Factors Affecting Contractors’ Bidding Decisions for Construction Projects in Saudi Arabia
Abstract
:1. Introduction
2. Research Methodology
- Reviewing previous studies to identify the main factors influencing contractors’ bid/no-bid decisions.
- Developing a questionnaire survey to assess the level of importance of the identified factors. The questionnaire survey consisted of two main sections. The first section served to obtain general background information related to the respondents and their respective companies, such as position, years of working experience, educational qualification background, number of employees, and size of projects. The second section, constituting the main part of the questionnaire survey, sought to obtain the respondent’s perception of the identified factors, with respect to the extent to which these factors influenced the bidding decision. The respondents were solicited to provide their evaluation of the factors. The questionnaire survey employed to evaluate the factors was a 5-point Likert scale, where 1 represents “insignificant” and 5 represents “extremely significant”.
- Distributing the questionnaire survey to contractors based in the Eastern Province of Saudi Arabia. The sample population consisted of professionals working for contractors and subcontractors classified under first, second and third grade. A total of 67 responses were obtained.
- Collecting and tabulating the responses to determine the relative importance index (RII) of these factors based on the ratings given by the contractors, and hence their ranking.
- Developing conclusions and providing recommendations based on the findings of the study.
3. Literature Review
4. Assessment of Factors Influencing Decision to Bid
4.1. Sample Size
4.2. Profile of the Respondents
5. Findings and Discussion
6. Test of Agreement
7. Conclusions and Recommendations
- Among the five most important factors identified by the respondents, a majority of them belonged to the “project characteristics” category. Some of the contractors who participated in the study recommended allocating adequate time for examining the project characteristics before a decision is made to bid for a particular project. Such characteristics should cover the type, size, and difficulty of the project. These aspects should be measured against the company’s capability and area of specialty. Adopting such a practice would ensure that more projects undertaken by the contractors are successful.
- One of the top five most important factors was “designer/design quality”, which was ranked fifth. One way of tackling this issue is through increasing the awareness of the significance of applying the constructability concept. This can be achieved through selecting a project delivery method, which integrates the design and contractor team. Examples of project delivery methods that foster this integration include design–build–operate–transfer (DBOT); design–build (DB); and engineering, procurement and construction (EPC). This will facilitate the early involvement of the contractors during the design stage. The value of this approach is that it allows the incorporation of the contractor’s construction experience at an early stage of the project. This should lead to better design quality [29,30].
- Some of the respondents suggested adding other factors to be investigated in future studies, such as “progress payments”, “clear information and details about project”, “specifications required and weather conditions”, “involvement of all departments of companies”, “current market conditions” and “contractor’s previous experience with other competitors and other projects”.
Author Contributions
Acknowledgments
Conflicts of Interest
References
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No. | Factors Affect Bidding Decision | Overall (N = 67) | Third-Grade Contractor (N = 26) | Second-Grade Contractor (N = 10) | First-Grade Contractor (N = 31) | ||||
---|---|---|---|---|---|---|---|---|---|
RII | Rank | RII | Rank | RII | Rank | RII | Rank | ||
Project Characteristics | |||||||||
1. | Size of the job | 78.8 | 1 | 80.8 | 2 | 82 | 1 | 76.1 | 6 |
2. | Type of the job | 77.3 | 2 | 81.5 | 1 | 68 | 10 | 76.8 | 3 |
3. | Location of the project | 64.5 | 25 | 66.9 | 17 | 60 | 19 | 63.9 | 26 |
4. | Duration | 69.9 | 12 | 71.5 | 8 | 74 | 5 | 67.1 | 22 |
5. | Historic profit on similar jobs | 69.9 | 12 | 71.5 | 8 | 60 | 19 | 71.6 | 14 |
6. | Job start time | 60.6 | 30 | 56.154 | 31 | 64 | 15 | 63.2 | 27 |
7. | Degree of difficulty | 71.9 | 8 | 73.1 | 5 | 62 | 17 | 73.5 | 11 |
8. | Degree of hazards | 66 | 22 | 67.7 | 14 | 52 | 26 | 69 | 19 |
9. | Project cash flow | 73.1 | 4 | 72.3 | 6 | 70 | 7 | 74.8 | 9 |
10. | Rate of return | 73.1 | 4 | 65.4 | 21 | 82 | 1 | 76.8 | 3 |
Market Characteristics | |||||||||
11. | Competition | 72.5 | 7 | 72.3 | 6 | 68 | 10 | 74.2 | 10 |
12. | Overall economy (availability of work) | 70.1 | 11 | 62.3 | 28 | 70 | 7 | 76.8 | 3 |
13. | Time of bidding (season) | 69 | 18 | 65.4 | 21 | 64 | 15 | 73.5 | 11 |
14. | Risk involved in the investment | 71.6 | 9 | 63.8 | 25 | 78 | 3 | 76.1 | 6 |
15. | Tax liabilities | 60.9 | 29 | 61.5 | 29 | 60 | 19 | 60.6 | 29 |
Contractor Characteristics | |||||||||
16. | Need for work | 69.9 | 12 | 66.9 | 17 | 52 | 26 | 78.1 | 2 |
17. | Current workload | 69.3 | 17 | 66.9 | 17 | 56 | 25 | 75.5 | 8 |
18. | Confidence in your workforce | 71.6 | 9 | 73.8 | 4 | 66 | 13 | 71.6 | 14 |
19. | Type and number of supervisory persons required/available | 64.8 | 24 | 65.4 | 21 | 50 | 29 | 69 | 19 |
20. | Type and number of laborers | 66.6 | 20 | 71.5 | 8 | 52 | 26 | 67.1 | 22 |
21. | Type and number of equipment required/available | 63.9 | 26 | 67.7 | 14 | 46 | 31 | 66.5 | 25 |
22. | Portion of the work to be subcontracted | 61.5 | 28 | 63.1 | 27 | 60 | 19 | 60.6 | 29 |
23. | Reliability of subcontractors | 69.9 | 12 | 69.2 | 12 | 66 | 13 | 71.6 | 14 |
24. | Company’s strength in the industry | 77 | 3 | 71.5 | 8 | 76 | 4 | 81.9 | 1 |
25. | General (office) overhead | 66.6 | 20 | 67.7 | 14 | 58 | 24 | 68.4 | 21 |
26. | Uncertainty of the estimate | 69.9 | 12 | 68.5 | 13 | 72 | 6 | 70.3 | 17 |
27. | Capital requirement/availability | 67.5 | 19 | 64.6 | 24 | 68 | 10 | 69.7 | 18 |
28. | Job-related contingency | 63.6 | 27 | 66.2 | 20 | 60 | 19 | 62.6 | 28 |
Owner/designer/labor Characteristics | |||||||||
29. | Previous experience with owner | 65.1 | 23 | 63.8 | 25 | 62 | 17 | 67.1 | 22 |
30. | Designer/design quality | 73.1 | 4 | 74.6 | 3 | 70 | 7 | 72.9 | 13 |
31. | Labor environment (union/nonunion/cooperative) | 57.3 | 31 | 57.7 | 30 | 48 | 30 | 60 | 31 |
No. | Factor | RII | OR (N = 67) |
---|---|---|---|
1 | Size of the job | 78.8 | 1 |
2 | Type of the job | 77.3 | 2 |
24 | Company’s strength in the industry | 77 | 3 |
9 | Project cash flow | 73.1 | 4 |
10 | Rate of return | 73.1 | 4 |
30 | Designer/design quality | 73.1 | 4 |
11 | Competition | 72.5 | 7 |
7 | Degree of difficulty | 71.9 | 8 |
14 | Risk involved in the investment | 71.6 | 9 |
18 | Confidence in the workforce | 71.6 | 9 |
12 | Overall economy (availability of work) | 70.1 | 11 |
4 | Duration | 69.9 | 12 |
5 | Historic profit on similar jobs | 69.9 | 12 |
16 | Need for work | 69.9 | 12 |
23 | Reliability of subcontractors | 69.9 | 12 |
26 | Uncertainty of the estimate | 69.9 | 12 |
17 | Current workload | 69.3 | 17 |
13 | Time of bidding (season) | 69 | 18 |
27 | Capital requirement/availability | 67.5 | 19 |
20 | Type and number of laborers | 66.6 | 20 |
25 | General (office) overhead | 66.6 | 20 |
8 | Degree of hazards | 66 | 22 |
29 | Previous experience with owner | 65.1 | 23 |
19 | Type and number of supervisory persons required/available | 64.8 | 24 |
3 | Location of the project | 64.5 | 25 |
21 | Type and number of equipment required/available | 63.9 | 26 |
28 | Job-related contingency | 63.6 | 27 |
22 | Portion of the work to be subcontracted | 61.5 | 28 |
15 | Tax liabilities | 60.9 | 29 |
6 | Job start time | 60.6 | 30 |
31 | Labor environment (union/nonunion/cooperative) | 57.3 | 31 |
Category Affecting Bidding Decision | Overall | Third-Grade Contractor | Second-Grade Contractor | First-Grade Contractor | ||||
---|---|---|---|---|---|---|---|---|
RII | Rank | RII | Rank | RII | Rank | RII | Rank | |
Project Characteristics | 70.51 | 1 | 65.077 | 3 | 61 | 2 | 64.97 | 4 |
Market Characteristics | 68.84 | 2 | 65.077 | 3 | 68 | 1 | 72.26 | 1 |
Contractor Characteristics | 67.83 | 3 | 67.93 | 1 | 60.15 | 3 | 70.22 | 2 |
Owner/designer/labor Characteristics | 65.17 | 4 | 65.38 | 2 | 60 | 4 | 66.67 | 3 |
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Alsaedi, M.; Assaf, S.; Hassanain, M.A.; Abdallah, A. Factors Affecting Contractors’ Bidding Decisions for Construction Projects in Saudi Arabia. Buildings 2019, 9, 33. https://doi.org/10.3390/buildings9020033
Alsaedi M, Assaf S, Hassanain MA, Abdallah A. Factors Affecting Contractors’ Bidding Decisions for Construction Projects in Saudi Arabia. Buildings. 2019; 9(2):33. https://doi.org/10.3390/buildings9020033
Chicago/Turabian StyleAlsaedi, Mohammad, Sadi Assaf, Mohammad A. Hassanain, and Abdullatif Abdallah. 2019. "Factors Affecting Contractors’ Bidding Decisions for Construction Projects in Saudi Arabia" Buildings 9, no. 2: 33. https://doi.org/10.3390/buildings9020033