An integrated decision-making model for evaluating public sector construction bids

The significance of public procurement activity is substantiated by its estimated value of 15% of the global gross domestic product (GDP). In South Africa, the government spent an average of 6% of the GDP in procuring infrastructure development projects. This emphasis on infrastructure development is the plan, amongst others, to eliminate principal challenges, inter alia, unemployment and inequality in South Africa. Therefore, public procurement is of particular significance in South Africa as it is not only used as a policy tool to address discriminatory and unfair practices from the apartheid era, but also to achieve socioeconomic goals. However, the faulty nature of the public procurement system is evidenced by characteristics such as projects’ budget overruns, inappropriate quality, and late completion of work, all of which are often attributed to the appointment of unqualified contractors. Moreover, there is a dearth of empirical studies that investigate and develop models to aid an effective bids evaluation process that ensures the selection of an adequate contractor.Thus, this research investigates the extant bid evaluation process and develops an integrated model that will aid the effective decision-making (DM) when evaluating public sector construction bids in South Africa. Primarily, the research modelled the extent that price, health and safety, experience, quality, financial soundness, technical ability, management capabilities, human resources as well as plant and equipment attributes (which were classified as the exogenous variables) influence the DM when evaluating construction bids. A conceptual integrated holistic DM model was developed based on the theory developed from the literature review. A questionnaire survey was administered to the built environment stakeholders who are actively involved in the industry to validate this conceptual model. A total number of 234 participants responded to the survey. Multiple techniques were employed to analyse and demonstrate thr validity and reliability of the sets of data collected. Thus, SEM utilizing EQS software was used for data analysis in this current study.Results from the investigation pertained to two broad areas. Firstly, the results related to theory on DM and bids evaluation studies. The study’s results addressed the lack of theoretical vi information about which attributes are most significant in influencing the DM during the evaluation of public sector construction bids. Also, the findings revealed that the DM for public sector construction bids evaluation involves multi-criteria and latent variables which lead to effective decision-making (DM) processes for bids evaluation as well as outcome variables which could be used for the measurement of the DM when evaluating construction bids. The second set of results related to the field questionnaire survey. Generally, the findings were that the hypothesis could not be rejected. It was found that price, health and safety, experience, quality, financial soundness, technical ability, management capabilities, human resources as well as plant and equipment attributes influenced the DM for evaluating public sector construction bids. Similarly, the structural equation modelling (SEM) results on the model’s goodness-of-fit and the statistical significance of parameter estimates met the cut-off criteria for the hypothesised model’s fit to the sample data. The study’s contribution to the body of knowledge is significant because it addresses the lack of theoretical information (historical literature data) about which attributes are most significant in predicting the DM for evaluating public sector construction bids. The current integrated model advances that the DM for evaluating public sector construction bids is a nine-factor construct, with the inclusion of a new variable, namely the human resources attribute. Previous studies have vaguely tried to include this variable in their DM models for bids evaluation; however, they were only limited to assessing the technical abilities of the contractor i stead of human resources attributes addressed in this study. Hence, this study has shown that there is more than one attribute that influences the DM for evaluating construction bids.The study recommends that public institutions desiring to achieve their primary and secondary procurement objectives could use the model developed in this current study when evaluating construction bids. Furthermore, for the policy implication, the study suggests that the DM for public sector construction bids evaluation can be improved through standardising the evaluating criteria, thus limiting reinventing the wheel every time. Similarly, the validated conceptual model of the DM model for bids evaluation will provide a reference for researchers who may study construction bids evaluation in the future. Keywords: Bids committee, bids evaluation, contractor selection, decision-making, evaluation criteria, public procurement, structural equation modelling.