Modeling integrated management of construction tender price inflation.
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Date
2023
Authors
Tembo, Moffat
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
The worldwide problems associated with the construction industry include low productivity, poor safety, inferior working conditions, lack of adequate financing, and insufficient quality. Widespread problems in the construction industry in most developing countries correspondingly include project cost overruns and schedule delays. These then affect the general economy, ranging from poor allocative efficiency to total project abandonment. Several solutions, industrialization, prefabrication, and modularization, relieve these construction problems. In the Zambian case, varying construction tender prices have been one of the general challenges in the industry, which require devising methods by clients to control project cost from the onset of the project at the bidding stage. This study provided an integrated model that proposes a collective practical solution to eminent critical Zambian construction-sector challenges regarding construction tender price inflation on public projects. The study investigated strategies contractors adopt during project pricing and explores capabilities that clients use to make informed decisions on individual construction tender prices. To that effect, the research explored decisive factors and contributory processes involved in pricing decisions by contractors in the public construction sector. This phenomenological study is driven within qualitative and quantitative paradigms through case study and causal research designs. Thus, a mixed-method approach to address specific public infrastructure tender price challenges was adopted. The findings show construction tender prices increased by 31.4% annually for upgrading roads to bituminous standards between 2008 and 2018. Whereas, between 2012 and 2021, tender prices for periodic maintenance of feeder roads increased by an average of 49.7% per annum. The research utilized the Kaizer stopping criterion and Rotation Sums of Squared Loadings which determined that benchmarking price performance accounts for 40.457% of the inflation, and eliminating errors in tender documents accounts for 33.693%. The Pseudo R2 indicated that the multinomial model explains 62.5% only of the variability between the independent variables and construction tender price inflation. The findings of the statistical analysis of the quantitative data provided a strong correlation between the dimension-independent variables and construction tender price. Regression functions correctly classify 86.4% of the inflation effect of tested predictor variables on construction tender price. The study established six key construction-related dimensions, including government, project, procurement, legal, industry, and project-specifics, with 65 indicators. It argues construction tender price inflation as a function of macroeconomic (quantitative) indicators and process management (qualitative) related variables. Further, the study notes significant positive and negative correlations between construction tender prices and foreign exchange rates, commercial interest rates, inflation rates, foreign direct investments, and government debt stock. The study developed an integrated model which acknowledges all 65 key dimension performance indicators as significant for producing a desirable construction tender price performance level. The developed model combines analytical and descriptive aspects of tender price factors.
Description
Thesis of Doctor of Philosophy in Construction Management.