Tender evaluation methods in construction projects: A comparative case study

Abstract

A review of tender evaluation practices from around the world revealed the inadequacy of the ‘lowest bidder’ criterion for contractor selection. In response to this inadequacy, many countries have introduced qualifications to this cri terion and established procedures for the evaluation process. The objective of the qualifications is to select a suitable contractor whilst fostering compet itiveness. Using a multi criteria decision making (MCDM) approach, the study identified eight contractor attributes from the literature, which are thought to be indicators of contractors’ capability to execute a contract and meet certain project specific criteria. Employing a case study project, the tenders of eight contractors short listed for the project were evaluated with the attributes using the “lowest bid”, multi attribute analysis (MAA) and analytic hierarchy process (AHP) methods. The results showed that the two multi criteria decision making methods indicated the selection of contractors other than what the ‘lowest bidder’ criterion indicated. Comparing the results of the MAA and AHP meth ods, it is evident that the two methods differed very little in their ranking of the contractors. This implies that the more complex nature of AHP and the extra efforts it requires have only a minor influence on the final ranking of contrac tors and seems to suggest that the extra cost of using AHP is not justified.