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

Abstract

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.

An assessment of the implications of disruptive technologies on the performance of energy infrastructure projects in Ghana

“…A linear regression was conducted to test the hypothesis. Linear regression using the following formula: Y = a + bX + ϵ , where Y is the value of the dependent (outcome) variable, a is the value of Y if X = 0 (the Y -intercept), X is the independent (explanatory) variable, b is the coefficient ascribed to the independent variable during the regression (slope) and ϵ is the residual (error) was used (Ellis et al , 2021; Fulcher et al , 2022). From the regression model in Table 4, the R 2 value displayed the coefficient of determination of the predictor variable in the spontaneous DTs on energy infrastructure projects.…”

Scholarship of Teaching and Learning for Construction Management Education amidst the Fourth Industrial Revolution: Recommendations from a Scientometric Analysis

“…First, an interpretivist position was adopted to analyse secondary data from SoTL literature [13]. Second, a pragmatic stance was introduced to assist in revealing the magnitude of the problem domain as well as assisting in defining possible resolutions [14]. Mixing philosophical stances into a single all-encompassing design is well established in both SoTL and built environment literature -e.g., Okolie et al [15] and Brandão et al [16].…”

Transparency And Halal Procurement In The Hotel Industry

“…An open book environment was developed due to negotiated procurement, where the suppliers and purchasers could see and trust each other. Proper adjudication of tender applications facilitated transparent two-way knowledge transfer to ensure that all parties had full and equal access to information (Ellis et al, 2021).…”

“…In complying with the shariah-based tendering process, businesses must always respect the values of honesty, ethics, integrity, and accountability. The practice of tendering in procurement allows companies to have an open relationship between buyer and supplier, thus improving trust (Ellis et al, 2021).…”