Contract administration: procurement factors that contributes to cost overruns of public project in Tanzania

There is a positive relationship between construction output and economic growth. However in Tanzania construction industry suffers a lot of problems. One of the problems is cost overruns caused by procurement factors. The research involved primary, secondary and interview data collection. Also this research collected extracts from construction project executed by Tanzania National Roads Agency and Tanzania Building Agency between 2006 and 2008 to supplement the questionnaires. The data were analyzed using Statistical Package for Social Sciences. Findings revealed that there is no standard pricing rates and cost evaluation base in construction industry in Tanzania and many Procuring Entities award contract to the lowest priced bids in most cases. Lack of educated staff with knowledge in tendering for a responsive bid was found problem from many contractors, Lack of standard pricing rates in construction industry and cost evaluation base, and the practice of most Procuring Entities award contract to lowest bids significantly contribute to cost overruns of public construction projects in Tanzania Contractors Registration Board and National Construction Council should try their best to educate contractors on procurement and bidding techniques to improve construction industry in Tanzania. Furthermore Public Procurement Regulatory Authority (PPRA) should find ways of establishing standard rates for construction at various zones in the country. Also construction stakeholders should find ways of harmonizing the term lowest evaluated bidder.