulting in a waste of knowledge, resources, and

intelligence. Additionally, poor communication is a bottleneck for performance improvement,

reinforcing a confrontational and blaming culture. Inferior data and information exchange
standards, derived from different developing standards, also prevent computer systems from

talking to each other; thus, the exchange of information and data is virtually impossible. This

issue is discussed contentious issue across all industries.

Project failure in IT has long been of interest to the public. A primary explanation for the extent

of project failures, and the size of the ultimate write-offs, is the presence of agency problems,

especially the escalation of commitment on the part of the managers (Keil 1995). The definition

for such escalation relates to the continued commitment of resources following negative

feedback about a project.

A most important feature of the electronic environment is that it allows for IT integration

through the exchange and reuse of data and information (Lou & Alshawi, 2009). Undertaken in a

cost-effective manner, the construction industry and tender processes are able to proceed,

efficiently and productively, into the future (Sarshar, Tanyer, Aouad, & Underwood, 2002).

2.5 Drivers and Barriers

Numerous barriers and drivers affect the implementation of e-Tendering in the construction

industry. The analysis and design of e-Tendering to overcome these barriers contributes to the

critical success factors in the use of e-Tendering. The following sections outline the barriers and

drivers that influence e-Tendering within the construction industry.

2.5.1 Drivers

A driver is a benefit derived from the implementation of e-Tendering in the construction

industry. One of the benefits is to centralize the tendering process and documents, which allows

for easier access to tender documentation by all parties. Eadie et al. (2007) assessed the existing

literature to establish the following list of e-Tendering drivers:

• Price reduction in tendering;

• Reduction in time to source materials;

• Reduction of administration costs;

 • Reduction of staffing levels in procurement;

• Gains in competitive advantage;

• Improvements in communication;

• Enhancement of decision making and market intelligence; and

• Reduction in operating and inventory costs.

The main benefit of the collaborative electronic environment is improved work processes,

efficient sharing and reuse of information, formation of strategic partnerships within the industry,

and reduced costs and time for preparation (Armit and Sott 2001). A competitive advantage can

occur from the benefits of the collaborative electronic environment through increased efficiency,

speed, data accuracy, and effectiveness in the tendering process (Lou & Alshawi, 2009).

The benefits of implementing e-Tendering are different for the different parties involved in the

procurement process. The benefits for the parties submitting bids for tender are as follows

(Kajewski and Weippert 2004):

• Quick and easy access to tendering information;

• Increased tender opportunities;

• Improved access for geographically isolated organisations;

• Increased market share and competitiveness; and

• Reduced cost of resources.

The benefits for the public sectors and government organisations are as follows (Kajewski and

Weippert 2004):

• Increased efficiency and effectiveness; and

• Consistent tendering processes across the government.

Kajewski and Weippert (2004) also found that industry benefited from the following:

• Reduced costs (up to 90% in preparing, copying and distributing tender

documents);
 • Reduced time costs through efficient use of technology;

• Equal advantage/disadvantage regarding geographical location;

• Increased distribution speed of tenders;

• Improved communication between parties;

• Improved tender management; and

• Reduced time spent on routine administration.

2.5.2 Barriers

A barrier is a restriction or deterrent that affects the implementation of e-Tendering within the

construction industry. Eadie et al. (2007) identified the following e-Tendering barriers:

• Unclear legal position of e-Tendering;

• Unaccepting company culture;

• Lack of upper management support;

• Lack of IT infrastructure;

• Costly IT systems;

• Lack of technical expertise;

• Insecurity of transactions;

• Interoperability concerns; and

• Unrecognised business benefits.

The biggest barrier to implementing e-Tendering and adopting the use of a collaborative

electronic environment is the employees themselves, mostly because of their lack of awareness

of the technology available within the construction industry. However, the lack of skilled

workers, and cross-communication and information exchange contributed to the e-Tendering

barriers (Lou & Alshawi, 2009). Alshawi and Weng Lou (2009) found that construction industry

companies were often set in their old ways of doing business. Further, they see the change to an

electronic environment as unproductive. Additionally, the legal aspects concerning an electronic

environment were identified by Kajewski and Weippert (2004) as barriers, especially the lack of

signed documents and face-to-face agreements between the parties on both sides of the tender

documents. This traditional and formal way of undertaking business was problematic for the

employees, as were the contractual restraints that were no longer apparent with e-Tendering.

2.6 Current Status of e-Tendering in Saudi Arabia

In the Saudi Arabia, the Government’s Procurement Regulation, Article 10, states: “It is

permissible to provide the offers and opened by electronic way as determined by the Executive

Regulation of this system, and government agencies announced the names of those who

submitted their offers”. Thus, the Regulation allows for the use of IT in advance of the IT

transactions. However, it appears that no one has yet used the full electronic tendering system or

application. Additionally, less than 10 users appear to take advantage of more than just the basic

features available in e-Tendering. E-Tendering can also be utilised by the Saudi Arabian portal

called Saudi e-Government National Portal (www.Saudi.gov.sa). The main aim of this portal is

to gather all the e-services within one site, which means that the site will be the distributer to the

other government agencies.

Recently, Monafast (2016) is the government service company that aims for announcing the

bids and deliver the bid documents electronically. This bids is very, and it has different types of

procurements include light construction works. However, this action is not serve the full e-

Tendering cycle as explained earlier.

4 Methodology

This section presents a discourse on the research methodology and design used to implement the

e-Tendering for the Public Construction Contract in Saudi Arabia. A sequence of the research is

undertaken using the mix method approach. The mix method approach is used widely and

suggested by many methodologists. In this paper, the general guidance to conduct the research

method is by following Creswell and Clark (2007) explanation, as well as specific consideration
to the Fellows and Liu (2008) suggestions to align with the construction best practice research

methodology. Moreover, the section describes, in detail, the targeted research sample, the

questionnaire distribution method, and data collection and data analysis techniques. Figure 1

shows overall research methodology diagram and illustrates the mix method in support of the

achieving of the paper objectives.

Insert Figure 1 here

The data is collected in three stages; Table 1 summarises the data collection steps undertaken

with their objectives for each pathway [Construction Engineering (CE) or Information

Technologies (IT)] and the general outcomes.

Insert Table 1 here

According to figure 1, the method consists of five sequential stages to deliver the final

framework. The first three stages relate to the data collection, while the last two stages present

the data analysis and results:

• Stage 1: A discussion of the literature review addressing e-Tendering for construction

contracts; the extensive literature review benefits/barriers, systems, and technologies. In

addition, the stage also involves an interview (Interview#1) with two Information

Technology (IT) experts. The interview sought to understand how the first proposed

model (Fig. 2) would work, technically and practically.

• Stage 2: Interview#2 was undertaken with eight procurement experts in construction with

regard to the development of the research model, and the testing of the questions used in

the questionnaire survey.

• Stage 3: The development, distribution, and data collection method for the research

questionnaire, including the focus group with IT experts to ensure that the process met

the IT requirements.
 • Stage 4: All the data from both IT and CE integrated together for the final outcome; the

analysis of the literature review, the interviews (#1 and #2), the survey questionnaire, and

the focus group.

• Stage 5: The results (derived from the outcome in Stage 4) were used to: define the final

developed model; present the conclusions and recommendations; and address future

research and limitations. The aim of the first proposed model was to link the design office

with the contractors. In traditional tendering, the contractors do not have an opportunity

(legal issue) to present their specific views in relation to the project, systems,

construction methods, or economic duration of the project.

Insert Figure 2 here

5 Result and Analysis

The data for the current study were collected using three data collection methods as follows:

1. Interviews:

a. Interview #1 was conducted in Australia with two IT experts. Their

opinions were sought to gain additional background information for the

development of the proposed e-Tendering model.

b. Interview #2 was conducted in Saudi Arabia with eight engineering

experts. These interviews were used to elicit information that would

improve the questionnaire and enhance the data to be collected from it.

Additionally, these experts were asked to provide feedback regarding the

first proposed model (Fig. 2), as the first model has been developed based

on the current practise in Saudi Arabia and the gathered data from the

literature review.

2. Questionnaire survey is distributed to a selected group of approved contacts.

These contacts are experienced in e-Tendering and did have an experience in the
 procurement practice of a Saudi engineering organisation. Because of this

selection process, the response rate is expected to be high.

3. Focus group was conducted in Australia. The task of the focus was to assess the

proposed model so that improvements could be made that would overcome any

barriers to its implementation. The purpose of the data analysis methods chosen

was to improve the efficiency of the public construction contract system in Saudi

Arabia.

1.1 Interview #1 Analysis (with IT experts)

The interviews with the two IT experts were conducted in Australia. These interviews were

undertaken to (1) gain a better understanding of IT systems, and how they could help improve

the application and allocation of construction contracts, and contract tendering in particular; (2)

identify how the initial proposed model could be improved; and (3) identify the programs and

applications that would work well with the seven tendering components and different suppliers.

The information obtained from the interviews provided the starting point for the IT discourse; it

also contributed to the development of the first model (Fig. 2).

1.2 Interview #2 Analysis (with Engineering Experts)

The main aim of Interview #2 was to test a number of factors that could influence the efficiency

of e-Tendering. Additionally, the interviews also investigated any other factors related to the

Saudi tendering environment. The second interview was conducted in Saudi Arabia. The

participants were eight engineers working in the field of construction who had a position in the

procurement or management areas within the government or construction sector.

The main objectives were to identify other factors relevant to the questionnaire, and learn which

factors were considered most efficient for use in the survey. While the majority of the engineers

had heard about e-Tendering, they did not have a unified definition for it. Indeed, the volunteer

interviewer had not heard of e-Tendering either. This unexpected outcome was determined not to
be a problem, as the issue would be validated by the questionnaire survey. Importantly, the first

e-Tendering model was shown to the interviewees to help them gain an understanding of the e-

Tendering process to obtain some feedback about the model. This approach worked as the

interviewees provided valuable insights that led to the development of the second proposed

model (Fig. 3).

Insert Figure 3 here

According to the interviewees, three issues prevent the contractors’ participation during the

design stage:

• There is not enough time for them to review the design;

• The procedure does not give them the capacity to become involved in the design stage;

and

• There are no benefits to entice the contractors to participate, and further, they do not have

the requisite qualifications to become involved.

Hence, the model proposed a way for the contractors to become officially involved in the

process, that is, via the e-Tendering features. The following schedule explains how the five

stages of the first model work. In traditional tendering, the contractors are not involved in these

stages, but when the e-Tendering is used, the client becomes the “linker” between the design

office and the contractors (Table 2).

Insert Table 2 here

In addition, the interviewees were asked about their expectations if the e-Tendering process was

implemented, and which area of the e-Tendering stage they thought would most affect the

efficiency of the process. The majority expressed their belief that the Contract Documents

Preparation was the area that would improve in efficiency the most through the use of e-

Tendering. The remainder identified the Pre-qualification area; it appears that when the Pre-
qualification stage is not handled properly, then the system suffers, as the contractors are not

qualified to manage this part of the project. Overall, the interviewees believed that if e-Tendering

was implemented, there would be some improvement in the process. Additionally, a number (six

interviewees) also saw an improvement in the transparency of the processes.

The interviewees also expected that some savings would be achieved if the e-Tendering was

implemented. Thus, the interviewees identified a possible average time saving of 33% and cost

saving of 28%. Further, most interviewees have decided to use e-Tendering for their next project

if they have the chance. However, a few will continue to use both e-Tendering and traditional

tendering. Table 3 presents the outcome from the interviews.

Insert Table 3 here

1.3 Questionnaire Survey Analysis

An online questionnaire survey was conducted in Saudi Arabia (April 2011). The questionnaire

invitation letters were sent by email to prospective participants, with the questionnaire links to

explain the research purposes and the survey requirements. The questionnaire invitation was

posted in the Arab Engineering Internet Forum, Saudi Section, in an attempt to involve more

engineers or experts who could not be contacted by email.

The questionnaire, consisting of three parts (Part 1: General Information, Part 2: Experience in

Traditional Tendering, and Part 3: Electronic Tendering), examined the current and proposed e-

Tendering practices within selected Saudi construction organisations. The structure of the

questionnaire is described below:

• Part 1 – General Information: including demographic information (e.g. years of

experience, type of profession, and level of education), as well as background

information of the respondents and their firms.

 • Part 2 – Experience in Traditional Tendering: including information related to the area

of tendering and its effectiveness, the importance and satisfaction level of the current

practice of e-Tendering, as well as the company’s specific waste management practices.

• Part 3 – Electronic Tendering (e-Tendering): including respondents’ opinions on the

implementation of e-Tendering for Saudi Construction Contracts, related to the stage of

tendering that needs to be assessed, their level of importance, the tendering applications,

the study scopes, and opinion of doing e-Tendering.

1.3.1 Completion Rate

Firstly, 152 participant viewed the questionnaires, most of them being engineers involved in

construction and procurement activities. Eighty-one (81) participants are clicked through the

survey link, only 59 questionnaires attempted to participate since 52 out of 59 completed the

survey. Therefore, completion rate is 38.81%. Finally, a couple of participant were excluded

from the analysis for not meeting the requirements of the questionnaires, namely:

• The respondent must be working in the construction field;

• The respondent must be practicing, or have practiced, any tendering aspect in the

construction field;

• The respondent must be working, or have worked, in the Saudi Arabian Construction

field; and

• The respondent must finish the survey within a 4-minute interval, which is less than the

accepted time to get quality answers.

1.3.2 Sample Size Requirement

As per the analysis, plan a priori test is conducted to see if the sample data collected is adequate

for statistical analysis. The results are provided below:

T-tests: Means: Difference between two independent means (two groups)

Analysis: A priori: Compute required sample size
Input: Tail(s) = Two
Effect size d = 0.9
 α err prob = 0.1
Power (1-β err = 0.90
prob)
Allocation ratio = 1
N2/N1
Output: Noncentrality parameter δ = 2.9849623
Critical t = 1.6819524
Df = 42
Sample size = 22
group 1
Sample size = 22
group 2
Total sample size = 44
Actual power = 0.9017335

Based on the sample size requirement, analysis to determine sample size adequacy shows that

the data collected from the completed participants (52 responses) meets the minimum

requirement (44 responses) and is therefore suitable for independent t-test.

1.3.3 Experience in Traditional Tendering

The findings from the analysis showed that, on average, 72% of the respondents had practiced all

stages of the tendering process for “many times”. In contrast, on average, only 26% of the

respondents had been involved in the tendering process only once. The respondents’ involvement

in construction contract tendering for the various areas, namely preparing or analysing the pre-

qualification information (once 26%, many times 72%). Moreover, preparing or analysing the

contract documents (once 22%, many times 78%); sending and answering the contract enquires

(once 31%, many times 66%); analysing the bids or offers (once 26%, many times 71%); and

making decision for the best offer (once 24%, many times 72%).

An important issue in the current research is the question as to which period, in the traditional

tendering process, was the most time consuming. For example, 79% of contractors believed that

preparing or analysing the contract documents was the most time consuming. On the other hand,

53% of the Engineering and Project Management Office identified analysing the bids or the

offers as the most time consuming, while 47% saw preparing the contract documents as the most

time consuming. The government respondents were split between preparing or analysing the
contract documents (43%) and analysing the bids or the offers (36%). However, the average was

55% for preparing or analysing the contract documents, followed by 40% for analysing the bids

or the offers (Fig. 5).

Insert Figure 5 here

1.3.4 Electronic Tendering (E-Tendering)

The expert opinion for the implementation of e-Tendering for Saudi Construction Contracts was

that it was a very important strategy that needed to be put into action. This finding was

confirmed by literature review and the outcomes from the interviews. There were seven

questions in the e-Tendering part of the questionnaire. For each question, the respondents had to

rate the level of importance and provide a view about e-Tendering. Forty-six respondents

completed the e-Tendering section.

The respondents were asked to identify the stage that would most affect the efficiency of the e-

Tendering process. As seen in Fig. 6, 28% considered this stage to be that of distributing and

receiving the bids to, or from, the sub-contractors and suppliers. The choice of the other stages

ranged from 11% to 17%.

Insert Figure 6 here

An important question related to the impact of implementing the e-Tendering process. The

respondents were asked to rank the impacts of implementing e-Tendering on the scale from 1

(significantly worsen) to 5 (significantly improve). The respondents ranked the impacts in the

following order: significantly improve commutations (5); improve transparency (4.5); improve

decision-making, accuracy, and project understanding (4); and only partially improve risk level

of project (3.5).

1.3.5 Evaluating the Decision Toward E-Tendering

Moreover, independent t-test is conducted to illustrate how people involved in making decisions

regarding Construction Contract Tendering evaluate the impact of E-Tendering.

The following table shows the impact of E-Tendering on Tendering Price and Number of Staff in

Procuring activity. The impact is illustrated by reduction (<1), no change (0), and increase (>1)

in factors means. Table XXX shows that people who were involved in decision-making for just

one time do not have much confidence, but people who were involved in decision-making many

times are excited about E-Tendering reducing Tendering Price. Both new and experienced

decision-makers think that E-Tendering is going to reduce the number of staff involved in the

procuring activity.

Group Statistics

Involved Making decision N Mean Std. Deviation Std. Error Mean

Impact Tendering Price Only one times 12 .0833 .66856 .19300
Many times 40 -.3659 .66167 .10334
Impact Staff procuring Only one times 12 -.2500 .86603 .25000
Many times 40 -.7317 .59264 .09255

The following table shows that the analysis is statistically significant at p < 0.1 (Sig. 2-tailed).

Independent Samples Test

Levene's Test
for Equality of
Variances t-test for Equality of Means
95% Confidence
Interval of the
Difference
Sig. (2- Mean Std. Error
F Sig. t df tailed) Difference Difference Lower Upper
Impact Equal variances 1.38 0.25 2.06 51.00 0.04 0.45 0.22 0.01 0.89
Tendering assumed
Price
Equal variances not 2.05 17.81 0.06 0.45 0.22 -0.01 0.91
assumed
Impact Staff Equal variances 6.06 0.02 2.22 51.00 0.03 0.48 0.22 0.05 0.92
procuring assumed
Equal variances not 1.81 14.15 0.09 0.48 0.27 -0.09 1.05
assumed

As noted earlier, there are a number of barriers to the implementation of e-Tendering, especially

in the context of the Saudi Arabian environment. The results of the survey identified, from the
respondents’ perspective, three extremely important barriers: government procurement systems

(4), security of transactions (4), and lack of IT infrastructure (4). Also, local legislation (3) and

upper management support (3) were considered as important. These barriers are illustrated in

Fig. 7.

Insert Figure 7 here

The following table shows the barrier to implementing E-Tendering. The intensity of each barrier

has been measured on a Likert scale of 4, where: 1- Not Important, 2- Good to be considered, 3-

Important, and 4- Extremely Important.

Table shows the scores obtained in each barrier. Anything above 2 should be considered as a

barrier.

Descriptive Statistics
N Mean Std. Deviation
Statistic Statistic Std. Error Statistic
Barrier Legislation 52 3.0755 .12002 .87374
Barrier Govt procurement sys 52 3.1321 .12930 .94131
Barrier Saudi culture 52 2.4906 .13636 .99272
Barrier Upper management support 52 3.1887 .10794 .78585
Barrier Lack IT infrastructure 52 3.1132 .13378 .97390
Barrier Costly IT systems 52 2.4528 .12797 .93162
Barrier Lacking technical expertise 52 2.7170 .13025 .94822
Barrier Transactions Security 52 3.0755 .13429 .97762
Barrier Interoperability concerns 52 2.5660 .10609 .77234
Barrier No realized business benefit 52 2.3585 .11771 .85697
Valid N (list-wise) 52

Additionally, eight elements, within the e-Tendering process, were considered to have either a

positive or a negative effect with the implementation of e-Tendering. All the elements (tendering

price, time to source materials, administration costs, staff in procurement department, operating

and inventory costs, gaining competitive advantage, communication tools, and enhanced

decision-making) were identified as creating an improvement by reducing, or increasing, some

issues. Figure 8 provides the results in a diagrammatic form. From the figure, 78% of the

respondents believe there would be a reduction in staffing numbers for the procurement
departments. Around 63% judged that the administration costs and time spent sourcing materials

would be reduced. In addition, approximately 50% thought there would be a reduction in the

operations and inventory costs, as well as reduction in communication tools and the tendering

price (the documents price; 38%). In addition, approximately 62% of the respondents believed

that e-Tendering would increase competitive advantage, as well as enhance decision making for

the tendering process.

Insert Figure 8 here

1.3.6 Barrier to Implementing E-Tendering from the Viewpoint of Decision-Makers

An independent t-test has been conducted to illustrate how people involved in making decisions

regarding Construction Contract Tendering evaluate the barriers of E-Tendering.

The table shows that the new and experienced decision-makers significantly differ in their

opinion considering Costly IT systems, Interoperability concerns, and No realized business

benefit being barriers to implement E-Tendering system. While new decision-makers think of

them as important barriers, experienced decision-makers view them as good to be considered.

Group Statistics

Std. Std. Error

Involved Making decision N Mean Deviation Mean
Barrier Costly IT Only one time 12 3.0833 .99620 .28758
systems
Many times 41 2.2683 .83739 .13078
Barrier Only one time 12 2.9167 .79296 .22891
Interoperability
Many times 41 2.4634 .74490 .11633
concerns
Barrier No realized Only one time 12 2.7500 .86603 .25000
business benefit
Many times 41 2.2439 .83007 .12964

The following table shows that the analysis is statistically significant at p < 0.1 (Sig. 2-tailed).

Independent Samples Test

Levene's
Test for
Equality of
Variances t-test for Equality of Means
95% Confidence
Sig. (2- Mean Std. Error Interval of the
F Sig. t df tailed) Difference Difference Difference
 Lower Upper
Barrier Equal variances .14 .71 2.84 51.00 .01 .82 .29 .24 1.39
Costly IT assumed
systems
Equal variances 2.58 15.83 .02 .82 .32 .14 1.49
not assumed
Barrier Equal variances .08 .77 1.83 51.00 .07 .45 .25 -.04 .95
Interoperabili assumed
ty concerns Equal variances 1.77 17.10 .10 .45 .26 -.09 .99
not assumed
Barrier No Equal variances .48 .49 1.84 51.00 .07 .51 .28 -.05 1.06
realized assumed
business Equal variances 1.80 17.37 .09 .51 .28 -.09 1.10
benefit not assumed

1.4 Focus Group Analysis

Using the focus group was determined to be the best choice for the current study at this stage in

the e-Tendering implementation, for the following reasons:

• The researcher does not have any IT experience;

• There were no factors that require guidance; and

• Hence, the IT experts were able to argue with each other about the various aspects

being raised, with the final choice being the best choice.

Invitations to join the IT focus group were sent to 11 Saudi PhD students, all of whom had an IT

background and were studying at three different universities in the State of Queensland,

Australia. Their contact details were obtained from the Saudi Arabian Attaché in Australia. The

decision to choose Saudi students reflected the need to:

• Understand more about the Saudi IT environment;

• Have members of the focus group with similar experiences to provide a cohesive

approach to the data collection;

• Understand the Saudi Procurement System and how it works; and

• Capitalise on the students’ research related to e-Government.

In the end, six ICT scholars attended the focus group. The meeting started with the facilitator

introducing the research aims, objectives, and the stages, along with the results to date. A

decision to looks at only two aspects are suggested; namely, implementation and configuration.

Table 4 presents the identified factors that were agreed to by the majority of members.

Insert Table 4 here

1.5 Proposed E-Tendering Model for the Public Construction Contract in Saudi Arabia

The proposed e-Tendering model for public construction contracts in Saudi Arabia comprises

three parts: the Model components, the Model framework, and the Model category. To be an

efficient tendering model, all parts need to work together in a cohesive manner. The link between

the parts is the e-Tendering application job. The study identified a number of recommendations

in Section 5 that would improve the tendering activities by using e-Tendering. However, the

findings also confirm that not all the model components need to be implemented at once.

1.5.1 Model Components

Interestingly, the model components for e-Tendering are the same components of traditional

tendering. The functions of the components also match those of traditional tendering. Further, the

model components will be in a web-based format, which will achieve the goal of e-Tendering.

Moreover, the similarities to traditional tendering make the transition to the new e-Tendering

format a smooth affair. Each of the model components is described below:

1. Publication and announcement: Using e-Tendering, the publication and announcement of

the winning bid will be sent automatically to the unsuccessful contractors via an official

email, letter, and fax, once the project has been allocated. The announcement will list the

new projects, the biddings, and the views of the specialists for the contractors and design

office.

2. Prequalification: E-Tendering will allow an advanced pre-qualification listing within the

announcement to the design office, contractors, and subcontractors (production, material,

 and field subcontractors). After qualifying, the bidders who are still interested in the tender

can apply officially and pay online the requisite tender fees.

3. Communication tools: The most important component in the model is its ability to be a

communication tool. However, a highly secure and flexible connection will be needed to

meet all the requirements, such as emails, requests, reminders, updates, and clarity of

videos.

4. Documents Management: E-Tendering allows all the bidding documents to be filed and

accessed together, including the drawings, specifications, bill of quantities (BOQ), and

contract documents. All documents will have their information classified so that, for

example, the contractors can allow their subcontractors to access and forward data within

their own field.

5. Blogging: In the traditional tendering model, contractors’ enquiries were called Questions

and Answers. The new e-Tendering model will allow the contractors to post their enquiries

under an anonymous name, while the client allows the design office to reply to the post.

Additionally, subcontractors will be allowed to post their comments directly to the main

contractor/s, using an approved request form.

6. Submissions of the offers: Traditional tendering in Saudi Arabia requires a selected

official committee to open the bids received in person, in the tender box, or via the post.

With e-Tendering, the contractors have a choice of two ways to submit their offers. They

can send them electronically via the e-Tendering program (with a high-level secure

connection), or they can be submitted, as was the case with the traditional method, into the

tender box. Additionally, they can still deliver the tender in person or via the post. Both the

e-Tendering and the traditional tendering options will give the bidders e-respite for their

submission.
 7. Analysing the bids: In traditional tendering, the bid analysis stage is long and protracted as

it takes time for the analysis committee to review the bid. Additionally, other factors can

cause delays during this period, such as entering errors proportion and data entry review. In

contrast, the e-Tendering model allows for e-analysis, so the decision can be made easier

and faster. The analysis takes place when the bidders upload their BOQ, within the

submission, to the analysis tools. The analysis tools then analyse the offers according to the

client requirements. Further, the analysis committee can perform their job at the same time,

and then post their comments using the e-analysis tools. These e-Tendering features help to

accelerate and shorten the bid analysis time.

1.5.2 E-Tendering Model Framework

Within the e-Tendering model framework (third proposed model; Fig. 9), there are links between

the three parties: project owner (client), the designer office (consultant), and the contractors

(tenders). For example, all three parties are linked together in the early stage, as they can

participate in the design stage. Additionally, the links between the design office and the

contractors during this stage will improve the efficiency of the contract document. The

relationship between the client and the design office begins during the design stages.

Insert Figure 9 here

They will be able to work with the full e-Tendering facilities, such as document management.

Moreover, e-Tendering will simply link the qualified contractors to the project’s data within the

web-based applications. As a consequence, the bidding time will be reduced and the

communication between the parties improved. Clearly, the proposed model introduces the

qualified contractors into stage 1, with the following benefits. They can:

• Use the dead time (the dead time happens when the contractors pre-qualify and are

waiting for the design to be completed) to review the design outcomes;

 • Participate in these activities and, thus, increase their understanding of the project and

increase their chance of winning the tender; and

• Reduce the risk by investigate any minor issues within the tender document.

The main difference between the traditional tendering process and the e-Tendering process is the

overlap between the design stage and tender stage. This overlap cannot be undertaken easily

without the e-Tendering applications; otherwise, the benefits will be overwhelmed. The time is

saved mainly within the bidding and analysing stages of e-Tendering. While there is no decrease

in the time taken to complete the design stage, there are indirect benefits, including

improvements in the quality of the design document, which the contractors have a chance to

review, stage by stage; and an improvement in understanding the project’s elements due to the

gradient of the study contract documents (drawings, specifications, and BOQ).

1.5.3 Model Category

A high-speed internet network (broadband) is very important for successful e-Tendering, as

noted in the literature review and data analysis. However, some contractors do not have the

ability or facility to work via the internet in remote location. Consequently, the implementation

of the e-Tendering process in Saudi Arabia will need to accommodate this issue. Therefore, the

contractors will be grouped into categories defined by the Saudi Rating Contractors Agency. The

rating system includes five categories [compulsory using e-Tendering (first class), second class,

alternatively using e-Tendering (third class), fourth class, and not required (fifth class)], within

five project areas (building works, road works, water and sanitation, electrical works, and

mechanical works), by the value of the project (from up to $1.5 M to more than $75 M). This

rating system has been combined with the e-Tendering categories for the convenience of the

study.
 2. Conclusion

2.1.1 Research Outcomes

The current study sought to provide a conceptual framework for the development of a proposed

model to improve the efficiency of the public construction contracts in Saudi Arabia. The model

facilitates an investigation into how to establish good relations with the design office during the

design stage, and how the contractors could use the normally dead time at this stage. The main

outcomes of the study are summarised below:

1. The government sector and the contractors had similar expectations about the most

important factors related to:

• The most time-consuming stage;

• The stage that will most affect the efficacy of e-Tendering; and

• The impact of implementing the e-Tendering process.

2. Only three stages had a perceived effect on the efficiency of e-Tendering:

• The preparation and analysis of the contract documents;

• The distribution and receipt of the bids to/from the sub-contractors and suppliers;

and

• The analysis of the bids or the offers.

3. Twenty-eight percent (28%) of the respondents, as a profession group, or overall,

identified the distribution and receipt of the bids to, or from, the sub-contractors and

suppliers as the stage most easily affecting the efficiency of e-Tendering.

4. Three elements were identified as very important barriers to the efficiency of e-

Tendering: the government procurement systems, the security of transactions, and the

lack of IT infrastructure.

5. Almost 80% of respondents believe that e-Tendering would reduce the number of the

staff working in the procurement departments, and 63% of the respondents thought that
 there would be a reduction in administration costs and time spent on sourcing the

materials using e-Tendering.

6. Around 60% of the respondents reported that e-Tendering would increase competitive

advantage and enhance the tender decision-making process.

7. Based on the findings from the above analysis, a proposed model for implementing e-

Tendering was developed.

However, the conclusions of the focus group are an important tool for reviewing e-Tendering

from an IT perspective. Three interesting comments related to the implementation and

configuration of the model:

• The e-Tendering model can be implemented with well-known ERP systems, such

as Oracle or SAP;

• The use of expert international systems for e-Tendering would avoid many

technical errors; and

• The system should be in a web-based application format.

2.1.2 Implications for Saudi Construction Industry

Using the e-Tendering technique for tendering purposes will create a more efficient tendering

process through the reduction in both time and cost. The process is practical, while the model can

be very useful. E-Tendering could be easily implemented into existing organisations and

industries. There are no significant alterations needed to transfer from the current traditional

tendering system to the e-Tendering system, thus allowing for a smooth transition between the

two systems. The following implications are listed for consideration by the Saudi Contraction

Contact Industry:

• The development of e-Tendering should include other sectors beside the government

sectors (e.g. Contractors, Design and Project Management Offices, and IT Consultants).
 • If the government has made a serious commitment to e-Tendering, then it should become

compulsory for certain types and values of projects.

• When developing the e-Tendering process, the developer would benefit from a review of

the advantages of existing e-Tendering models and practices utilised by other countries.

While each country has its own tendering process, lessons can be learnt so that Saudi

Arabia can benefit from the best practice identified.

• To avoid the duplication created by each government sector building their own e-

Tendering system, a semi-government organisation may serve as a centralised e-

Tendering provider for all government agencies.

2.1.3 Study Limitations and Future Work

The aim of this paper is to propose a framework for improving the efficiency of tendering in the

area of public construction contracts in Saudi Arabia. As with all research, there were limitations

to the study, for example:

• Investigating in detail the barriers to, and the solutions for, the implementation of e-

Tendering in Saudi Arabia.

• Testing the proposed model to determine its performance and suitability for construction

contract projects in Saudi Arabia.

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Table 1. Methodology of data collocation stages
Research Stage

1st Stage 2nd Stage 3rd Stage

Construction Literature review Interview #2 (eight Questionnaire survey

Engineering (CE) one-on-one

interviews)

Objectives Find the link between Factors that can affect Test and examine the

IT and CE tendering efficiency factors

futures Survey factors Find more

Expectations for relationships between

implemented e- the e-Tendering

Tendering components and

factors.

Information Interview #1 (two Not applicable Focus group

Technologies (IT) one-on-one

interviews)

Objectives Greater understanding Not applicable Ensure the model can

of how the IT works be implemented

with the proposed More practical rather

model than theoretical only

General outcomes First model Second model (the Final model

developed model) Stages investigated

Survey factors Find the efficient

stage
Table 2. The proposed relation and tasks when e-Tendering is adapted between the design office and the contractors
Stage The Design Office The Clients The Contractors

First Working in the first stage The client prequalified the Under the qualifying

contractors process

Second Upload the outcomes of the • Open the reviews for • Reviewing the

first stage contractors outcomes of first

• Re-post the stage

feedback to the • Adding their

Design Office comments

Third Upload the outcomes of the • Open the reviews for • Reviewing the

second stage contractors outcomes of

• Re-post the second stage

feedback to the • Adding their

Design Office comments

Fourth Upload the outcomes of the • Open the reviews for • Reviewing the

third stage contractors outcomes of third

• Re-post the stage

feedback to the • Adding their

Design Office comments

Fifth Provide all the tender Hand the document to the • Reviewing the

documents with electronic contractor bids as an official

copy, required numbers of documents now

copies for the contractors

Table 3. Interview #2 with engineering expert
# Question Answer Frequency

1 Have you heard about e-Tendering? Yes 6

No 2

2 When you hear the phrase e-Tendering, what Invitations 6

does that is mean for you? RFP (request for proposal) 4

Prequalification 8

Document management 6

Submission of the offer 8

3 In traditional tendering, what areas consume the Receiving bids 1

most time? Analysing bids 6

Distributing bids to the 4

sub-contractors and

suppliers

Contract documents 4

Preparation

Contractors Invitation 1

4 Indeed, the research is “Implementing E- Pre-qualification 3

Tendering to Improve the Efficiency of Public Contract documents 5

Construction Contract in Saudi Arabia” as the Preparation

model shows. So, what area of the e-Tendering

process do you think will most affect the

efficiency?

5 What is your expectation of implementing the Good improvement 8

e-Tendering process for the Public Construction More transparency 6

 Contract in Saudi Arabia? Fast to take a decision 2

Decreasing the risk for the 1

project

6 So, as a primary expectation, what do you think Cost −28%

the effect will be on cost and time when using Time −33%

e-Tendering

7 If you can decide, or have the chance, to use the Use e-Tendering 6

e-Tendering process in your next project, what Use both traditional and e- 3

you will do? Tendering

Table 4. Focus group analysis
Aspect Themes

1 Implementation The e-Tendering model is for the Public Construction Contracts;

therefore, using current software is not the perfect solution

2 The e-Tendering model can be implemented with the well-known ERP

systems, such as ORACEL or SAP

3 The availability of the current government procurement system

procedures makes converting them to e-Tendering much easier and faster

4 Creating an outsourcing semi-government company will make the

implementation easier

5 Using expert international systems for e-Tendering will avoid many

technical errors

6 Using a create your own e-Tendering system for Saudi Arabia is not

practical

7 Having different programs in the e-Tendering system will increase the

training costs

8 Therefore, there is a need to design a framework or model

1 Configuration The procedure should be very clear and within the IT data flow diagrams

2 The system should be web-based application

3 The cost and time for building the program is uncertain

Figure Citations

Fig. 1. Overall research methodology

Fig. 2. First proposed model

Fig. 3. Second proposed model

Fig. 4. Involved in construction contract tendering

Fig. 5. Most time consuming of the tendering period

Fig. 6. Important stage will affect the efficiency in e-Tendering

Fig. 7. The important barriers for the implementing

Fig. 8. The affected factors when the e-Tendering is implemented

Fig. 9. Third proposed model

Fig. 1
Fig. 2

Design PPA PPA

First Stage
Office The
Bidder
PPA s

The qualified
Design
Second Stage Office PPA The
Bidde

PPA

The qualified
Design PPA
Third Stage Office The
Bidde

PPA

The qualified
Design PPA
Forth Stage Office The
Bidde

PPA

PPA sends the

Fig. 4
 Involved in Construction Contract Tendering

80%
70%
60%
50%
40%
30%
20%
10%
0%
Preparing or Preparing or Sending or Analysing the bids Making decision
analysing the pre- analysing the answering the or the offers for the best offer
qualification contract contract enquires
documents
one once 26% 22% 31% 26% 24%
many times 72% 78% 66% 71% 72%
Fig. 5

Most Time Consuming of the Tendering Period

Preparing or analysing the
pre-qualification
80%

60%
Making decision for the Preparing or analysing the over all
best offer 40% contract documents

20%
Contractors and
0% Private

Analysing the bids or the Sending or answering the Government

offers contract enquires sectors

Engineering and
Distributing and receiving Project
the bids to/from the sub- Management
contractors and suppliers Offices
Fig. 6

Important Stage Will Affect the Efficiency in E-tendering

requalification

Other, please specify Contract documents handiling

Making decision for the winner Contractors' enquirers

Distributing and receiving the

Analysing the bids or the offers bids to/from the sub-contractors
and suppliers
Fig. 7

The Important Barriers for the Implementing

Legislation
4
Government procurement
No realised business benefit
3 system
2
Interoperability concerns Saudi Arabian culture
1

Security of transactions Upper management support

Lack of technical expertise Lack of IT infrastructure

4 Extremely Important
Costly IT systems 3 Important
2 Good to be Considered
1 Not Important
Fig. 8

The Affected Factors When the E-tendering is Implemented

80%

70%

60%

50%
Axis Title

40%

30%

20%

10%

0%
Tendering Price Time to source Administration Staff in Operating and Gaining Communication Enhanced
materials costs procurement inventory costs competitive tools decision making
department advantage
Reduce 38% 64% 62% 78% 49% 7% 51% 13%
Increase 11% 13% 27% 9% 11% 62% 38% 62%
 Fig. 9

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