Assessment of Contractors’ Bidding Strategies Influence on Tender Success Rate

Abstract

Contractors’ survival in the construction industry heavily depends on the ability to secure tenders and complete projects successfully. Due to the highly competitive nature of the industry getting works requires skills, strategies, and experience. Inter alia the use of poor bidding strategies by contractors, especially small and medium-class has led most of them into an early grave. This study therefore aims at assessing bidding strategies used by building contractors to establish their relationship with tender success rate and lastly model this relationship to improve contractors bidding practices. A descriptive cross section research design was adopted for this study where quantitative research approach was used. Questionnaires were employed to collect data about bidding strategies and tender success rate. Stratified random sampling method was used in this study, where sample size from class iv to vii building contractors where calculated to satisfy their respective strata. Descriptive analysis was used to study the nature of the data collection and address the first specific objective. Specifically mean and standard deviation were used in this analysis. Inferential analysis was adopted for second and third specific objectives where Pearson correlation was used to establish the relationship between biding strategies and tender success rate. Tender success prediction model on the other hand was developed using multiple regression analysis. Findings have revealed the most used bidding strategies to be “Use of historic data”, “Draft and Review Strategy” and “Systematic Bidding Approach”, were the least used being “Aggressive strategic bidding” and “the Use of bid preparation software”. Findings have further shown that the most used biding strategy have least impact on the tender success rate and vice versa. This study revealed that there is a strong positive relationship between bidding strategies and tender success rate. In particular two bidding strategies have shown a significant positive relationship with tender success rate which are Pricing strategies and Market Intelligence. In conclusion this study has been able to develop and validate a statistically significant model for predicting tender success rate using bidding strategies as independent variables and experience as the moderator variable. The study therefore recommends that, contractors should put more emphasis on bidding strategies which has direct impact on success rate as well as seek experience to increase their chances of winning tenders.