Presentation for progress report
Selection of Research Topic Form (F1) Student Name: Omar Saad Aljohani Student ID: 202314370 Undergraduate University: __________ Undergraduate CGPA: __________ Undergraduate degree: ____________ Job Title: _____________________ Tentative title of the Master project In PM: Enhancing Participation of Contractors in Bidding for Construction Projects: Challenges and Strategies Brief Abstract/ Summary of the Proposed work: The proposed work aims to investigate the challenges faced by contractors in participating in bidding for construction projects and to develop strategies to enhance their involvement. By identifying and addressing these challenges, the research intends to improve the efficiency and effectiveness of the bidding process, ultimately benefiting both contractors and project stakeholders. Through a comprehensive examination of factors such as market dynamics, regulatory constraints, and industry practices, the study seeks to provide actionable insights that can facilitate greater contractor participation and competitiveness in the construction sector bidding process. The objectives of the Proposed work: The primary objective of the proposed work is to analyze and understand the challenges that contractors encounter when participating in bidding for construction projects. This involves identifying key obstacles such as limited access to information, financial constraints, regulatory barriers, and competitive pressures. With this understanding, the research aims to develop practical strategies and recommendations to overcome these challenges and enhance contractor participation in bidding processes. By improving access, reducing barriers, and enhancing competitiveness, the goal is to foster a more inclusive and efficient construction industry bidding environment that benefits all stakeholders involved. Advisor Name: _Dr.___________________ Student Signature: ____________________ Date: _______________________________ ENHANCING PARTICIPATION OF CONTRACTORS IN BIDDING FOR CONSTRUCTION PROJECTS: CHALLENGES AND STRATEGIES CHAPTER 1 INTRODUCTION This thesis discusses contractors’ challenges in bidding for construction projects and proposes strategies to enhance their participation. It introduces the challenges of the construction segment to the central theme of the bidding process, which is one of the most essential project management methods. This identification statement incorporates the conditions and bindings for successful opportunities for contractors to take part in bidding. The research objective is to thoroughly scrutinize these obstacles and develop methods to address them correctly. 1.1 OVERVIEW In construction project management, bidding for projects is a critical juncture that significantly impacts project outcomes, contractor competitiveness, and overall industry dynamics. Achieving construction contracts by submitting competitive bids in appropriate plots is a very initial stage to an ultimate construction realization in the construction industry (cf. Dao et al., 2021). Although the way out of this paradigm is not straightforward, and the process is frequently bogged down with challenges and complexities, there is a need to develop a deep insight into the process and institute effective strategies to overcome the challenge. Compared to the conventional one, the construction industry of the present day and age is experiencing a series of tough challenges like competition advantage, changing market dynamics, intricate regulatory realm, fluctuating customer requirements (Moavenzadeh, 2022). This task helps contractors avoid issues when bidding for construction projects. These considerations raise challenges that are mostly but not limited to the economic, legal, technological, and socio-political factors, which may vary in their pitfalls that the contractors must deal with for the sake of the profit and the sustainability of the projects. One of the main problems contractors face during tendering for construction projects involves the competitive environment (Muhammed et al., 2022). A wide range of actors who seek a place in this world coexists in the construction industry, creating a very keen competition with little profit margin left. Consequently, most of their orders are frequently branded with a race of leading in the middle. This means that a bidder with a low price, even at the expense of the quality and sustainability issues, ultimately brings down the industry standards and jeopardizes project performance. In addition, the constructors has to deal with scope of work complexity, problems within the design package, and a micro-regulatory framework, which is additional to the bidding procedure. Contractors confront the challenge of competing with many regulations, directives, and guidelines from governmental and public organizations and private customers that are often confusing and take a long time to comply (Jobidon et al., 2021). Adherence to regulations needs precise focus and involvement in collecting extra funds and administrative tasks, which significantly strains contractors’ resources and capacities. 1.2 Problem Statement The bidding process in the construction field is complicated and has many challenges that prevent the active participation of construction enterprise owners in what they are entitled to. Although contractors face severe challenges in achieving a level playing field and winning promising contracts simultaneously, which is crucially important in sourcing projects, they must contend with it. These challenges derive from market dynamics, regulatory bottlenecks, technical impediments, scope of work complexity, defects within the IFP design package, unbalanced EPC scope of work, alternative projects, market demand, and socio-political challenges that must be confronted to establish contractors’ participation. The main challenge is the high level of rivalry, which makes contractors fight simultaneously for an opportunity to work and, on the other hand, to stay profitable. Moreover, the companies are forced to lower bids to the detriment of their sustainability (Ellis et al., 2021). This premature rush to base floors breaks profitability, lowers the standard of work, and eventually leads to suboptimal project outcomes and negative results that are bad for stakeholders. The implementation of the technical components into the scope of work is the motivational factor for contractors to design the IFP inappropriately that in the end blocks them from submitting their bids. Hence, we need to be efficient and focus on controlling the projects. Besides, competition involving alternative projects and changing market demand will add more uncertainty to this process, making it more challenging for contractors to foresee and react in time to obtain project opportunities. Addressing these issues is essential for bidders having all fair chances and for the construction industry to be more diverse and competitive. Therefore, the central problem addressed by this research is: What barriers impede contractors from competing for construction projects on the market, considering various challenges related to competition advantage, changing market dynamics, intricate regulatory realm, scope of work complexity, defects within the design package, and fluctuating customer requirements? Solving the problem of the bidding process is an objective of this research, and valuable findings and suggestions are expected to enable the contractors to maneuver the bidding process successfully and contribute toward the development of the construction sector. 1.3 Research Objectives The primary objective of this research is to explore the challenges that contractors face during the bidding process for construction works and to install alternative policy frameworks that will strengthen their participation. By undertaking a profound analysis of competition advantage, changing market dynamics, intricate regulatory realm, scope of work complexity, defects within the IFP design package, alternative projects/initiatives, market demand, and fluctuating customer requirements, market reactors, and regulatory body systems, the report will determine the significant impediments to contractors’ participation and suggest workable strategies to solve them. The study aims to find strategies that will increase contractors participation, campaign for competition fairness, upgrade project development, and lead to sustainability. The research’s objectives are to bridge the gap in project management and provide contractors with the knowledge, skills, and experience that are highly demanded to guide them in the bidding process. 1.4 Significance of the Study This research aims to answer various critical issues from the construction industry and facilitate the industry-wide transition to a sustainable and competitive paradigm. The study initially makes a point by looking into the challenges of bidding that construction companies face when pursuing construction project contracts. This gives more informed policymakers, practitioners, and other stakeholders an understanding of the factors contributing to companies’ inability to make the best bid. This awareness about the origin and catalysts of bid success will help us devise and roll out such interventions and initiatives to enhance a conducive bidding environment. Further to this, the research is aimed at assisting clients in acquiring the goal of formulating practical strategies backed with research findings and best practices to have the needed knowledge and skills to stand an excellent chance to compete effectively and attract value contracts rather than accept the cheapest ones (Heinninen, 2021). Swinging the pendulum from a more cost-oriented to a value-based approach can generate better timeframes, risk mitigation, and high-quality results in construction projects. Moreover, the knowledge gained from this study carries significant weight in future project management and construction procurement research fields, affecting academia, industry, and society. Through creating fresh perspectives, approaches, and resolutions, the study adds to the constructed knowledge house and offers insight for future research. In addition, the study is expected to contribute to innovation, efficiency, and sustainability within the construction industry, which would make a positive spillover effect that is not limited to single projects but also to the economy, environment, and community. 1.5 Scope and Limitations of the Research Study The scope of this research project comprises an analysis of difficulties that constructors face when submitting offers and working out ways to become more involved with bidding. This requires looking at different aspects, such as the competition advantage, changing market dynamics, intricate regulatory realm, scope of work complexity, defects with the design package, fluctuating customer requirements, laws and regulations that determine the participation of contractors in bidding. The project will be guided by multiple research techniques, such as literature reviews, case study analysis, interviews with industry professionals, and data crunching, to help achieve the goal of offering in-depth views and operational solutions. However, the research project should take into account some limitations that are typical of such investigations. The scope of the study runs at risk of being constrained by time and resource limitations, resulting in the depth and breadth of analysis being a bit narrow in specific areas. Besides, this research activity may be biased or have data limitations, which may occur when dealing with stakeholders’ proprietary and industrially sensitive information. Additionally, the generalizability of findings might be hindered by the particular context and characteristics of the construction sector in the individual regional market or trade section. The region may have specific regulation models, market dynamics, and socio-political contexts that may influence contractor participation in bid processes (Kuitert et al., 2019). Hence, the research outcomes may not be generalized universally, and implementation will require consideration of context. Moreover, although feasible and applicable strategies will be carried out, implementing strategies to improve contractors’ participation may be impeded by real-life scenarios. Factors that can block the application of proposed interventions include resistance to change, organizational culture, and budget constraints in the contracting firms. Although these limitations exist, the research project aims to offer critical insights into contractors’ challenges and strategies as they pursue projects and propose practical approaches for advancing their participation in the field of construction (Rahmani, 2021). This research strives to acknowledge and address some of these limitations. In that way, it can develop reliable, applicable, and valuable findings that will aid in improving knowledge and practice within project management in the construction sector. References Alwis, G. C. D., Perera, B. A. K. S., Gallage, S. D., & Indikatiya, I. H. P. R. (2022). Enhancing the quality of bid evaluation in government refurbishment projects. Intelligent Buildings International, 14(3), 375-390. Clarke, L., Sahin-Dikmen, M., & Werna, E. (2024). Climate change, inequality and work in the construction industry. In Research Handbook on Inequalities and Work (pp. 507-522). Edward Elgar Publishing. Dao, T. N., Chen, P. H., & Nguyen, T. Q. (2021). Critical success factors and a contractual framework for construction projects adopting building information modeling in Vietnam. International Journal of Civil Engineering, 19, 85-102. Ellis, J., Edwards, D. J., Thwala, W. D., Ejohwomu, O., Ameyaw, E. E., & Shelbourn, M. (2021). A case study of a negotiated tender within a small-to-medium construction contractor: modelling project cost variance. Buildings, 11(6), 260. Hänninen, H. (2021). Practices of Value-based Pricing in Industrial Services (Master’s thesis). Jobidon, G., Lemieux, P., & Beauregard, R. (2021). Building information modeling in Quebec’s procurement for public infrastructure: A case for integrated project delivery. Laws, 10(2), 43. Lauwo, S. G., Azure, J. D. C., & Hopper, T. (2022). Accountability and governance in implementing the Sustainable Development Goals in a developing country context: evidence from Tanzania. Accounting, Auditing & Accountability Journal, 35(6), 1431-1461. Moavenzadeh, F. (2022). The construction industry. In Shelter, Settlement & Development (pp. 73- 109). Routledge. Moriyani, M. A., Asaye, L., Le, C., & Le, T. (2024). Network theory–based approach to datadriven assessment of bidding competition in highway construction. Journal of Management in Engineering, 40(1), 04023051. Muhammed, A. O., Muhammed, A. A., Yakubu, H. A., Suleiman, A., & Adam, A. (2022). Assessment of factors affecting contractors tendering success for construction projects in North-Central Nigeria. International Journal of Real Estate Studies, 16(1), 87-99. Rahmani, F. (2021). Challenges and opportunities in adopting early contractor involvement (ECI): Client’s perception. Architectural engineering and design management, 17(1-2), 67-76. Ratanawaraha, A., Torquato Cruz, R., & Perez Cuso, M. (2024). Policies to promote private sector engagement in Science, Technology and Innovation: Workbook. 1 CHAPTER 2 LITERATURE REVIEW 2.1 Background Deadlines for contractors to take part in bidding for construction projects, especially oil and gas projects, are crucially important for infrastructure undertakings to be accomplished. Materialization in real structures of project plans is complemented by roles played by the contractors who become vital agents in their realization and turn affect the final project outcomes. On the other hand, the bidding side of the process is very difficult for contractors which results in impaired or hampered participation. However, some difficulties are even greater than normal in the oil and gas industry due to its specific industry structure and also the specific nature of the projects that are carried out in this business. It is often that oil and gas contractors experience a range of challenges when taking part in bids, and most of the time they are rejected or simply postpone their participation in the bidding process. The parameters are diverse and include other project engagements that may come into conflict with a contractor’s existing commitments or better incentives in other sectors that contractors may opt for reducing the personnel they can deploy in bidding for oil and gas projects. Also, there is a challenge in determining the suitability of the project based on factors like scope of work (SoW), size of the project, and harmonization of EPC requirements among the three parties (engineering, procurement, and construction) involved. Understanding the nature and viability of projects could constrain contractors from entering bidding processes for new projects. 2 On the other hand, the existence of contractors already in the given localities with a confirmed interest in specific projects will tempt other contractors from going for the contracts as they perceive themselves in a disadvantaging competition zone. Furthermore, contractors may not be interested in participating in the tenders if the specification itself is incomplete or it contains provisions that set the project up for limitations or high risks, specifically during the preliminary design phase, in which such legal consequences may stem from. To exhaust the activities of contractors including competitive bidding in the oil and gas sector, stakeholders should mitigate the discussed problems. Recognizing the exact problems of contractors and obstacles helps in improving the bidding processes and alignment of requirements for equality and effectiveness. Application of such strategies will ensure that these challenges are not only lessened but also lessen the risk of failure of projects and this will go a long way in promoting growth within the oil and gas construction industry. 2.1.1 Decision Making on Contractor Participation The bid participation of contractors for construction projects involves a complex decision process platform related to the internal and external environment. The prime contractor must evaluate if the task aligns with their capacity in terms of skills, ability, and resource allocation. They decide if the project is within their area of expertise whether they have sufficient experience in it and also that they have the necessary skills and tools. Furthermore, bidders evaluate this by the project’s role model, complexity, and period, going by their existing workload and the current availability of their workforce. 3 The external environment is also another major player in the decision-making process. Instability in the market related to such factors as economic fluctuations, industry competition, and expectations of clients on the part of contractors may cause them to perceive projects negatively or profitably. Subcontractors compare the number of competitors and the sophistication of competing firms to determine the level of competition in the proposal pool. In addition, contractors determine whether the location is advantageous, boundaries, logistical challenges, and regulatory requirements, influence project feasibility and risk exposure. Risk assessment and strategic planning are core factors contractors determine their risk management system. Contractors carry out comprehensive risk evaluations to determine and mitigate the risks, that might arise during a project, among them including but not limited to financial, technical, and operational vulnerabilities. They judge the contractual and payment terms, as well as potential liabilities that are all evaluated with the situation in mind like the probability and outcome of negative events. Strategic bidding planning entails designing competent bidding strategies to enable projects to get maximum possible success and minimum possible risks and uncertainties (Jang et al., 2019). The contractors’ success in bidding for construction projects largely depends on how smart the contractors are in selecting projects, exploring the attached risks, and partnering their abilities (capabilities) with the requirements of the projects to arrive at an informed judgment regarding their engagements in project bidding (Hanák et al., 2021). Consequently, the right decision-making in contractor participation is the basis of bettering the outcome of the project, healthy competition, and the green growth of the industry. 4 2.2 Review of Existing Research In this part, we will review the current studies concerning when contractors participate in tenders in the construction of oil and gas projects. Participation of contractors is subject to several factors: we will analyze these factors, consider the challenges contractors face, explain strategies for improving contractor participation, and also cite case studies featuring successful projects where contractor involvement was high and other cases where the lack thereof had a significant negative impact. 2.2.1 Factors Influencing Contractor Participation The role of contractors competing for construction projects within the oil and gas industry borders cannot be underestimated for the general success of infrastructure programs related to this industry. On the other hand, several forces make contractors conclude on bidding processes they may participate in whether to bid or not to bid in the bidding process. They involve several dimensions such as the complexity of a project, agreement clauses, finances, and the target an organization has set for itself, Contractors evaluate the project involved in the scope, scale, and technical parameters to know whether their skills and capabilities are suitable and the ability is available to perform the project. Besides, the location of the project, market conditions, and the regulatory environment heavily influence contractors’ participation decisions on the projects. In addition, contractors regard the competitive environment when selecting projects, they wish to tender, considering not only the existence of the established competitors and their performance in similar projects but also the competition for the project. Besides, the nature of project documentation composed of requirements lists and specifications also determines the level of confidence and intention for participation of contractors. It is a fundamental feature of project 5 success since the project owner, stakeholders, and contractors have to understand factors that lead to a broad qualified contractors pool and healthy competition to benefit the construction project bidding process (Porwal & Hewage, 2013). 2.2.2 Challenges Faced by Contractors Contractors are key players and have a very vital part to play in construction projects yet they are faced with major issues that impair their involvement in the bid process. The most crucial challenge is the hard competition inside the branch, where contractors are battling for a small number of opportunities especially in the oil and gas sector. These highly competitive bids often result in price undercutting and bidding wars. Ideally, this should help everyone make extra money, but the other side of the coin is that it hurts profit margins and business sustainability. Furthermore, the requirements of qualification standards from project owners and government institutions prevent the small or inexperienced contractors from participating in the envious projects. Consequently, they miss the opportunity to do profitable jobs (Alkhateeb et al., 2020). On top of that, contractors deal with some problems that are related to access to essential information, including incomplete or unclear specifications and lack of information channels with the owners. Lack of this transparency may result in misperceptions and disagreements, causing contractors to submit poor bids or even their decision to drop from the bidding. Financial limits are not the easiest things that contractors face since they are the most crucial factors in mobilizing resources for the initial stages of the projects, covering the bonding and insurance (Alkhateeb et al., 2020). 6 2.2.3 Strategies for Enhancing Contractor Participation For the public-private participation in the construction bidding process to be effective in the oil and gas sector there has to be the adoption of strategies that are proactive towards the challenges above. One feasible approach to speed up the bidding process can be to provide the completed information about the bids that is clear, well-organized, and comprised of specifications, the scope of projects, and the procurement requirements. The equitable process builds trust and transparency between contractors and process owners; which in turn leads to wider participation and competitive bid. Another measure may be the use of quotas or contract stipulations to accommodate small and minority-owned businesses by setting aside particular contract sections for them or supporting those that are developing. Additionally, setting minimum qualification criteria to balance customer requirements with contractor capabilities so that all contractors can compete equally and still achieve high standards of performance is important. 2.2.4 Case Studies and Best Practices Analyzing the intensity of bidding competition and the proportion of successful bids within public construction projects (PCP) offers a good ground to go further as it shows the dynamics of participant contractors’ factors and their role in the outcome. This study from Alkhateeb et al. (2020) concentrated on 2,296 bidding engagements out of which 289 tender projects were announced by Jordan’s Governmental Tendering Department over 3 years which was between 2013 and 2016. This finding indicated the contractors’ average bid competitiveness percentage (BCP) to be 83.8%, and their success rate to be 13.3%, in Jordanian projects based on price offer scoring. Among the factors that contributed more intensely to bidding competition for ability were the sector of work, the category of contractors being contracted, the size of the project, and the 7 number of bidders that participated. In addition, the classification group the worker belonged to and the work segment did not determine the chances of successful bids. This illustrates the value of contractors’ competitiveness in the bidding process as well as emphasizes the usefulness of effective bidding strategies for techniques beyond experience accumulation (Alkhateeb et al., 2020) In another study by Hanák et al. (2021) which targeted the Czech Republic at the level of public construction procurement, the contractors’ bidding strategies were studied through questionnaires surveys, and statistics analysis. The research revealed that Czech government contractors mostly apply cost-oriented bidding, where tender attractiveness and risks mostly fall into consideration. The market was considered an event in which bidders would tend to quote at every cost-saving figure. The statistics thusly signify that the contractors should reassess their bidding strategies, so as not to compromise competitiveness, economic stability, as well as project viability (Hanák et al., 2021). Combining these studies’ observations can help to recognize the most feasible bidding strategies, and risk-handling methods, and emphasize the necessity of the market dynamics. These real examples provide pragmatic lessons for contractors given the gains in their bidding for construction projects which results in improved outcomes and competitiveness in the industrial environment. 2.3 Gaps in the Literature Current literature has certainly helped understand the elements determining the participation of contractors in tendering of the construction projects and how participation may be boosted, nonetheless, some avenues remain untapped and thus need more investigation. A big gap 8 that stands out is giving a deficient attention to the special problems which are particular for the oil and gas industry which is indicated by the resources. The sector features special projects and situations such as a high-risk environment, complicated scope requirements, and rigorous regulatory compliance. Therefore, particular strategies for the involvement of contractors have to be developed to handle these situations adequately. Additionally, there is an absence of comprehensive research projects targeting the dynamic response of contractors’ participation strategies in the industry amid emerging digital trends, environmental sustainability measures, and the growth in the need for integrated project delivery models. The knowledge of the contractors’ strategies applied in their bidding approaches to correlate with the trends plays a key role in optimizing participation and guaranteeing the success of projects. Such a gap prevents the realization of the fact that there are certain faced by the targeted interventions to solve the problem of scope creep as well as looking at a way forward on the role of the contractor in the construction projects. Filling these gaps will lead to a deeper knowledge of how contractors contribute to and strategies that facilitate their enhancement of participation in construction bidding. 9 References Alkhateeb, A. M., Hyari, K. H., & Hiyassat, M. A. (2020). Analyzing bidding competitiveness and success rate of contractors competing for public construction projects. Construction Innovation, ahead-of-print(ahead-of-print). https://doi.org/10.1108/ci-04-2020-0060 Hanák, T., Drozdová, A., & Marović, I. (2021). Bidding Strategy in Construction Public Procurement: A Contractor’s Perspective. Buildings, 11(2), 47. https://doi.org/10.3390/buildings11020047 Jang, S., Jeong, Y., Lee, G., & Kang, Y. (2019). Enhancing Subcontractors’ Participation in BIMBased Design Coordination under a DBB Contract. Journal of Management in Engineering, 35(6), 04019022. https://doi.org/10.1061/(asce)me.1943-5479.0000714
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