Problems of Low-Bid Contract Award System in

Construction Industry of Pakistan.

SUBMITTED BY
NAMES ROLL NO
MASAM KHAN (Group leader) 18CE25
ABDUL JALIL 18CE07
ASIF ALI 18CE53
IRFAN ALAM 18CE72
ZAIN UL ABIDIN 18CE98

BATCH: 2018-2019
SUPERVISED BY: ENGR. SYED ABDULLA SHAH HASHMI

SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT FOR THE DEGREE OF CIVIL ENGINEERING

December 2022
Department of Civil Engineering
BALOCHISTAN UNIVERSITY OF ENGINEERING AND
TECHNOLOGY, KHUZDAR

Balochistan University of Engineering and Technology Khuzdar i

 DEPARTMENT OF CIVIL ENGINEERING

CERTIFICATE
This is to certify that the work presented in this project report/thesis “Problems of Low-Bid
Contract Award System in Construction Industry of Pakistan” is entirely written by the
following students themselves under the supervision of Engr. Syed Abdullah Shah

NAMES ROLL NUMBER

MASAM KHAN (Group leader) 18CE25
ABDUL JALIL 18CE07
ASIF ALI 18CE53
IRFAN ALAM 18CE72
ZAIN UL ABIDIN 18CE98

This project is submitted in partial fulfillment of the requirement

for the award of “Degree of Civil Engineering”

Project supervisor Head of Department

Date:

Balochistan University of Engineering and Technology Khuzdar ii

Abstract
For each given project, it is necessary to calculate the accurate cost estimate. This estimate is

then provided for planning and funding the project that is suggested. A low bid indicates that the

design-build team with the lowest price will be awarded the contract. This plan is widely adopted

since it guarantees a lower price while also getting rid of fraud and corruption. One of a country's

most significant businesses, the building sector demands both people and financial resources.

Most nations rely heavily on design and building construction to support their national

economies. It is now in the best interests of the construction community to improve construction

procurement because of the complicated link between bid and procurement as well as their

challenges in regard to the construction industry. For their businesses to continue existing in the

domestic and international market, construction firms must remain competitive. A person or

business that submits the lowest bid for a project is known as the lowest bidder. The primary

drawbacks of the least bid price win technique are missed contract deadlines, increased project

costs as a consequence of variation, quality compromise, and a combative attitude between the

contracting parties. Additionally, the least bid, best offer system encourages unworthy bidders to

participate in the process while deterring qualified contractors.

Balochistan University of Engineering and Technology Khuzdar iii

 ACKNOWLEDGEMENT

We are very thankful to Almighty Allah the most merciful and beneficent, who gave us the

strength and enabled us to complete this project. We would like to express our gratitude to our

dear supervisor Engr. Syed Abdullah Shah for his guidance, motivation and immense knowledge

helped us in the time of research work and writing of this thesis. Besides of our advisor, we

would like the rest of our thesis committee. A sincere thanks also goes to Engr. Shakeel Ahmed

for their help and assistance in completing this project. We are thankful to our respected parents,

family members and friends for their moral support and prayers. We are also thankful to the staff

of the labs of Civil Engineering Department for their cooperation with us.

Balochistan University of Engineering and Technology Khuzdar iv

 DEDICATION

This study is wholeheartedly dedicated to our beloved parents, teachers, who have been

our source of inspiration and gave us strength when we thought of giving up, who continually

provide their moral, spiritual, emotional, and financial support. To our brothers, sisters, relatives,

mentor, friends and classmates who shared their words of advice and encouragement to finish

this study. Finally, we dedicated this work to the Almighty Allah, who blessed us with his

countless guidance, strength, power of mind, protection and skills and for giving us healthy life.

Balochistan University of Engineering and Technology Khuzdar v

Contents
Chapter 1..........................................................................................................................................1

Introduction......................................................................................................................................1

1.1 Background..........................................................................................................................1

1.2 Problem statement:..............................................................................................................2

1.3 Aim........................................................................................................................................3

1.4 Objectives of the Study........................................................................................................3

1.5 Scope.....................................................................................................................................3

Chapter 2..........................................................................................................................................4

Literature Review............................................................................................................................4

2.1 Introduction...........................................................................................................................4

2.2 Legal Framework (Bidding Procedures and Laws)..............................................................7

2.2.1 Procedures for Competitive Bidding.................................................................................7

2.3 Contract Award Procedures in Construction........................................................................8

Chapter 3..........................................................................................................................................9

Methodology....................................................................................................................................9

3.1 Background..........................................................................................................................9

3.2 Research Design.................................................................................................................10

3.3 Data collection...............................................................................................................10

3.4 Data Analysis.................................................................................................................10

Balochistan University of Engineering and Technology Khuzdar vi

Chapter 4........................................................................................................................................11

Results and Discussions.................................................................................................................11

4.1 Objective 1..........................................................................................................................12

4.2 Objective 2..........................................................................................................................17

The research shows the average level of outcomes for the lowest offer in terms of cost, time,

value, and other constraints. Contractors are made aware that the lowest bidder would likely get

the contract, in contrast to clients and consultants. Likewise, less experienced experts see things

differently than more experienced specialists. Five additional bidders were suggested for

comparison with the standard lowest bidder process. About 35.71% of those polled agreed with

and backed the idea of multi-parameter bids, while 28.57% recommended using the average

bidding approach. The majority of the pros we spoke with throughout our interviews

recommended the multi-parameter bidding strategy.....................................................................19

Chapter 5........................................................................................................................................20

CONCLUSION AND RECOMMENDATIONS..........................................................................20

5.1 CONCLUSION..................................................................................................................20

5.2 Future recommendations..................................................................................................21

Appendix........................................................................................................................................27

Questionnaire Survey.................................................................................................................27

SECTION-I....................................................................................................................................28

SECTON-II....................................................................................................................................30

Balochistan University of Engineering and Technology Khuzdar vii

Balochistan University of Engineering and Technology Khuzdar viii
Balochistan University of Engineering and Technology Khuzdar ix
 Chapter 1

Introduction
1.1 Background

Competitors in the construction sector have admitted that accepting the lowest rate offer does not
always result in the best value. Implementing a value-based winning strategy is challenging,
especially for Pakistan's public sector customers who lack the ability to predict the lowest bids
based in particular on the low-bid grant system. Organizations involved in the building industry
are more likely than not going to submit unusually cheap offers in the current economic climate
in an effort to get new business. The main characteristics of public construction in contracts
being given on the basis of cheap bids include persistent issues with inadequate quality of
constructed facilities, abnormal prevalence of claims and lawsuits, and frequent cost and
schedule adjustments. This investigation was started to assess the performance of public owned
building projects awarded using a lowest bidder awarding system and to get the opinions of
construction experts regarding the current traditional bidding process and alternative systems for
evaluating bids and awarding contracts. For the purpose of identifying varied approaches, a
thorough literature review was done. Questionnaires were sent to different contractor groups, and
data on completed projects was collected from clients and consultants overseeing public
construction projects. In this study, several alternative bid evaluation and contract award
procedures are proposed and discussed; however, only a small number of these options are
actually used by other countries and organizations. Studies revealed that the primary approach
for determining the winner of a construction contract was the evaluation and award of the least
responsive offer. Occasionally, additional variables are taken into account when awarding
contracts, namely the contractor's prior experience working on projects for a certain customer.
Economical low bid schemes have drawn a lot of criticism because of their detrimental effects on
management, quality standards, disputes and claims, and project length. Lack of equipment and
supplies has hampered several endeavours. In several initiatives, the need of workers was also
addressed. As an alternative, defendants greatly valued other bidding techniques used in the

Balochistan University of Engineering and Technology Khuzdar 1

investigation for their encouraging impact on these aspects. The investigators mostly agreed on
the need of using the standard bid procedure for awarding contracts to open bidders, which is
backed by a number of construction industry specialists participated in the research. Civic sector
owners are under increasing pressure in the present construction climate to improve project
performance, accelerate project completion, and reduce the cost of regulating their building
timelines. In order to respond to these pressures and improve project quality and performance,
the Pakistani construction sector must develop new methods of acquiring and contracting that
take into account criteria other than just cost.

1.2 Problem statement:

As a result, the low-bidding approach could not provide the optimum performance both during
and after construction or the best value for money invested. Additionally, the traditional low-bid
strategy favours adversarial rather than cooperative or managerial relationships between the
builder, the architect, and the customer. In most cases, the owner is more vulnerable to the
builder's accusations about the design and building standard concerns (Rizwan, 2008). The goal
of this thesis is to assess the current state of procurement and bid policies in the construction
sector. However, the least responsive bidder or price-based technique, which is the method most
often used to award contracts, has serious shortcomings due to strong competition and poor
performance. These inexperienced activities provide a severe risk and difficulty, such as:

• Delays in project completion time

• Intensification of project costs, ultimately pushing businesses into bankruptcy.

• a decline in building quality;

• a grave concern about public safety;

• total project failure

The low-bid technique calls for contractors to submit open bids based on strategies and
requirements created by a private engineering firm that the organization has engaged. In odd
circumstances, the contractor who offers the lowest open bid receives the building contract.

Balochistan University of Engineering and Technology Khuzdar 2

However, in a small number of instances, the quality factor, the builder's skill level, and other
norms are disregarded when awarding these contracts.

1.3 Aim

The study conducted for this thesis primarily aims to assess how low-bid contract awarding
systems affect the completion of significant public works as defined in terms of schedule, cost,
quality, and security. This research will provide suggestions and recommendations for using an
alternative bid evaluation procedure and contract award procedure for the construction sector.

1.4 Objectives of the Study

The objectives of thesis are given below:

1) To investigate the impacts of low bid contract award system in different construction
industry of Pakistan.

2) To suggest best feasible alternative method for awarding contract.

1.5 Scope

The goal of the thesis is to assess the procurement procedures used in Pakistan when a
government-owned project is given to the lowest bidder. Send suggestions and references as
well, since they will aid in the development of the parties' procurement procedures and the
bidding process. The report presents the findings of the literature review and the information
acquired from the statistics sheets and survey questionnaires. This thesis includes the legal
justification and government administrative rules pertaining to the topic of public building
construction contract-award procedures.

Balochistan University of Engineering and Technology Khuzdar 3

 Chapter 2

Literature Review

2.1 Introduction

The building industry's experts are concentrating on alternative project providing solutions as a
result of recent, rapid expansions and requirements in many facets of civic life. However, the
tender and awarding procedures have largely remained unchanged. Due to the awarded servicers'
deficiencies and errors, there have been delays, disagreements, and even liquidations. The
predetermined selection criteria and the purpose of the pre-qualification and bid evaluation
procedures must be made clear and improved if a client wants to cope with these new expansions
and invite qualified bidders (Hatush et al, 1997). The most popular method of procuring goods
and services is the economical low-bid approach, which awards contracts to the accepting
contractor who offers the lowest price. The creation of necessary and suitable standards is
required for the pre-qualification and bid evaluation procedures. The complexity of projects and
client demands have grown significantly over the last two decades, which has encouraged the
adoption of alternative project assignment methods. Pre-qualification and bid assessment
methods, standard quantification, and standard valuation, in contrast, are still in their
revolutionary stages. Pre-qualification provides a customer with a specific list of vendors who
are regularly requested to submit bids. This approach is now used by most countries, and it takes
into account a variety of criteria in order to evaluate the general suitability of contractors. The
low-bidding approach has certain pros and cons. A certain benefit of the approach is that it
encourages contractor competition. To ensure they secure contracts and maintain their profit
margins, contractors must keep their costs low, often via innovation. Additionally, the technique
is beneficially visible to the public sector due to its clarity and significance as a public
programme standard (Photios, 1993). However, allowing projects to be awarded solely on who
can pay the least has its drawbacks. The primary negatives of the responsive low-six bidding
award technique are delays in fulfilling deadlines, increases in absolute development costs as a

Balochistan University of Engineering and Technology Khuzdar 4

result of unique variances, a predisposition to sacrifice value, and tense relationships between
contracting parties (Thomas, 2009). Additionally, the low-bid funding structure favours complete
bidders and deters competent contractors from competing. According to Hardy (1978), the
criteria used to evaluate bids should take the client's goals into account. These include the offers'
complete agreement with the contract and the bidders' qualification to assume the contract. The
offer that optimizes the client's return on investment is the criteria for choosing a successful
candidate. Therefore, he advised bidders to provide a summary of the payments they anticipate
receiving during the contract. According to a survey carried out in the Oromiya Regional State,
the main issues with the current method of project submission were the lack of genuine
competition in the selection of suppliers, excessive time overruns, a decline in quality, and an
increase in final project costs compared to estimated costs (Lemma, 2006).Other significant
concerns cited as causes of delays throughout the building phase in the Ethiopian construction
sector include inadequate initial project funding by the contractor and a lack of timely supplies of
materials, equipment, and personnel (Abdo, 2006). Multi-organizational activity is included in
the building process. As a result, conflicts and disagreements might arise between the customer
and a consultant, a supplier, a subcontractor, etc. at any point in the contract chain. The system
selected for project execution is one of the numerous factors that might lead to arguments in a
building project (Abera, 2005).

Construction experts are now focusing on using alternative project distribution strategies due to
recent expansions and wants in many facets of human existence. Project bidding and donation
processes, however, are still primarily set up in their fundamental manner. Clarify and advance
specified selection requirements, as well as the purpose of the pre-qualification and bid
evaluation procedures, if the client wishes to traverse these new styles and invite qualified
bidders (Hatush et al., 1997). The Government of Pakistan is the primary client of the building
industry in Pakistan (GOP). While the lowest-bid approach, in which contracts are given to the
open provider who offers the lowest price, is the most popular way for securing projects, the pre-
qualification requirements and the selection procedure have not changed significantly in the
previous twenty to thirty years and continue to be done in the same manner. A pre-qualification
from the customer includes a list of contractors who are commonly requested to submit bids. The
lowest bidder bidding process has clear advantages and clear disadvantages. To ensure they

Balochistan University of Engineering and Technology Khuzdar 5

secure contracts and retain their profit margins, they compel contractors to reduce their costs,
often via innovation and transformation. Additionally, this procedure is especially advantageous
for the public sector since it is simple and transparent, two important elements of public planning
(Photios, 1993). However, permitting projects to be awarded based on the lowest bid will have
its own drawbacks. The primary negatives of using a sophisticated low bid process are delays in
fulfilling deadlines, increases in project costs due to significant anomalies, a propensity to
compromise on quality, and tense relationships between contractors (Thomas., 2009).
Additionally, the low-bid method deters competent contractors from participating while
encouraging unqualified bids to compete. A study conducted in the Oromiya Regional State
found that the biggest issues with the current method of project execution were the absence of
genuine competition in the selection of suppliers, excessive time delays, declines in quality, and
increases in final project expenses from estimated costs (Lemma., 2006). The chosen project
application system is one of the noticeable components among the various causes for variances
in a building project (Abera, 2005).

2.2 Legal Framework (Bidding Procedures and Laws)

For building projects, the Pakistani government has laws mandating the filing of competitive
bids. According to the Public Procurement Regulatory Authority (PPRA) and Pakistan
Engineering Council (PEC), public entities must award such contracts to the "lowest responding
bidder."

2.2.1 Procedures for Competitive Bidding.

(a) Single Stage, One Envelope Procedure

Each offer must include a single envelope with a financial proposal and a technical
proposal inside (if any). All submitted bids must be opened and assessed according
to the guidelines outlined in the bidding document.

(b) Single Stage, Two Envelope Procedure

Balochistan University of Engineering and Technology Khuzdar 6

The bid must come in a single box with two distinct envelopes. The financial proposal and the
technical proposal must be placed in separate envelopes. Only the envelope with the words
"TECHNICAL PROPOSAL" must be opened at first. The procurement agency must publicly
release the financial proposals of the technically acceptable bids only after evaluating and
approving the technical proposal at some point within the bid validity period.

2.3 Contract Award Procedures in Construction

Most bidding processes include negotiation and competition. The majority of other techniques
fall somewhere between these two important groups or are variations of them. If the lowest
bidder is shown to be responsive, the job is given to him or her in a competitive process. The
cost is discussed and negotiated with the chosen function Object () { [native code] } under the
negotiated mode of procurement. For reducing the worries and consequences of these two
extreme categories, certain adjustments have been suggested and tested in many nations. The
following contract-award techniques are examined and taken into consideration in this study:

(a) Competitive lowest bidding approach (Price-basis).

(b) Competitive average bidding approach (Price-basis).

(c) Multi parameter bid approach (Basing on quality, time, price and “other” factors) .

(d) Negotiated bid approach (Competitive).

(e) Negotiated bid approach (Non-Competitive).

(f) A+B approach.

Balochistan University of Engineering and Technology Khuzdar 7

 Chapter 3

Methodology
3.1 Background

A survey of the literature that includes a few case studies, research articles, books, and earlier

investigations. The use of questionnaire surveys and in-depth interviews is a way for gathering

and producing research data. For the purpose of analysing the effectiveness of the lowest bidder

method, a total of 35 factors were found. Of these, 26 were chosen for further consideration

while taking into account the environment and culture of Pakistan. 26 parametric questions and 5

questions depending on the respondent's opinions were included in the questionnaire that was

created using these parameters. To complete the questionnaire, a pilot research including 12

construction industry professionals and their interviews was conducted. Five alternatives to the

lowest bidder bid procedure were chosen for the exploratory research, and part II of the

questionnaire was created. To compare these techniques, 10 parameters were chosen. After

making the required corrections, the surveys were examined once again and then completed.

Balochistan University of Engineering and Technology Khuzdar 8

3.2 Research Design

3.1 Data collection

The developed questionnaire was distributed to the engineers, contractor and consultants. A
google link was also created for those respondents which could not be approached. So, the
google link was sent and received their responses. Twenty questionnaires were distributed
among different departments. The interview was conducted among 12 peoples.

3.2 Data Analysis

The obtained data was analyzed through SPSS software. With the help of which the
questionnaires were further analyzed for the identification of impact in low bid contract award
system in the construction industry of Pakistan.

Balochistan University of Engineering and Technology Khuzdar 9

 Chapter 4

Results and Discussions

The following basic data research tests were conducted on the obtained data to examine the
quality, normalcy, reliability, and validity of survey data that was acknowledged from various
categories of respondents around the nation about the performance of lowest bidder.

Objective 1:

 The 1 st
Objective was achieved by conducting a questionnaire survey and google form
which was consists of demographic information and different questions. Total 53
questions data was collected.

Objective 2:

 The 2nd Objective was achieved by conducting structure interview with construction
industry experts.

 Total of 14 interviews are conducted.

Balochistan University of Engineering and Technology Khuzdar 10

4.1 Objective 1

Demographic DATA

Balochistan University of Engineering and Technology Khuzdar 11

Means of questions

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

5. A method that only takes 54 1 5 2.57 1.222

into account the lowest price
provides contractors with an
incentive to concentrate on
reducing bid prices as much
as they can.

Balochistan University of Engineering and Technology Khuzdar 12

5. Due to the absence of a 54 1 5 2.52 1.005
quantitative technique to
evaluate the lowest proposal
objectively, customers in the
public sector are unwilling to
contest it.

4. The low bid award 54 1 5 2.41 1.019

mechanism is ineffective in
determining if contractors
have the capacity to
complete projects of an
acceptable level within the
allotted budget and time.

1. The low bid technique 54 1 5 2.35 1.231

often leads in customer
satisfaction.

4. The public sector 54 1 5 2.26 1.049

customers saw increasing
pressure to improve
performance and lower
project management costs as
a result of the lowest bid
price..

4. The lowest bid price does 54 1 5 2.22 1.003

not always translate into the
project's lowest cost.

5. The lowest bidder's ability 54 1 4 2.22 .904

to do the task is not always
assured in a low bid process.

5. Between the lowest bidder 54 1 5 2.19 1.150

and other offers, there is a
significant price difference.

Balochistan University of Engineering and Technology Khuzdar 13

2. Customers must exercise 54 1 5 2.17 1.042
greater management,
guidance, and control in a
price-based system.

2. Lowest bid price as the 54 1 5 2.17 .947

only criterion for selection
promotes participation from
unqualified contractors.

3.Contractors use low-quality 54 1 5 2.15 .979

artisans who meet the bare
minimal requirements to save
costs and ease pricing
pressure.

3. Because of the intense 54 1 5 2.15 .998

rivalry among contractors,
some may submit an
absurdly cheap bid in an
effort to get the job.

1. Non-expert contractors are 54 1 5 2.11 1.127

chosen through the
conventional low bid award
mechanism.

3. A bad contractor raises the 53 1 5 2.08 .978

likelihood of cost overruns,
disagreements, poor
performance, and delays.

2. The selection of a 54 1 4 2.06 .834

contractor on the basis of
pricing may lead to irrational
and very cheap
subcontracting.

Balochistan University of Engineering and Technology Khuzdar 14

4. The contractors reduce 54 1 4 2.04 .971
their performance to satisfy
the minimal requirements in
order to save money.

5. The low bid award 54 1 4 2.04 .910

mechanism prohibits the best
contractor for the project
from being chosen.

2. Low quality work is 54 1 5 2.02 .961

produced through the
conventional bid
procurement procedure.

4.The lowest bidder 54 1 5 2.00 1.082

overestimates the project's
cost in an effort to win the
contract.

1. Loss of money results 54 1 5 1.96 1.027

from the contractor's lowest
price proposal differing from
the market pricing.

3. The low bid award 54 1 4 1.94 .834

mechanism exposes
customers in the public
sector to significant risk.

1. In the low bid award 54 1 5 1.94 1.036

procedure, projects are not
finished by the deadline.

2. Unreasonably low bid 54 1 4 1.91 .759

costs make it difficult for
customers in the public
sector to assure project
management and quality.

Balochistan University of Engineering and Technology Khuzdar 15

3. Accepting the lowest bid 54 1 5 1.87 .891
pricing does not always
result in getting the best deal.

1. The failure of the project is 54 1 5 1.85 1.035

caused by the low bid award
procedure, which chooses
incompetent contractors.

Valid N (listwise) 53

4.2 Objective 2

Interviews data

Balochistan University of Engineering and Technology Khuzdar 16

Balochistan University of Engineering and Technology Khuzdar 17
The research shows the average level of outcomes for the lowest offer in terms of cost, time,

value, and other constraints. Contractors are made aware that the lowest bidder would likely get

the contract, in contrast to clients and consultants. Likewise, less experienced experts see things

differently than more experienced specialists. Five additional bidders were suggested for

comparison with the standard lowest bidder process. About 35.71% of those polled agreed with

and backed the idea of multi-parameter bids, while 28.57% recommended using the average

bidding approach. The majority of the pros we spoke with throughout our interviews

recommended the multi-parameter bidding strategy.

Balochistan University of Engineering and Technology Khuzdar 18

 Chapter 5

CONCLUSION AND RECOMMENDATIONS

5.1 CONCLUSION

Check out the lowest bidder's performance in the Pakistani CI's public sector. This was

accomplished by categorizing 26 performance limitations, creating a survey out of them, and

using some estimation-based inquiries. Five novel strategies that had previously been used in

different regions of the globe were identified in order to improve project performance. For each

of the five approaches' limitations, a presentation index (PI) of 10 recognized presentation

characteristics was proposed. After completing the survey, RI of all the procedures was

predetermined based on preconceived restrictions. In contrast to the lowest bidder, this was

found to be the best possible alternative. The foundation for further in-depth readings for a clear

correlation among many alternatives has been established by this research of the examination of

diverse methodologies. Sending the obtained findings, deductions, or accolades to PEC or PPRA

for further review and consideration is an option. Conclusions (a) In this study, convention award

and least-cost bid evaluation systems were used to evaluate the presentation of public-owned

manufacturing projects. The opinions of manufacturing experts from public organizations about

the existing manner of bid award process and other alternatives have also been sought for. On the

basis of the evaluation done on information gathered from surveys given to construction industry

specialists, the following assumptions are formed.

Balochistan University of Engineering and Technology Khuzdar 19

5.2 Future recommendations

(a)According to the study, the primary method of presenting public manufacturing works

contracts is the least intimidating bid evaluation and agreement award strategy. In CI of Pakistan,

the responsible and accessible bidders with the lowest price bids get around 83% of all public

projects.

(b) A common management error in practically all global manufacturing operations is

collusion/bid shopping. Pakistani CI is also prone to the incidence. The outcome reveals that in

62% of the instances, this repeat is successful. The Effects of Lowest Bid Bid Awarding System

in Public Sector Construction Projects in Pakistan 18 are not the only things that are impacted by

this. The economical bidding technique used by Global Journal of Management and Business

Research Volume XV Issue I Version I Year () G 2015 2015 Global Journals Inc. 1 (US)

increases the bid price due to the unrealistic bids submitted by bidders for the project.

(c)It was determined that the quality of the completed projects by the lowest bidders was just

acceptable (index rating of 59%) and not the best. In conversations on a few project sites,

independents cited cheaper prices as the primary justification for not completing the work with

the highest level of quality.

(d) Nearly half of the projects that are owned by the community take longer than expected to

complete. Because it costs more and has a smaller profit margin, the lowest bidder cannot add

new items to the development to make it stronger. Eventually, the development as a whole is

delayed, and WBS is also not adhered to strictly.

Balochistan University of Engineering and Technology Khuzdar 20

(e) Cost is the primary element around which the whole international bidding and manufacturing

process, and Pakistani CI in particular, revolves. With a few notable exceptions, the lowest

bidder bid method is often preferred since it reduces costs. However, it is also shown that more

than 50% of manufacturing projects go over budget and end up costing extra money.

(f) A design cannot be flawless. Changes during or after the project's performance phase are

essentially inevitable. Unless it is more lucrative, more than half of the lowest-bidder companies

often refuse to accept modification orders.

(g) More than 60% of newly constructed facilities have defects that may be fixed throughout the

warranty term. Freelancers are often requested to fix the flaw, and they typically provide a

favorable response.

(h) More than 90% of industry experts believe that manufacturing projects shouldn't always be

awarded to the lowest bidder since the quality of the final product will be higher and the project

may be done sooner if it is conducted by a non-lowest bidder.

(i) The manufacturing authorities encourage research into alternate bidder methods. It was

acknowledged that in order to get definitive findings, new methods in the area had to be tested.

(j) The majority of industry experts welcomed the multi parameter bidding approach since it

seems to be more common and beneficial in a variety of best bid situations. It may have as many

restrictions as the customer desires. It could be superior than the conventional lowest bidder

procedure.

Balochistan University of Engineering and Technology Khuzdar 21

 References

[1] A Guide on Bid Evaluation, Asian Development Bank, 2010.

[2] Guidelines: Procurement of Goods, Works, and Non-Consulting Services Under IBRD Loans

and IDA Credits & Grants by World Bank Borrowers, The World Bank, Washington, January

2011.

[3] Standard Procedure for Evaluation of Bids for Procurement of Works, Pakistan Engineering

Council, March 2009.

[4] Thomas Bedford: Analysis of the Low Bid-Award System in Public Sector Construction

Procurement, MSc. Thesis, Graduate Department of Civil Engineering University of

Toronto,2009.

[5] Laychluh, Mechegiaw, Performance Study of Lowest Bidder Bid Award System in Public

Construction Projects, MSc. Thesis, Addis Ababa University, 2013.

[6] Bob Lohfeld: Will Low-price Contracting Make us all Losers?, Washington Technology

Daily Jun 04, 2012.

[7] Association of Colleges - Further Education Library of Procurement, Most economically

advantageous tender (MEAT), August 2012.

[8] Photios G. Ioannou, Ann Arbor Sou-SenLeu:Average-Bid Method—Competitive Bidding

Strategy: ASCE Journal of Construction Engineering and Management, Vol. 119, No. 1, March

1993.

[9] Wei-Shiun Chang, Bo Chenz Timothy C. Salmon: An Investigation of the Average Bid

Mechanism for Procurement Auctions, October 2013.

Balochistan University of Engineering and Technology Khuzdar 22

[10]. Alexanderson, G. and Hulten, S. (2006). Predatory Bidding in Competitive Tenders: A

Swedish Case Study, European Journal of Law and Economics, 29-36.

[11]. Dowle, W.J., and De Stephanis, A. (1990). “Preparing bids to avoid Claims.”, Construction

Bidding Law, John Wiley & Sons, Inc., New York.

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Balochistan University of Engineering and Technology Khuzdar 25

 Appendix

Questionnaire Survey
BALOCHISTAN UNIVERSITY OF

ENGINEERING AND TECHNOLOGY

KHUZDAR
PROBLEMS OF LOW BID CONTRACT AWARD SYSTEM IN CONSTRUCTION
INDUSTRY OF PAKISTAN

QUESTIONNAIRE SURVEY

PURPOSE OF QUESTIONNAIRE:
Our research project, "Problems of Low Bid Contract Award System in Construction
Industry of Pakistan ", includes this questionnaire survey. This survey will help us to
identify the main problems of contracts in Pakistan construction industries awarding on the
basis of low-bid method. The questionnaire survey mainly divided into different sections:
Including demographic data, and the other field related questions about the research.

Please proceed to take part in this research.

Note: All data gathered through this questionnaire survey will be treated in complete

confidence; no companies or people will be named in any study reports; and all data

submitted will be used only for academic research.

Balochistan University of Engineering and Technology Khuzdar 26

SECTION-I

DEMOGRAPHIC OF RESPONDENTS

Qualification of B. E M.E DAE Other

Respondents
Gender Male Female
Experience 1-5 5-10 10-15 15-20
(Years)
Organization Govt/Public Private Sector Private Sector Other
Type organization (contractor) (consultant)

Balochistan University of Engineering and Technology Khuzdar 27

 SECTON-II

S.no Questions Strongly Agree Neutral Disagree Strongly

Agree Disagree
1. Difference between contractor’s
lowest price proposal and market
price leads to loss of money.
2. Unreasonable low bid prices
pose a hindrance for the public
sector clients to ensure the
quality and management of
project.
3. Accepting the lowest bid prices
does not guarantee maximum
value.
4. The lowest bid price does not
result into lowest cost of the
project.
5. The low bid award system
prevents the selection of best
contractor for the project.
Please give your response on problems caused by low-bid contract award system in
different phases of construction industry in Pakistan.

Part 1: Value for Money

S.no Questions Strongly Agree Neutral Disagree Strongly

Agree Disagree
1. In low bid award system projects

Balochistan University of Engineering and Technology Khuzdar 28

 are not completed within
stipulated.
2. The traditional system of bid
procurement delivers low quality
work.
3. The low bid award system
involves high risk exposure to
public sector clients.
4. In order to save money, the
contractors lower their
performance to meet the
minimum standards.
5. In low bid approach it is not
guaranteed that contractor with
lowest proposal is actually able to
carry out the work.
Please give your response on problems caused by low-bid contract award system in
different phases of construction industry in Pakistan

Part 2: Efficiency

Balochistan University of Engineering and Technology Khuzdar 29

 Please give your response on problems caused by low-bid contract award system in
different phases of construction industry in Pakistan.

S.no Questions Strongly Agree Neutral Disagree Strongly

Part 3: Fairness /Competition
Agree Disagree
1. The low bid award system selects
incapable contractors which
results in project failure.
2. The price-based selection of
contractor may result in
unreasonable and very low
subcontracting.
3. The high competition among the
contractor may encourages some
of the contractors to submit an
unreasonable low price in order
to win the contract.
4. The low bid award system is
unsuccessful in investigating
potential of contractors to deliver
projects of acceptable standard
within stipulated time and cost.
5. There is large price gap between
the lowest bidder and other bids.

Balochistan University of Engineering and Technology Khuzdar 30

S.no Questions Strongly Agree Neutral Disagree Strongly
Agree Disagree
1. The traditional low bid award
system chooses non-expert
contractors
2. Lowest bid price as the single
award criteria encourages non-
qualified contractors to take part
in bidding.
3. An inappropriate contractor
increases the risk of cost
overrun, disputes, substandard
work, delays.
4. In order to secure the contract,
the lowest bidder underestimates
the cost of project.
5. A system strictly considering the
lowest price gives the
contractors with an incentive to
focus on cutting bid prices to
some possible extent.
Please give your response on problems caused by low-bid contract award system in
different phases of construction industry in Pakistan.

Part 4: Transparency

Balochistan University of Engineering and Technology Khuzdar 31

S.no Questions Strongly Agree Neutral Disagree Strongly
Agree Disagree
1. The low bid system often results
into satisfaction of the clients.
2. The price-based environment
requires more management,
direction and control from
clients.
3. In order to save money and price
pressure contractor employs low
level of craftspeople with
minimum standards.
4. Due to lowest bid price the
public sector clients found
themselves under increased
pressure to enhance performance
and reduce management cost of
project.
5. Public sector clients are reluctant
to challenge the lowest bid
proposal due to lack of
quantitative model to objectively
review the lowest proposal.
Please give your response on problems caused by low-bid contract award system in
different phases of construction industry in Pakistan.

Part 5: Accountability

Balochistan University of Engineering and Technology Khuzdar 32