A Thesis Proposal on

Multi-Criteria Bid Evaluation System For The Department

of Urban Development and Building Construction Projects

in Nepal

Presented By: Bidur Khadka

Roll No: Fall 011-1004

Program: Construction Management

Date: 2013/12/18

DUDBC is one of the oldest department carrying out public

works such as public buildings and urban development

infrastructure.

Background

Nepalese Construction Industry uses around 35 percentage

of government budget (FCAN, 2010).

Public procurement accounts for about 8 to 9 percentage

of Gross Domestic Product in Nepal and therefore plays

important role in national development (National Planning

Commission, 2012/2013).

Public construction procurement, the process by which

contractors are chosen for public construction projects, has

traditionally been based on selecting the lowest bidder.

Background (Continued)

Many researchers state that 'reliance on bid prices alone as a

discriminating factor between bidders is, however, somewhat

risky .

contractors desperately quote low prices by reducing their

quality of work, and hope to be compensated by submitting

'claims'. They might also cause time and cost overruns of the

projects.

Extensive delays in the planned schedule, cost overruns and

failure to meet desired level of quality are very common

problems faced by most construction projects in Nepal

(Agrawal, 2005).

Statement of the Problem

Failure of project implementation is quite often attributed

to the inappropriate selection method of contractors.

(Skitmore et al, 1997).

In competitive bidding process in Nepal, the contract is

generally awarded to the lowest bidder (FCAN, 2010). It is

often problematic in the long run.

Statement of the Problem (Continued….)

It is important to adopt an approach that will include

necessary qualification-criteria for the selection of

appropriate contractors in executing the public construction

projects.

There has been a steady increase in the variety of

methods used for the procurement of construction work.

However, there has been no proportionate improvement in

the success rate of construction projects (Huang, 2010).

Research Questions

What are the existing methods of contractor selection that

are recently being applied?

What are the qualification criteria that are being

considered so far for the selection of contractors?

To what extent do these criteria apply to the public

procurement system in DUDBC? Is there any necessity for

the improvement in the current multi-criteria bid evaluation

method adopted by DUDBC?

Research Questions (Continued….)

Is modification in the existing public procurement act and

rule necessary to incorporate qualification criteria in the bid

document for the selection of contractors?

What sort of multi-criteria contractor selection model is

suitable for DUDBC?

Research Objectives

To review a range of prevailing methods of contractor

selection and contract awarding systems.

To identify from the literature the variables which have

been determined to be used for the selection of contractors.

To identify the suitable contractor selection criteria in

DUDBC based on the perceptions of engineers, consultants

and contractors.

Research Objectives (Continued….)

To recommend the factors to be considered in the selection

of contractors and propose a suitable multi-criteria bid

evaluation system for the selection of contractors in

DUDBC.

Significance of the Study

the volume of economic transactions conducted by public

competitive bidding through multi-criteria selection method of

contractor gives importance to its study as a part of basic

research in management science.

It is therefore necessary to examine different qualification

criteria adopted by DUDBC in selecting contractors in Nepal

in order to find out the most suitable criteria that DUDBC

should focus on when awarding construction contracts.

Significance of the Study (Contd……..)

The results of this study will provide some insight and

information on whether present qualification criteria used by

DUDBC for the selection of contractors are sufficient and

appropriate

The results recommends an appropriate multi-criteria

contractor selection model.

It will provide the guideline to lawmakers and policymakers

of Government of Nepal to adopt suitable multi-criteria

contractor selection method or review and amend provisions of

existing competitive bidding system of Public Procurement Act

(2007).

Scope & Limitation of the Study

Scope of the study: It will mainly focus on the

development bid price and non-price selection criteria to be

used in bid evaluation and contract award for the construction

projects under study.

Limitation of the Study : Given the constraints of time and

resources, the spatial coverage of the research is limited to a

part of DUDBC.

Literature Review

7.6

7.8

8

8.2

8.4

8.6

8.8

9

9.2

2005/062006/072007/082008/092009/102010/112011/122012/13

GD

P C

on

trib

uti

o in

perc

en

tag

e

Year

GDP Contribution of Construction Industry in Nepal

GDP contribution ofConstruction Industry inPercentage

Linear (GDP contribution ofConstruction Industry inPercentage)

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

Construction industry GDP 83147 91746 111639 131278 158728 182614 199349 222704

Total GDP 1013977 1126300 1264601 1508850 1772694 2052228 2306738 2564782

0

500000

1000000

1500000

2000000

2500000

3000000

GD

P i

n M

illio

ns

Year

GDP Contribution of Construction Industry in Nepal

Construction industry GDP Total GDP

Linear (Construction industry GDP) Linear (Total GDP)

competitive bidding

74%

Sealed quotation

9%

Direct purchase

6%

User's committee

11%

Share of procurement methods for DUDBC Budget

Literature Review (Selection Criteria:)

Criteria Structure of Contractor Selection

Tender Price Financial Capability

1. Financial Statement

2. Financial References

Past Performance

1. Failure to complete the contract

2. Cost Overrun

3. Delay

4. Actual Quality Achieved

Past Experience

1. Scale of Projects Completed

2. Types of Projects Completed

3. Experiences in Local Area

Resources

1. Physical Resources.

2. Human Resources

Current work loadEnvironmental and Safety Performance

Past Client/Contractor Relationship

Methodology

Methodology (Contd……..)

The piloting process will be conducted through the

suggestions of the concerned specialist in preparing

questionnaire (Trial run of the questionnaire). Validity and

Reliability test will be conducted.

Relative Important Index: ∑ (w* ni) / N

Where: w is the weight given by n number of respondent

N = the total number of respondents = ∑ ni

w

AN

Methodology (Contd……..)Determining Sample Size

n = n1 / (1 + n1 /N), (Kish, 1965)

Where n = sample size

n1 = S2/V2

N = total population

V = standard error of sampling distribution (0.05)

V2 = (0.05) (0.05) = 0.0025

S = maximum standard deviation of the population elements

S2 = P (1-P) = 0.5 (1- 0.5) = 0.25

P = proportion of the population elements that belong to the

defined

w

AN

Research Plan

Activities Nov Dec Jan Feb Mar Apr

Thesis Proposal

Preparation

Proposal Presentation

Literature Review

Data Collection

Data Analysis

Draft Report

Mid Term

Presentation

Incorporation of

comments and

suggestions

Thesis Presentation

Final Report

Activities Amount (Rs.) Remarks

Field visit (travel & other logistics) for 5

days

Rs. 18,000.00

Data collection (fees, photocopy, travel cost

& etc)

Rs. 9,000.00

Stationary & Communications Rs. 7,000.00

Report Preparation Rs. 19,000.00

Other Miscellaneous Expenditures Rs.4,000.00

Total Estimated Budget Rs. 57,000.00

Budget Plan

Thank You