Effectiveness of contractor’s bid costs evaluation for execution of building construction projects in public sectors: a case study of the ministry of health and social welfare

The effectiveness of evaluation of bid costs for contractors in the execution of building construction projects was assessed for the Ministry of Health and Social Welfare (MoHSW) in the United Republic of Tanzania. Fifty two questionnaires and ten interviews that were responded by experienced professionals in public construction projects were collected and coded according to categories and processed using the SPSS and MS Excel to assess factors of the effectiveness of evaluation of bid costs. Secondary data were obtained from ten evaluation reports that were randomly selected from MoHSW building projects. The study determined factors that contribute to the selection of unrealistic cost include inadequate feasibility study, inadequate application of current market price per item, over or under specification, lack of standard pricing list, neglecting engineer’s estimate, lack of post qualification of lowest bidder and misinterpretation of the lowest bid concept. In addition, the study identified critical factors to be used in evaluation of bid cost that combined the assessment process, criteria and standards. Public procurement entities should clearly state in the tender documents other factors for evaluation of cost apart from bid price; conduct post qualification of contractors; come up with project pricing strategies and their evaluation teams need to have knowledge on project pricing techniques. Further research is suggested to be conducted to determine the effectiveness of the composition of evaluation team towards selection of contractors capable for executing the projects and achieve the projects objectives.