Improving Procurement Selection Criteria for Managing Construction Tender-Price Volatility on Public Projects

Abstract

This paper investigates current knowledge concerning adopted procurement strategies for managing construction-price in the public sector. The article reveals that studies mainly address four main areas: procurement decision support systems, transparency, ethical considerations in procurement, identification of procurement criteria, and overcoming inconsistencies in the procurement process. The paper provides a new perspective on the selection of procurement strategy. Therefore, selecting a suitable procurement strategy is essential for managing project pricing. The review has revealed that the lowest bid is the main criterion of contractor selection in the public sector. There is a need to combine some, if not all, procurement strategies within a significantly flexible approach that can have multiple potential advantages in the construction field by serving as a robust decision-making tool. There is a need to develop a public procurement strategy for managing construction price variability and inflation by modeling for fundamental principles such as value for money, benchmarking price performance, and reducing tendering documentation errors, that collude and conspire to impact price inflation, client perception and infrastructure push, and public accountability. The study, thus, deduces two principal factors that serve as critical indicators of a procurement selection criterion focused on managing construction tender-price variability and inflation. These include benchmarking price performance and eliminating errors in the tender documentation.