Factors affecting tender price in the Ghanaian construction industry

Abstract

PurposeTender price remains an imperative parameter for clients in deciding whether to invest in a construction project, and it serves as a basis for tender price index (TPI) manipulations. This paper aims to examine the factors affecting tender price in the construction industry.Design/methodology/approachBased on the literature review, nine independent constructs and one dependent construct relating to tender pricing were identified. A structured questionnaire survey was conducted among quantity surveyors in Ghana. Partial least squares structural equation modelling (PLS-SEM) examined the influences of various constructs on tender price development (TPD) and the relationships among TPD and TPI.FindingsResults showed that cultural attributes, client attributes, contractor attributes; contract procedures and procurement methods; consultant and design team; external factors and market conditions; project attributes; sustainable and technological attributes; and TPI have a positive influence on tender price, whereas fraudulent attributes exert a negative influence.Practical implicationsThe findings offer construction professionals broader understanding of factors that affect tender pricing. The results may be used in professional decision-making in the pricing of construction projects, as they offer clearer causal relations between how each construct will influence pricing.Originality/valueThis study adds to the body of construction pricing knowledge by establishing the relationships and degree of influences of various factors on tender price. These findings provide a valuable reference for practitioners.