A review of tender evaluation practices from around the world revealed theinadequacy of the ‘lowest bidder’ criterion for contractor selection. In responseto this inadequacy, many countries have introduced qualifications to this criterionand established procedures for the evaluation process. The objectiveof the qualifications is to select a suitable contractor whilst fostering competitiveness.Using a multi-criteria decision making (MCDM) approach, the studyidentified eight contractor attributes from the literature, which are thought to beindicators of contractors’ capability to execute a contract and meet certainproject-specific criteria. Employing a case study project, the tenders of eightcontractors short-listed for the project were evaluated with the attributes usingthe “lowest bid”, multi-attribute analysis (MAA) and analytic hierarchy process(AHP) methods. The results showed that the two multi-criteria decision makingmethods indicated the selection of contractors other than what the ‘lowestbidder’ criterion indicated. Comparing the results of the MAA and AHP methods,it is evident that the two methods differed very little in their ranking of thecontractors. This implies that the more complex nature of AHP and the extraefforts it requires have only a minor influence on the final ranking of contractorsand seems to suggest that the extra cost of using AHP is not justified.
|Publication status||Published - Jun 2006|
- analytic hierarchy process
- contractor selection
- tender evaluation