Inhibiting Factors to the Implementation of Preferential Procurement Policy in the South African Construction Industry

Abstract

The South African preferential procurement policy emerged from the demand for transparency, fair competition, value-for-money, standardised and benchmark pricing, and regulation of public procurement arrangements in the construction industry. The policy aims to address historical inequalities, support economic growth, and foster sustainable development. The effectiveness of the preferential procurement policy in South Africa is affected by the inhibiting factors of its implementation system. Given this, this study assesses the factors inhibiting preferential procurement policy implementation in the South African construction industry. This study reviewed the extant literature from online databases as a secondary data source to identify and understand the factors inhibiting procurement policy implementation. A quantitative research design using a closed-ended survey questionnaire surveyed 31 identified inhibiting factors affecting procurement policy implementation from the literature review. One hundred sixty-seven (167) questionnaires were retrieved from two hundred (200) distributed, representing an 83.5 per cent response rate, distributed through Google Forms to the respondents in Northwest Province, South Africa. The reliability of the data collection instrument was determined using Bartlett’s sphericity, Cronbach’s alpha, and Kaiser–Meyer–Olkin tests. The exploratory factor analysis findings established eight components from the 31 identified inhibiting factors affecting procurement policy implementation, which are the absence of due diligence in procurement screening, corruption and political interference in procurement systems, an ineffective regulatory framework supporting public procurement policy, discrepancies in award of contracts and the absence of dispute resolution, ambiguity in procurement selection criteria, poor enforcement mechanisms, cost discrepancies in advance payment, and excessive bureaucracy in procurement documentation. This study’s practical implications provide an understanding of establishing and prioritising procurement selection criteria, such as project requalification requirements, cost performance requirements, technology integration in the prequalification process, and contract change order requirements, which would improve procurement systems in the South African construction industry.

1. Introduction

The construction industry (CI) stands as major contributor driving the essential infrastructure development and stimulating economic growth [1,2,3]. The CI transforms the national economy by developing infrastructural facilities, including roads, buildings, housing, bridges, dams, transportation, and telecommunication [3,4,5]. Moreover, the dynamic nature of the CI is also attributed to uncertainty in project delivery cost, time, safety, and quality [6,7,8]. Likewise, the industry is highly competitive and characterised by an uncertain business environment, and construction projects’ clients, the major stakeholders, demand timely delivery [9]. The complexity of construction projects’ design, planning, control, and performance in meeting clients’ goals has increased stakeholders’ mission to improve procurement systems [10,11,12]. Thus, researchers have continued to investigate the roles of procurement systems in the CI to mitigate the problem of project performance [13,14].

Procurement is one of the procedures used to realise construction project objectives in the CI [15]. Chanudha [16] described procurement as acquiring products and services for construction project operations from investigation to delivery. Tiwari [13] noted that the procurement system allows construction organisations to assign specific tasks and authorities to individuals, defining the interdependence of the various operations in the contractual arrangements. Chanudha [16] opined that construction procurement is key to achieving strategic project goals and success. Procurement systems are essential in construction processes, ranging from various activities that provide knowledge, supplies, equipment, sourcing, manpower, purchasing, supervision, and managing services required to achieve project success [17,18]. Thus, the unique nature of the construction sector requires the project team to understand procurement policy and processes to achieve the construction project objectives [19].

Globally, procurement policies have been part of the government’s reform of the public sector and improved effectiveness in service delivery in the construction sector [15]. The preferential procurement policy in South Africa strengthens joint alliances between established and emerging firms to secure major construction contracts [20]. Procurement policies inform the process of creating and managing construction contracts by identifying contract requirements as a flawless approach for integrating the best strategy for organisational directions [17]. The procurement policy fosters transparency, integrity, efficiency, fair treatment of suppliers, and non-discrimination, enabling the attainment of the best value for public funds [18]. In addition, the procurement policy ensures due process is followed in establishing competitive, transparent, fair procurement systems, integrity-driven contract awards, and meeting quality and standards delivery of projects within budgets [21]. However, the intention of the South African procurement policy for the construction sector is not without inhibiting factors that affect its implementation in the construction processes [22]. Jones [9] noted that procurement policies are designed to ensure open and transparent government contracting; however, bid rigging or collusive tendering, corrupt public official practices, and insufficient data availability limit its effective implementation.

The Preferential Procurement Policy Framework Act (PPPFA) is one of the strategies employed by the South African government to reform public procurement systems to ensure inclusiveness, promote economic transformation, and address historical imbalances by favouring businesses owned by historically disadvantaged groups [14]. The policy addresses historical inequalities, supports economic growth, and fosters sustainable development [14]. Fourie [14] added that the effectiveness of the PPPFA in South Africa is affected by the factors of the implementation system rather than the system itself. According to Jimoh [19], many clients often engage in procurement systems by default without adequate knowledge of what is suitable for contracts and tenders. Thus, these inhibiting factors often affect the client–contractor contractual relationship. Addressing the inhibiting factors to preferential procurement policy implementation in the CI, few studies have examined government reform of public procurement policy and its impacts in developing countries, particularly South Africa [14,15]. Ezeh [23,24] affirmed the procurement policies reform implemented in various nations in developing countries, particularly Ghana, Kenya, Zambia, Lesotho, Liberia, Nigeria, and Sierra Leone, over the last two decades to strengthen their public procurement arrangements. Holistically identifying inhibiting factors to procurement policy implementation from the global lens of the extant literature and using the perspective of construction stakeholders to validate these factors create a knowledge gap in developing countries, particularly South Africa [14,22]. There is thus a need to provide an understanding of factors inhibiting preferential procurement policy implementation that creates unlawful and unfair procedures in public procurement systems among previously disadvantaged stakeholders in South Africa [14,22].

Therefore, this study assesses the factors inhibiting preferential procurement policy implementation through a quantitative research design using construction stakeholders’ perspectives specific to the South African construction industry (SACI). The objective of this study was determined through a review of the existing literature to identify the factors inhibiting the implementation of preferential procurement policies. This study adopted exploratory factor analysis (EFA) as a statistical tool, exploring the interrelatedness and correlation within the eight components of EFA using data obtained from the perspective of construction stakeholders in Northwest Province, South Africa. Therefore, this study’s theoretical and practical implications are expected to guide construction stakeholders, particularly in South Africa, against the inhibiting factors of preferential procurement policy implementation and improve the client–contractor contractual relationship. The study findings are necessary to identify inhibiting factors affecting the preferential procurement policy in South Africa and improve policy framework implementation supporting previously disadvantaged people and communities, creating greater opportunities for many historically disadvantaged contractors. Understanding these inhibiting factors among construction stakeholders would also promote small businesses empowerment, socio-economic transformation, and the advancement of local industrial development. Moreover, it is also crucial for the South African government to meet the objectives of the National Development Plan (NDP) by 2030, which include promoting inclusiveness, fostering skills development, ensuring an effective public sector, and supporting nation-building.

2. Literature Review

The need for reform in contractual arrangements has led construction stakeholders to seek innovative means of improving procurement systems and policies in developing countries’ CI [15]. Procurement arrangements encompass strategies for project organisation, funding source and partner selection, pricing agreements, resource allocation, and subcontracting to ensure project success [25,26,27]. The procurement policy frequently addresses issues within contractual arrangements, such as procurement techniques, project complications, the separation of planning from construction, lack of stakeholder integration, ineffective communication, vulnerability, a changing environment, and evolving customer needs and desires [10]. An effective procurement system relies on three key factors: governance, behaviour, and the business environment [28]. Hence, Fourie and Malan [14] admitted that the recent economic downturn in public procurement requires a renewed focus on integrity, ensuring the delivery of public services and trust in the government

2.1. Understanding South African Past and Present Public Procurement Systems

In the SACI, procurement systems have been in use since the country’s time as a British colony [29]. The South African procurement structure is modelled after the British system but was unsystematic during the apartheid era [30]. This is because of South Africa and Britain’s institutional arrangements and different setups [30]. However, the SACI experienced significant changes due to political uncertainties in the early 1980s and late 1990s [30]. The SACI has evolved from focusing on first-world environments to addressing the needs of a developing-world construction sector, prioritising the basic needs of the economic condition of its population [29]. This shift was directed towards developing new construction policies to promote stability and foster economic growth and competitiveness. After 1994, the South African Government of National Unity and CI stakeholders formed the Construction Industry Development Board (CIDB) to enhance the consistent application of best practices in construction procurement within the framework of government policies [31,32]. The PPPFA, enacted by national legislation, provides a framework for implementing construction procurement policy [7,31].

Subsequently, after democracy arrived in South Africa in 1994, the State Tender Boards managed all public sector procurement, while provincial tender boards oversaw procurement in the provincial government. The variation in tender cultures stemmed from different conditions across national and provincial governments. To address this, reform and uniformity were needed in the procurement system. This reform started with the introduction of the ‘10-point plan’ by the National Department of Public Works (NDPW) [33]. The ten agenda of the NDPW plan emphasised the following issues:

• Improve accessibility to tender information for all businesses;
• Establish tender advice centres nationwide;
• Simplify procedures for contracts under ZAR 7500.00;
• Support specific groups affected by unfair prejudice;
• Simplify tender submission obligations;
• Appoint a procurement regulator;
• Classify civil engineering and building contracts;
• Remove the need for upfront securities and sureties from contractors;
• Divide projects into smaller parts to involve small businesses;
• Enforce a 30-day payment cycle to suppliers.

The new South African Constitution was enacted in 1996 (Act No. 108 of 1996) [34], and Chapter 13 on finance, under Section 217 of the Constitution, specifically addresses procurement. It establishes the need for a procurement system that is equitable, fair, competitive, transparent, and cost-effective, and the Public Finance Management Act (Act No. 1 of 1999) involves accounting officers to ensure a system according to Section 38 (a) (iii) [14,29]. To this end, Act No. 108 of the 1996 Constitution set out goals of competition, equality, transparency, fairness, and cost, which need to be translated into policy and legislation to offer an improvement over the National Treasury and the National Department of Public Works’ collaboration on the first policy framework document.

Hence, the 1997 Green Paper on Public Sector Procurement Reform emerged due to this publication [35], which necessitated the state to use procurement to achieve socio-economic objectives. The Green Paper aims to facilitate small, medium, and micro enterprises’ access to the tendering system as a step towards ensuring good governance and promoting competition in public procurement [35].

The Preferential Procurement Policy Framework Act (PPPFA) was initially introduced in a white paper and has been revisited and become more comprehensive following the enactment of the Public Finance Management Act, the Municipal Finance Management Act, the Broad-Based Black Economic Empowerment Act, and the PPPFA [3,32]. These Acts now define the environment to the extent that they are becoming increasingly germane in ensuring that the building and CI become more diverse and inclusive [32]. These policy frameworks, combined with strong support from all the interested parties in the government and communities of the previously disadvantaged people, are expected to result in greater opportunities for many historically disadvantaged contractors [36]. Adopting the Act also represents a shift from addressing the disadvantages of designated groups through social policy to addressing the problem through policies that broaden the accessibility of economic opportunities. The Act aims to achieve this by increasing the share of government business awarded to small, medium, and micro enterprises (SMMEs), which receive no less than 30% of the total value of all contracts. The remaining 70% of procurement should be allocated to black-empowered companies, women-owned companies, and companies owned by individuals with disabilities.

The introduction of Preferential Procurement Regulations, 2017 (PPRs, 2017) under the Ministry of Finance section 5(1) of the PPPFA Act No. 5 of 2000 and the Green Paper on Public Sector Procurement Reform provides a framework for subsequent legislation to achieve the principles set out in the Constitution and in Section 217 [37]. The objective of the regulations is to use public procurement to promote the empowerment of small enterprises, socio-economic transformation, rural and township enterprises, designated groups, and the promotion of local industrial development [37]. The new regulations will replace those published in 2011 to allow bid evaluation based on functionality, but this only serves as a qualifying measure and does not affect the final evaluation of the tender. An additional 50/50 preference points category was introduced for bid evaluation, applying bids of less than ZAR 10 million to the existing 80/20 and 90/10 categories. This category allocates fifty points to price and fifty points to specific preference criteria, such as HDIs, female ownership, ownership by persons with disabilities, SMME, and LED [37]. The Preferential Procurement Regulations [37] require state organs to ensure price analysis to determine reasonable, fair bid prices. This involves comparing prices for similar services, evaluating proposed prices against existing contracts, and checking prices set by law or regulation [32]. It emphasises the need to document price analysis as part of bid evaluation, highlighting its impact on public sector bids [32].

2.2. Literature Findings on Inhibiting Factors to the Implementation of Preferential Procurement Policy

Construction procurement encompasses the activities and techniques used to secure the construction of a defined system for an organisation involved in construction projects and the allocation of risks among various stakeholders [36]. Completing construction projects within the time, quality, and cost constraints depends on the selected procurement policy [38]. The procurement system selection depends on the project type, ownership structure, CI nature in each country, and industry maturity, as noted by Dithebe [36]. However, Thwala [32,36] affirmed that internal and external inhibiting factors often affect the implementation of procurement policy. The internal inhibiting factors affecting procurement policy implementation include political and social concerns, understanding of the system, project size and technical complexity, quality of client’s knowledge or experience and control, sources of funding, price certainty, and risk allocation [32,36]. Thwala [32,36] posited that the external factors influencing procurement policy include the need to include technology, market competition, natural causes, and the regulatory environment. However, the effectiveness of the procurement policy in South Africa is attributed to the factors affecting the implementation system [14].

According to Badaso [39], implementing the procurement process has become an issue of public debate and is often subject to national reform, rules, policies, restructuring, and regulations. Olatunji et al. [15] identified the inhibiting factors to procurement policy implementation, including ambiguity in the qualification criteria, unclear distinction between the various forms of procurement, a lack of capability on the procurers’ side, absence of dispute resolution methods, favour only open competitive tendering, and lack of competition. Williams-Elegbe [21] affirmed that the government’s intention to implement procurement policy by adopting international practices into the Nigerian procurement systems is affected by factors such as corruption and fraud practices, political interference, differences in understanding functions among officials, lack of quality personnel, and poor technology application. Adewole [40] affirmed that the identified inhibiting factors to implementing public procurement policy include a lack of clear regulatory framework, corruption in the procurement process, poor enforcement mechanisms, and abuse of procurement processes.

In addition, Aliu et al. [41] noted that the implementation of public procurement policy always faces many challenges, including late passage of the annual budget, influencing project awards, insufficient competition and fairness, poor screening of technical and financial bids, abuse of procurement process, tax clearance forgery, non-appreciation of the Public Procurement Act by the public, estimate leaked to the contractors, lack of enlightenment concerning public procurement among the public, and difficulties in receiving advance payment. Jones [18] noted that despite public procurement policy being designed to ensure open and transparent government contracting, some factors affecting its effective implementation include bid rigging or collusive tendering, corrupt public official practices, mistrust of government and public institutions, tenders only attracting single bidders, insufficient data availability, insufficient cultural value, training and monitoring of procurement laws, and insufficient enforcement of corruption and competition laws. Arrowsmith et al. [42] attributed the inhibiting factors to procurement policy implementation to manipulation of the procurement rules or laws, authorities’ influence on the procurement process, and corruption and fraud practices.

Fourie and Malan [14] noted that the proactive approach to improving preferential procurement policy implementation is identifying risks and avoiding poor-quality financial statements, performance reports, non-compliance, and material irregularities. The study identified over- and underspending of budget, lack of requisite skills, inadequate budget planning, insufficient monitoring and evaluation, corruption, unethical behaviour, and high decentralisation of the procurement system as inhibiting factors affecting preferential procurement policy implementation in South Africa [14]. Furthermore, Ambe and Badenhorst-Weiss [29] noted that the public procurement policy in South Africa still faces enormous challenges, such as decentralisation of the procurement system, non-compliance with policy and regulations, inadequate planning, budget availability, lack of accountability and corruption, insufficient monitoring and evaluation of procurement procedures, and poor black economic empowerment (BEE) policy.

The perspective of construction stakeholders in Northwest Province, South Africa, on the identified inhibiting factors affecting procurement policy implementation is provided in

Table 1. Inhibiting factors affecting procurement policy implementation.

Inhibiting Factors Affecting Procurement Policy Implementation	Authors
Lack of clear regulatory framework	[36,40]
Lack of guidelines open to public scrutiny	[21,36,43]
Poor enforcement mechanisms	[40]
Poor accessibility	[14]
Inadequate advertising of opportunities	[14,36]
Excessive bureaucracy	[14]
Excessive documentation	[14]
Lack of capability on the procurers’ side	[15]
Unclear selection criteria	[15]
Lack of competition	[15]
Corruption in the procurement process	[21,40,42]
Preference for more prominent bidders (putting price before quality)	[18]
Absence of rationale for awards	[41]
Political interference	[21,36]
Poor technology application	[21,36]
Lack of quality personnel	[14]
Poor enforcement of procurement guidelines	[18]
Ambiguity in the qualification criteria	[15]
Absence of dispute resolution methods	[15]
Late passage of the annual budget	[14,21,41]
Influencing project award	[41]
Insufficient competition	[18]
Insufficient fairness	[41]
Poor screening of technical bids	[18,41]
Poor screening of financial bids	[18,41]
Abuse of the procurement process	[40,41]
Tax clearance forgery	[41]
Non-appreciation of the Public Procurement Act	[14,41]
Lack of enlightenment on public procurement	[14,41]
Estimate leaked to the contractors.	[41]
Difficulties in receiving advance payment	[18,41]

Authors’ review (2024).

. Hence, the data obtained in this study are analysed using descriptive statistics and exploratory factor analysis.

3. Methodology

This study explored construction stakeholders’ perspectives on identified inhibiting factors affecting procurement policy implementation in the SACI using a positivist philosophical position. According to Adekunle et al. [44] and Owusu-Manu et al. [45], the positivist philosophical position has been adopted in the built environment because it adds to the existing body of knowledge by focusing on observable, measurable, and recordable phenomena, similar to natural science. This study adopted a quantitative research design using a closed-ended survey questionnaire to ensure the findings are generalisable over a large population subject to an acceptable error limit. The target population includes construction stakeholders who play vital roles in the procurement process towards ensuring the successful execution of construction projects in the Northwest province, South Africa. The choice of Northwest Province for this study is because of the high number of ongoing government projects awarded through the provincial procurement system [46]. Also, the province has the highest number of construction projects, construction organisations, and construction professionals across Potchefstroom, Klerksdorp, Brits, Rustenburg, Klerksdorp, and Lichtenburg, within the province in South Africa. These stakeholders’ distinct responsibilities and contributions collectively lead to effective procurement processes. These construction stakeholders include construction professionals, government officials (CIDB), clients, consultants, financial institutions, and contractors and suppliers directly involved in construction project procurement because of their key significant roles in the procurement system within the SACI. A non-probability sampling technique was used because it enables sample selection based on respondents’ willingness to participate, which is useful when a random sampling method is not feasible for the chosen representative sample size [47,48].

Moreover, a sample size of 200 construction stakeholders involved in construction activities within the study area based on a purposive sampling method was selected through the head of the service in the Northwest Province, South Africa (see

Table 2. Respondents’ demographic background information.

Demographic Category	Description	Percentage (%)	Frequency
Working experience	<1 year	6	10
	1–5 years	21.6	36
	6–10 years	16.2	27
	11–15 years	31.1	52
	16–20 years	13.8	23
	21–25 years	8.4	14
	>25 years	3	5
	Total	100	167
Education level	Matric	2.4	4
	Diploma	24.6	41
	Bachelors	27.5	46
	Honours	24.6	41
	Masters	15.5	23
	Doctorate	5.4	9
	Total	100	167
Designations	Architects	12.6	21
	Engineers	16.2	27
	Contractors	12.6	21
	Quantity surveyors	12	20
	Project managers	9.6	16
	Clients	9.6	16
	Consultants	9	15
	Government officials	8.4	14
	Financial institution representative	2.4	4
	Others	1.8	3
	Total	100	167
Experience in Procurement	1–5 years	25.1	42
	6–10 years	24	40
	11–15 years	21.6	36
	16–20 years	15	25
	21–25 years	13.2	5
	>25 years	12	22
	Total	100	167

for respondents’ demographic information). This study purposely selected 200 respondents to appropriately balance the need for sufficient data with the practicalities of data collection. The sample size is also sufficient to achieve reliable and valid results while balancing the constraints of time, budget, and resources for the study. A purposive sampling technique was employed to distribute questionnaires to the 200 selected respondents in the study area, and an 83.5% response rate was achieved for the 167 collected data. The high response rate is due to the relevance of and interest in the research topic, which addresses pressing issues in preferential procurement policy among construction stakeholders within the study area. It enables comprehensive data collection, robust statistical analysis, and credible policy recommendations, ultimately contributing to more effective and inclusive policymaking for future review of the preferential procurement policy for the SACI. This methodology is similar to the sample size method adopted in the study of Ogundipe et al. [49,50]. A structured questionnaire was adopted as a data collection instrument to survey respondents’ perspectives on the 31 identified inhibiting factors affecting procurement policy implementation using an online survey platform (Google Forms) to reach a wider group.

The survey questionnaire was divided into two sections. The first section obtained respondents’ background information, and the second section focused on the respondents’ perceptions of the identified inhibiting factors affecting procurement policy implementation in the Northwest Province, South Africa. This study adopted a 5-point Likert scale: 1 = strongly disagree (SD); 2 = disagree (D); 3 = neutral (N); 4 = agree (A); 5 = strongly agree (SA) to establish the rank of respondents’ scores.

Subsequently, IBM SPSS V28 was utilised to analyse the data collected from the survey questionnaire. The collected data were analysed using descriptive statistics (including frequency, percentage, mean, and standard deviation) as well as exploratory factor analysis, which involved Cronbach’s alpha test, the Kaiser–Meyer–Olkin (KMO) measure, and Bartlett’s test of sphericity. According to Tabachnick and Fidell [51], exploratory factor analysis identified and established the correlation patterns within the dataset and extracted variables into the different component factors. Likewise, the KMO test of sampling adequacy suggesting a KMO value above 0.7 and a Bartlett’s sphericity test value (α < 0.05) were considered significant and satisfactory factor analysis [52,53]. The reliability of the variables tested by the questionnaire survey was checked using Cronbach’s alpha test, in which a 0.917 value was obtained for the 31 identified inhibiting factors affecting procurement policy implementation in the SACI. An acceptable value was obtained for Cronbach’s alpha test above the recommended 0.7 [48,52,53,54].

4. Results and Discussion of Findings

4.1. Respondents’ Demographic Background Information

Table 2 presents the respondents’ years of experience in the SACI. This comprises 31.1% (52) who had 11–15 years of experience, 21.6% (36) who had 1–5 years of experience, 16.2% (27) with 6–10 years of experience, 13.8% (23) with 16–20 years of experience, 8.4% (14) with 21–25 years of experience, 6% (10) with less than one year of experience, and 3% (5) that had more than 25 years of experience, respectively. Likewise, 27.5% (46) have bachelor’s degrees, 15.5% (26) have master’s degrees, 24.6% (41) have honour’s degrees, 24.6% (41) have diplomas, 5.4% (9) have a doctorate, and 2.4% (4) have matric. Regarding the respondents’ designation in procurement processes in the SACI, 16.2% (27) engineers, 12.6% (21) architects, 12.6% (21) contractors, 12.0% (20) quantity surveyors, 9.6% (16) project managers, 9.6% (16) clients, 9.0% (15) consultants, 8.4% (14) government officials, 6.0% (10) suppliers, 2.4% (4) financial institution representatives, and 1.8% (3) others participated in the survey. Furthermore, Table 2 shows the respondents’ years of experience in the procurement processes for construction projects in the SACI. The results indicate that 25.1% (42) had 1–5 years of experience, 24.0% (40) had 11–15 years of experience, 21.6% (36) had 6–10 years of experience, 15.0% (25) had 16–20 years of experience, 10.2% (17) had less than one year of experience, 3.0% (5) had 21–25 years of experience, and 1.2% (2) had more than 25 years of experience, respectively.

4.2. Descriptive Analysis

Table 3. Descriptive analysis of Inhibiting factors affecting procurement policy implementation.

Inhibiting Factors Affecting Procurement Policy Implementation	Mean	Std. Dev
Poor enforcement of procurement guidelines	4.06	0.841
Ambiguity in the qualification criteria	4.02	0.832
Absence of rationale for awards	4.02	0.874
Poor screening of technical bids	4.01	0.803
Corruption in the procurement process	4.01	0.857
Poor technology application	4.00	0.938
Absence of methods of dispute resolution	3.99	0.832
Lack of quality personnel	3.99	0.836
Political interference	3.99	0.938
Preference for larger bidders (putting price before quality)	3.99	0.847
Abuse of the procurement process	3.97	0.810
Estimate leaked to the contractors	3.96	0.763
Lack of capability on the procurers’ side	3.96	0.794
Late passage of the annual budget	3.95	0.838
Excessive bureaucracy	3.94	0.734
Tax clearance forgery	3.94	0.734
Unclear selection criteria	3.94	0.834
Lack of enlightenment on public procurement	3.93	0.769
Poor screening of financial bids	3.92	0.871
Inadequate advertising of opportunities	3.92	0.928
Non-appreciation of the Public Procurement Act	3.91	0.805
Lack of competition	3.90	0.841
Difficulties in receiving advance payment	3.90	0.882
Poor accessibility	3.89	0.829
Influencing project award	3.88	1.017
Insufficient fairness	3.87	1.056
Poor enforcement mechanisms	3.86	0.956
Excessive documentation	3.83	0.876
Insufficient competition	3.81	0.931
Lack of clear regulatory framework	3.74	1.157
Lack of guidelines open to public scrutiny	3.68	0.988

presents the mean score (MS) and standard deviation (Std. Dev.) values of the identified inhibiting factors affecting preferential procurement policy implementation in the SACI. However, factors with the same mean score (MS) and standard deviation (SD) were used to determine their significance. This supports Field’s [55,56] assertion that the variable with the lowest standard deviation is ranked highest when variables have the same mean score values. Table 3 shows the significance of factors such as poor enforcement of procurement guidelines, with 4.06 MS and 0.841 Std. Dev.; ambiguity in the qualification criteria, with 4.02 MS and 0.832 Std. Dev.; absence of a rationale for awards, with 4.02 MS and 0.874 Std. Dev.; poor screening of technical bids, with 4.06 MS and 0.841 Std. Dev.; corruption in the procurement process, with 4.06 MS and 0.841 Std. Dev.; and poor technology application, with 4.00 MS and 0.847 Std. Dev. In addition, absence of methods of dispute resolution, with 3.99 MS and 0.832 Std. Dev.; lack of quality personnel, with 3.99 MS and 0.836 Std. Dev.; political interference, with 3.99 MS and 0.938 Std. Dev.; and preference for larger bidders (putting price before quality), with 3.99 MS and 0.847 Std. Dev. recorded high-significance factors accordingly.

Likewise, as Opawole [57] recommended, all the variables had an MS value of 3.50, suggesting the high significance of the identified inhibiting factors affecting preferential procurement policy implementation in the SACI. These include abuse of the procurement process, with 3.97 MS and 0.810 Std. Dev.; estimate leaked to the contractors, with 3.96 MS and 0.763 Std. Dev.; and lack of capability on the procurers’ side, with 3.96 MS and 0.794 Std. Dev.; late passage of the annual budget, with 3.95 MS and 0.838 Std. Dev.; excessive bureaucracy, with 3.94 MS and 0.734 Std. Dev.; tax clearance forgery, with 3.94 MS and 0.734 Std. Dev.; and unclear selection criteria, with 3.94 MS and 0.834 Std. Dev.; a lack of enlightenment on public procurement, with 3.93 MS and 0.769 Std. Dev.; poor screening of financial bids, with 3.92 MS and 0.871 Std. Dev.; and inadequate advertising of opportunities, with 3.92 MS and 0.928 Std. Dev. Non-appreciation of the Public Procurement Act ranked twenty-first, with 3.91 MS and 0.805 Std. Dev.; lack of competition, with 3.90 MS and 0.841 Std. Dev., and difficulties receiving advance payment, with 3.90 MS and 0.882 Std. Dev. recorded high-significance inhibiting factors affecting preferential procurement policy implementation in South Africa.

This is closely followed by other significant inhibiting factors affecting the implementation of preferential procurement policy in the SACI, including poor accessibility, with 3.89 MS and 0.829 Std. Dev.; insufficient fairness, with 3.87 MS and 1.056 Std. Dev.; poor enforcement mechanisms, with 3.86 MS and 0.876 Std. Dev.; excessive documentation, with 3.83 MS and 0.829 Std. Dev.; insufficient competition, with 3.81 MS and 0.931 Std. Dev.; lack of clear regulatory framework, with 3.74 MS and 1.157 Std. Dev.; and lack of guidelines open to public scrutiny, with 3.68 MS and 0.988 Std. Dev.

4.3. Exploratory Factor Analysis

The result obtained in

Table 4. KMO and Bartlett’s test for the inhibiting factors affecting procurement policy implementation.

KMO and Bartlett’s Test
Kaiser–Meyer–Olkin Measure of Sampling Adequacy		0.810
Bartlett’s Test of Sphericity	Approx. Chi-Square	2639.925
	Df	495
	Sig.	0.000

indicates a 0.810 KMO test value obtained above the 0.7 value Watkins [47,52,53] recommended, which indicates sample adequacy for the EFA. Similarly, the Sig. value represented the significant value of Bartlett’s test of sphericity for a measure of the multivariate normality in the dataset distributions. According to George [58], a significant 0.000 value obtained for the EFA is less than the recommended 0.05, indicating acceptable data for EFA. This is because the data do not generate an identity matrix. Therefore, a correlation coefficient >0.3 supported the KMO and Bartlett’s test for the factorability of the datasets.

Table 5. Communalities of inhibiting factors affecting procurement policy implementation.

Inhibiting Factors Affecting Procurement Policy Implementation	Initial	Extraction
Lack of clear regulatory framework	1.00	0.758
Lack of guidelines open to public scrutiny	1.00	0.755
Poor enforcement mechanisms	1.00	0.661
Poor accessibility	1.00	0.736
Inadequate advertising of opportunities	1.00	0.659
Excessive bureaucracy	1.00	0.635
Excessive documentation	1.00	0.763
Lack of capability on the procurers’ side	1.00	0.536
Unclear selection criteria	1.00	0.700
Lack of competition	1.00	0.612
Corruption in the procurement process	1.00	0.595
Preference for larger bidders (putting price before quality)	1.00	0.634
Absence of rationale for awards	1.00	0.696
Political interference	1.00	0.682
Poor technology application	1.00	0.671
Lack of quality personnel	1.00	0.660
Poor enforcement of procurement guidelines	1.00	0.611
Ambiguity in the qualification criteria	1.00	0.628
Absence of methods of dispute resolution	1.00	0.510
Late passage of the annual budget	1.00	0.610
Influencing project award	1.00	0.777
Insufficient competition	1.00	0.752
Insufficient fairness	1.00	0.647
Poor screening of technical bids	1.00	0.597
Poor screening of financial bids	1.00	0.638
Abuse of the procurement process	1.00	0.621
Tax clearance forgery	1.00	0.704
Non-appreciation of the Public Procurement Act	1.00	0.740
Lack of enlightenment on public procurement	1.00	0.516
Estimate leaked to the contractors	1.00	0.685
Difficulties in receiving advance payment	1.00	0.737
Extraction method: principal component analysis

shows the extraction values obtained are >0.3, which means the thirty-one identified inhibiting factors affecting preferential procurement policy implementation in the SACI are well-fitted in their clusters without any sign of variance. Hence, the factor grouping is reliable because none of the identified variables have a low extraction value.

As indicated in

Table 6. Total variance explained.

Component	Initial Eigenvalues			Extraction Sums of Squared Loadings			Rotation Sums of Squared Loadings a
	Total	% of Variance	Cumulative %	Total	% of Variance	Cumulative %	Total
CPP 1	9.098	29.347	29.347	9.098	29.347	29.347	4.502
CPP 2	3.371	10.876	40.223	3.371	10.876	40.223	5.723
CPP 3	1.855	5.983	46.206	1.855	5.983	46.206	3.603
CPP 4	1.468	4.737	50.943	1.468	4.737	50.943	4.524
CPP 5	1.307	4.217	55.160	1.307	4.217	55.160	2.976
CPP 6	1.237	3.989	59.149	1.237	3.989	59.149	2.161
CPP7	1.132	3.652	62.802	1.132	3.652	62.802	3.337
CPP 8	1.059	3.415	66.216	1.059	3.415	66.216	3.034
CPP 9	0.974	3.140	69.357
CPP 10	0.916	2.954	72.311
CPP 11	0.869	2.804	75.116
CPP 12	0.744	2.400	77.516
CPP 13	0.722	2.329	79.845
CPP 14	0.647	2.087	81.932
CPP 15	0.632	2.038	83.970
CPP 16	0.589	1.900	85.870
CPP 17	0.553	1.783	87.653
CPP 18	0.465	1.500	89.153
CPP 19	0.426	1.375	90.528
CPP 20	0.378	1.218	91.745
CPP 21	0.342	1.103	92.849
CPP 22	0.331	1.067	93.916
CPP23	0.311	1.003	94.919
CPP 24	0.289	0.932	95.852
CPP25	0.250	0.805	96.657
CPP 26	0.232	0.749	97.406
CPP 27	0.213	0.686	98.093
CPP 28	0.174	0.561	98.654
CPP 29	0.145	0.468	99.122
CPP 30	0.137	0.441	99.564
CPP 31	0.135	0.436	100.000
Extraction method: principal component analysis

^a. When components are correlated, sums of squared loadings cannot be added to obtain a total variance.

, the latent root criterion retains components with eigenvalues >1.0 for the total variance explained for the thirty-one identified inhibiting factors affecting preferential procurement policy implementation in the SACI. The eight components with eigenvalues > 1.0 were explored as 9.098, 3.371, 1.855, 1.468, 1.307, 1.237, 1.132, and 1.059, explaining 29.347%, 10.876%, 5.983%, 4.737%, 4.217%, 3.989%, 3.652%, and 3.415%. Thus, the eight components explained a cumulative 66.216% of the total variance, suggesting the significance of the variables clustered in the eight components.

4.4. Discussion of Exploratory Factor Component Report

Table 7. Pattern matrix ^(a).

CPP Variables	Component
	1	2	3	4	5	6	7	8
Tax clearance forgery	0.753
Non-appreciation of the Public Procurement Act	0.685
Lack of enlightenment on public procurement	0.605
Abuse of the procurement process	0.548
Poor screening of technical bids	0.397
Political interference		0.791
Lack of quality personnel		0.771
Poor technology application		0.771
Absence of rationale for awards		0.752
Preference for larger bidders (putting price before quality)		0.745
Poor enforcement of procurement guidelines		0.693
Corruption in the procurement process		0.661
Ambiguity in the qualification criteria		0.659
Lack of clear regulatory framework			0.839
Lack of guidelines open to public scrutiny			0.780
Inadequate advertising of opportunities			0.526
Influencing project award				0.815
Insufficient competition				0.779
Insufficient fairness				0.673
Late passage of the annual budget				0.439
Absence of methods of dispute resolution				0.395
Unclear selection criteria					0.762
Lack of competition					0.732
Lack of capability on the procurers’ side					0.463
Poor accessibility						0.648
Poor enforcement mechanisms						0.455
Difficulties in receiving advance payment							0.801
Estimate leaked to the contractors.							0.725
Excessive documentation								0.780
Excessive bureaucracy								0.667
Poor screening of financial bids								0.435
Extraction method: principal component analysis. Rotation method: oblimin with Kaiser normalisation.

a. Rotation converged in 19 iterations.

presents the pattern matrix for the thirty-one identified inhibiting factors affecting preferential procurement policy implementation in the SACI. The thirty-one variables were clustered into eight components. Likewise, the component naming and interpretations align with the inherent relationship between the variables clustered in each component before assigning a familiar name to them. As Ogundipe [49,59] recommended, a 0.40 loading is an acceptable value with a significant variable to be retained in EFA components for pragmatic reasons. Therefore, loading values of 0.40 and above were included in this study. Factor 1 named absence of due diligence in procurement screening; factor 2 named corruption and political interference in procurement systems; factor 3 named ineffective regulatory framework supporting public procurement policy; factor 4 named discrepancies in the award of contracts and absence of dispute resolution; factor 5 named ambiguity in procurement selection criteria; factor 6 named poor enforcement mechanisms; factor 7 named cost discrepancies in advance payment; and factor 8 named excessive bureaucracy in procurement documentation.

4.4.1. First Component: Absence of Due Diligence in Procurement Screening

The five variables clustered in the first component had 29.347% of the variance explained and the highest factor loadings: tax clearance forgery (75%), non-appreciation of the Public Procurement Act (69%), lack of enlightenment on public procurement (61%), abuse of the procurement process (55%), and poor screening of technical bids (40%). The variables in this component explain the inhibiting factors affecting preferential procurement policy implementation in the SACI. Hence, the variable in this component provides an understanding of the absence of due diligence in procurement screening in the SACI. Hence, this is in agreement with Badaso [39], who identified that the absence of due diligence in procurement screening, personnel formation quality, and procurement formulation amounted to the factors affecting the implementation of procurement policy in the CI. The study findings are consistent with Fourie and Malan [14], Thwala and Mathonsi [32], and Aliu et al. [41], who attributed the absence of due diligence in procurement screening to the non-integration of automation in procurement systems. However, the study findings stressed the absence of due diligence in the procurement screening process due to a mismatch between budgetary appropriation and actual release funds and tax clearance forgery [21,60]. Hence, there is a need for more collaboration between government agencies, private and public construction stakeholders, and academic scholars to develop procurement systems that foster a culture of due diligence in procurement screening processes and that will improve the acceptance of provincial procurement policy in the SACI.

4.4.2. Second Component: Corruption and Political Interference in Procurement Systems

Similarly, the eight variables in the second component represented 10.876% of the total variance. The variables in this component are political interference (79%), lack of quality personnel (71%), poor technology application (77%), absence of rationale for awards (75%), preference for more prominent bidders (putting price before quality) (75%), poor enforcement of procurement guidelines (69%), corruption in the procurement process (66%), and ambiguity in the qualification criteria (66%). The variables in this factor explain corruption and political interference in procurement systems when implementing preferential procurement policy in the SACI. The study findings align with Badaso [39,41], who asserted that the inhibiting factors affecting preferential procurement policy implementation are political interference, poor formulation of procurement policies, and absence of information technology. In addition to Jones’s [18,41] study, the findings emphasised the absence of a rationale for awards (based on a defined set of selections), lack of capability on the procurers’ part, and unclear selection criteria facing the procurement systems in the SACI. In support of this study’s findings, Fourie [14,15] admitted that the interference from local politicians, businesspersons, members of parliament, and very influential top management individuals had interrupted and deterred transparency in the public procurement system. Hence, the challenges of political interference and corrupt practices among stakeholders contributing to developing and implementing provincial procurement policy are essential to ensure that public procurement systems in the SACI are working.

4.4.3. Third Component: Ineffective Regulatory Framework Supporting Public Procurement Policy

The three variables in the third component are lack of a clear regulatory framework (84%), lack of guidelines open to public scrutiny (78%), and inadequate advertising opportunities (53%). This component explained 5.983% of the total variance. This component’s naming as an ineffective regulatory framework supporting public procurement explains the challenges faced in implementing preferential procurement policy in the SACI. This is in agreement with Dithebe [36,40], who admitted that the CI in most developing countries lacks an entity within the government responsible for implementing procurement policy and ensuring that the system is functioning correctly. In addition, Fourie [14] admitted that procurement policy is the responsibility of government institutions. However, its implementation is affected by poor legal instruments, poor enforcement of the policy, and ineffective procurement functions. In addition, the study findings supported Dithebe [36], who acknowledged challenges in implementing procurement policy, including lack of a clear regulatory framework, open public procurement scrutiny, and non-supportive enforcement mechanisms. Procurement policy implementation is a legal tool to guide activities and pre-qualify construction organisations, including organising the construction works and allocating risks to stakeholders involved in a project. However, the ineffective regulatory framework supports public procurement, and the study findings support Jones’s [18,40] conclusion that the absence of a strong and compelling institution framework, no demand for public accountability, and lack of political will to initiate development change affect procurement policy implementation. Hence, the third component provides an understanding of the challenges of ineffective regulatory frameworks supporting procurement systems to meet the dynamic changes and requirements of CI procurement systems in South Africa.

4.4.4. Fourth Component: Discrepancies in Award of Contract and Absence of Dispute Resolution

The fourth component explained 4.737% of the total variance. The variables in this component are influencing project award (82%), insufficient competition (78%), insufficient fairness (67%), late passage of the annual budget (44%), and absence of methods of dispute resolution (40%). This component’s naming as discrepancies in the contract award and absence of dispute resolution explains the inhibiting factors affecting the implementation of preferential procurement policy in the SACI. This finding is supported by Fourie [14,21,40,41], who attributed the challenges of implementing public procurement policy to the late passage of the annual budget, the absence of dispute resolution methods, and the manipulation of the Act, which reduced its integrity at the lower tier of government. The study findings established that the public procurement system often faces many challenges. As informed by Aliu [41], the late passage of the annual budget, influencing project awards, insufficient competition, and insufficient fairness significantly affect the effective implementation of public procurement systems. The study findings align with Jones [18], who noted that bid rigging or collusive tendering, insufficient data availability, and tenders that only attract single bidders constitute discrepancies in the award of public contracts.

4.4.5. Fifth Component: Ambiguity in Procurement Selection Criteria

The three variables in the fifth component explained 4.217% of the total variance. The component explained unclear selection criteria (76%), lack of competition (73%), and lack of capability on the procurers’ side (46%). The variables in this component gave an understanding of ambiguity in procurement selection criteria as factors that inhibit the implementation of provincial procurement policy in the SACI. The study findings supported Olatunji [15], who noted that ambiguity in the qualification criteria of procurement managers, favouring lowest bidders and favouring open competitive tendering, undermined the effectiveness of the implementation of procurement policy. In addition to Williams-Elegbe’s [21] study, the irregularities in the development of the Act, authorities’ lack of capacity, and lack of understanding functions among officials affect the effective implementation of the Procurement Act. This study’s practical implications provide an understanding of how establishing and prioritising procurement selection criteria, such as project requalification requirements, cost performance requirements, technology integration in the prequalification process, and contract change order requirements, would improve procurement systems in the SACI.

4.4.6. Sixth Component: Poor Enforcement Mechanisms

Furthermore, poor accessibility (65%) and poor enforcement mechanisms (46%) are the two variables in the sixth component, explaining 3.989% of the total variance. The two variables in this component demonstrated the poor enforcement mechanism in implementing preferential procurement policy in the SACI. Aligning the study findings with Fourie [14,36], who maintained that the combination of the lack of predictability in the application of existing rules and weak enforcement creates enormous opportunities often for abuse of the procurement system and total impunity. In addition to Fourie [14,36], the study findings supported that poor accessibility and inadequate advertising of opportunities contributed to poor enforcement mechanisms for procurement policy in the SACI.

4.4.7. Seventh Component: Discrepancies in Advance Payment

The seventh component explained 3.652% of the total variance, and the two variables explained are difficulties in receiving advance payment (80%), and estimates leaked to the contractors. This component explains discrepancies in advance payment and informs about possible unethical practices in implementing preferential procurement policy in the SACI. The study findings conform with those of Aliu [41], who maintained that difficulties in receiving advance payment and estimated leakage of contract documents to preferred contractors negatively affect the integrity of procurement systems. Likewise, Jones [18] noted that public procurement policy implementation faces difficulties in receiving advance payment and variations on estimated works.

4.4.8. Sixth Component: Poor Enforcement Mechanisms

The eighth component had the most minor loading factor, explaining 3.415% of the total variance. The variables in this component include excessive documentation (78%), excessive bureaucracy (67%), and poor screening of financial bids (44%). The component emphasises excessive bureaucracy in procurement documentation when implementing preferential procurement policy in the SACI. The findings supported Fourie’s [14] study, which attributed the challenges in procurement policy implementation to excessive bureaucracy and documentation, lack of capability of the procurers, and unclear selection criteria.

The study findings in

Table 8. Component correlation matrix.

Component	1	2	3	4	5	6	7	8	Cronbach’s Alpha Coefficient
1	1.000	0.258	0.166	0.296	0.180	0.140	0.297	0.198	0.808
2	0.258	1.000	0.076	0.254	0.159	0.113	0.196	0.086	0.891
3	0.166	0.076	1.000	0.218	0.206	0.088	0.112	0.269	0.797
4	0.296	0.254	0.218	1.000	0.198	0.081	0.210	0.155	0.815
5	0.180	0.159	0.206	0.198	1.000	0.120	0.137	0.228	0.660
6	0.140	0.113	0.088	0.081	0.120	1.000	0.170	0.108	0.760
7	0.297	0.196	0.112	0.210	0.137	0.170	1.000	0.158	0.711
8	0.198	0.086	0.269	0.155	0.228	0.108	0.158	1.000	0.655

Extraction method: principal component analysis. Rotation method: oblimin with Kaiser normalisation.

reveal the values of the relationship between the variables of each component, which were around 0.30. The significance levels of the correlation matrix suggest a positive relationship between the variables clustered in each component, establishing the significance of the relationships between variables, which justifies the strong extraction of factors. Likewise, the Cronbach’s alpha value for the reliability of each component ranged between 0.655 and 0.891.

5. Conclusions and Recommendation

This study assesses the factors inhibiting preferential procurement policy implementation in the SACI. The study adopted a quantitative research design, using a purposive sampling technique to administer the closed-ended questionnaire survey to the selected construction stakeholders in Northwest Province, South Africa. The descriptive statistics findings revealed that the inhibiting factors affecting preferential procurement policy implementation in the SACI with high-significance factors comprise poor enforcement of procurement guidelines, absence of a rationale for awards, ambiguity in the qualification criteria, corruption in the procurement process, poor screening of technical bids, poor technology application, preference for larger bidders (putting price before quality), absence of methods of dispute resolution, political interference, lack of quality personnel, abuse of the procurement process, and lack of capability on the procurers’ part. These factors with high significance limit the success of procurement processes and systems in the construction sector in the SACI. In addition, eight components were identified from the exploratory factor analysis about the relationship between the variables within the components, which are the absence of due diligence in procurement screening, corruption and political interference in procurement systems, ineffective regulatory framework supporting public procurement policy, discrepancies in award of contracts and absence of dispute resolution, ambiguity in procurement selection criteria, poor enforcement mechanisms, cost discrepancies in advance payment, and excessive bureaucracy in procurement documentation.

The theoretical and practical implications of this study provide knowledge among construction stakeholders to improve the procurement system in South Africa. Empirically, this study emphasises the need to understand the inhibiting factors affecting preferential procurement policy implementation in the SACI. The eight components identified from the exploratory factor analysis could assist construction stakeholders and policymakers in developing strategies to improve procurement systems within the construction sector. This study’s practical implications provide an understanding of how establishing and prioritising procurement selection criteria, such as project requalification requirements, cost performance requirements, technology integration in the prequalification process, and contract change order requirements, would improve procurement systems in the SACI. It also provides guidance for the South African government to achieve the objectives of the national development plan (NDP) by 2030 in promoting inclusiveness, promoting skills development, an effective public sector, and nation-building among construction stakeholders.

Thus, there is a need for more collaboration between government agencies, private and public construction stakeholders, and academic scholars to develop implementation strategies for the procurement system that foster a culture of due diligence in procurement screening processes and will improve the acceptance of the preferential procurement policy in the SACI. Therefore, this study concludes that understanding and guiding against factors such as the absence of due diligence in procurement screening, corruption and political interference in procurement systems, an ineffective regulatory framework supporting public procurement, discrepancies in the award of contracts and the absence of dispute resolution would improve procurement systems in the SACI.

This study focused on the challenges of implementing a preferential procurement policy, and the data analysed were based on the perspective of selected construction stakeholders in Northwest Province, one of the Republic of South Africa’s twelve provinces (as explained in the Methodology Section). Nonetheless, the respondents who participated in this study fairly represent professionals involved in procurement processes within the CI across various sectors in South Africa. Hence, in addressing these weaknesses, future research can provide more robust, reliable, and comprehensive insights into the impacts of preferential procurement policies in the CI by including more provinces in their study. Also, future research should adopt a sequential exploratory mixed method to overcome the weakness of using only quantitative data collection for the study. Further research can also be carried out to examine the satisfaction and success factors of the preferential procurement policy on public contractual arrangements in South Africa.