4.6 Article

A Case Study of a Negotiated Tender within a Small-to-Medium Construction Contractor: Modelling Project Cost Variance

Journal

BUILDINGS
Volume 11, Issue 6, Pages -

Publisher

MDPI
DOI: 10.3390/buildings11060260

Keywords

UK construction; tendering and procurement; rework; race to the bottom; negotiation; predicted cost

Ask authors/readers for more resources

This research explores the failure of competitively tendered projects in the UK construction industry to procure the most suited contractor(s) to conduct the works. It seeks to improve future practice through the development of a novel alternative procurement option (i.e., negotiation) and highlights the importance of understanding the scope of works allowed within a tender submission before discounting it based solely on price. The study combines interpretivism to critically review literature and pragmatism to analyze perceptions of tendering and procurement, presenting new contemporary insights into procurement and tendering in the construction industry, with emphasis on SME contractors, existing relationships, and open-book negotiation.
This research explores the failure of competitively tendered projects in the UK construction industry to procure the most suited contractor(s) to conduct the works. Such work may have equal relevance for other developed nations globally. This research seeks to teach clients and their representatives that lowest price does not mean best value, by presenting a case study of a successfully negotiated tender undertaken by a small-to-medium enterprise (SME) contractor; SME studies are relatively scant in academic literature. By applying the lessons learnt principle, this study seeks to improve future practice through the development of a novel alternative procurement option (i.e., negotiation). A mixed philosophical stance combining interpretivism and pragmatism was used-interpretivism to critically review literature in order to form the basis of inductive research to discuss negotiation as a viable procurement route, and pragmatism to analyse perceptions of tendering and procurement. The methods used follow a three-stage waterfall process including: (1) literature review and pilot study; (2) quantitative analysis of case study data; and (3) qualitative data collection via a focus group. Our research underscores the need to advise clients and their representatives of the importance of understanding the scope of works allowed within a tender submission before discounting it based solely on price. In addition, we highlight the failings of competitive tendering, which results in increased costs and project duration once the works commence on site. These findings provide new contemporary insight into procurement and tendering in the construction industry, with emphasis on SME contractors, existing relationships, and open-book negotiation. This research illustrates the adverse effects of early cost estimates produced without first securing a true understanding of project buildability and programming. Our work concludes with a novel insight into an alternative procurement option that involves early SME contractor involvement in an open-book environment, without the need for a third-party cost control.

Authors

I am an author on this paper
Click your name to claim this paper and add it to your profile.

Reviews

Primary Rating

4.6
Not enough ratings

Secondary Ratings

Novelty
-
Significance
-
Scientific rigor
-
Rate this paper

Recommended

No Data Available
No Data Available