Bilen Abera

Construction Procurement Practices and It’s Impacts on
Ethiopian Road Construction
Case Study: - Ethiopian Road Authority

By
Bilen Abera
A Thesis Submitted to the School of Civil Engineering

Construction Technology and Management
Partial Fulfillment of the Requirements for the Degree of Master of Science
Addis Ababa University

Addis Ababa, Ethiopia
May, 2017
ADDIS ABABA UNIVERSITY

Construction Procurement Practices and It’s Impacts on Ethiopian Road Construction
May 2017
ADDIS ABABA INSTITUTE OF TECHNOLOGY

SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING
This is to certify the thesis prepared by Bilen Abera, Entitles: Construction Procurement
Practices and It’s Impacts on Ethiopian Road Construction and submitted in partial
fulfillment of the degree of master of sciences (Civil and Environmental Engineering)
complies with the regulation of the university and meets the accepted standards with respect
to originality and quality.
Signed by Examining Committee:
Internal Examiner Signature Date
External Examiner Signature Date
Advisor Signature Date
Co-Advisor Signature Date
School or Center Chair Person
i| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Declaration
I, the undersigned, declare that this thesis entitled Construction Procurement Practices and
It’s Impacts on Ethiopian Road Construction is my original work and has not been
presented for a degree in any other university. All sources of materials used for the thesis
have been duly acknowledged.
NAME: BILEN ABERA
SIGNATURE: __________________________
PLACE:
ADDIS ABABA UNIVERSITY
ADDIS ABABA INSTITUTE OF TECHNOLOGY
SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING
DATE: MAY, 2017
ii| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Acknowledgment
First and foremost I would like to thank the Almighty God for his invaluable care and support
throughout the course of my life. Next, I would like to express my appreciation enough to
Prof. (Dr. –Ing) Abebe Dinku for his patience, encouragement and wise advice. I would like
to thank him for offering his continuous time, knowledge, and advice throughout the
development of my thesis.
My acknowledgement also goes to all the members of Ethiopian Roads Authority who
directly or indirectly helped me to obtain the data for this research work. My appreciation is
also goes to those who participated in answering the questionnaire by giving their precious
time.
Finally, I would also like to express my sincere appreciation to my dear family who have
been very supportive in all of my life. I would also like to extend my gratitude to my precious
sister Eleni Abera for her encouragement and support in my life, she means a lot to me, even
if she is not with me today.
Last but not least, I would like to acknowledge the Ethiopian Roads Authority for giving me
the opportunity to attend for my post graduate study in the Construction Technology and
Management Stream.
iii| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Table of Contents
Declaration........................................................................................................................................ ii
Acknowledgment ............................................................................................................................. iii
List of Figure................................................................................................................................... vii
List of Table ................................................................................................................................... viii
Abbreviation ..................................................................................................................................... x
Abstract ............................................................................................................................................ xi
CHAPTER ONE ............................................................................................................................... 1
INTRODUCTION ............................................................................................................................. 1
1.1 General .............................................................................................................................. 1
1.2 Statement of the problem.................................................................................................... 2
1.3 Research Question.............................................................................................................. 3
1.4 Objective of the research .................................................................................................... 3
1.4.1 General objective of the research ................................................................................ 3
1.4.2 Specific objective of the research ................................................................................ 3
CHAPTER TWO .............................................................................................................................. 4
LITERATURE REVIEW .................................................................................................................. 4
2.1 Construction Procurement .................................................................................................. 4
2.1.1 Definition of procurement........................................................................................... 4
2.1.2 Construction Procurement .......................................................................................... 4
2.1.3 Procurement Methods ................................................................................................. 7
2.1.4 Role of procurement in construction industry ............................................................ 12
2.1.5 History of public procurement in Ethiopia ................................................................ 13
2.1.6 Procedure of procurement in the Ethiopian construction industry .............................. 13
2.1.7 Procurement Management Processes in Ethiopia Road Authority.............................. 20
2.1.8 Legal Aspects ........................................................................................................... 26
2.1.9 Federal Procurement Laws ....................................................................................... 27
2.1.10 Procurement related factor that influence project performance .................................. 40
2.1.11 Applicable Laws, Rules, Regulations and Guidelines ................................................ 43
2.2 Procurement, Contract and Contract Management ............................................................ 43
2.2.1 Introduction .............................................................................................................. 43
2.2.2 Procurement & Contract Management Process.......................................................... 44
2.3 Project Delivery system.................................................................................................... 46
iv| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
2.3.1 Definition of project delivery system ........................................................................ 46

2.3.2 Types of construction project delivery system ........................................................... 46
2.3.3 Project delivery system selection criteria .................................................................. 54
2.4 Project Performances........................................................................................................ 55
2.4.1 Performance: Concept Definition .............................................................................. 55
2.4.2 The Two Contending Performance Demands: Successes or Failures ......................... 57
2.4.3 Performance Criteria ................................................................................................ 60
2.4.4 Performance Measurement and Evaluation ............................................................... 61
2.4.5 ERA Performance Evaluation of Contractors under Government Financed Tenders .. 62
2.5 Chain’s Procurement Practices ......................................................................................... 63
2.5.1 Current Tendering Processes in Chain....................................................................... 63
2.5.2 Tender Preparation by Clients ................................................................................... 64
2.5.3 Calling for Tender and Bidder Selection ................................................................... 64
2.5.4 Tender Receipt, Open and Evaluation ....................................................................... 66
2.5.5 Tender Evaluation Criteria ........................................................................................ 67
2.5.6 Construction Plan ..................................................................................................... 68
2.5.7 Contract Award and Record Archiving ..................................................................... 69
2.6 Literature Review Summary ............................................................................................. 69
CHAPTER THREE ......................................................................................................................... 72
RESEARCH METHODOLOGY ..................................................................................................... 72
3.1 Introduction ..................................................................................................................... 72
3.2 Research Type and Approach ........................................................................................... 73
3.3 Research Instrument ......................................................................................................... 74
3.1.1 Questionnaire ........................................................................................................... 74
3.1.2 Desk Study ............................................................................................................... 75
3.4 Sample Size Distributions ................................................................................................ 75
3.5 Data Collection ................................................................................................................ 78
3.6 Data Analysis ................................................................................................................... 79
3.7 Scope and Limitation ....................................................................................................... 79
CHAPTER FOUR ........................................................................................................................... 81
ANALYSIS AND DISCUSSION .................................................................................................... 81
4.1 Introduction ..................................................................................................................... 81
4.2 Results of Questionnaire................................................................................................... 81
4.2.1 Respondent characteristics ........................................................................................ 81
4.2.2 Contractor Respondent’s View ................................................................................. 85
v| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
4.2.3 Consultant Respondent’s View ................................................................................. 88

4.2.4 Contractor and Consultant Respondent’s View (Common Questioner Survey) .......... 94
4.2.5 Client View ............................................................................................................ 101
4.3 Case Study on Ethiopian Road projects .......................................................................... 103
4.3.1 Construction Procurement Practice ......................................................................... 105
4.3.2 Construction procurement impacts in construction budget, completion time and
performance in Ethiopian road construction (DB and DBB project Delivery Method) ............ 136
CHAPTER FIVE ........................................................................................................................... 144

CONCLUSION AND RECOMMENDATION .............................................................................. 144
5.1 Introduction ................................................................................................................... 144
5.2 Conclusion ..................................................................................................................... 144
5.3 Recommendation ........................................................................................................... 146
6. Reference .............................................................................................................................. 148
Appendix - 1 ................................................................................................................................. 151
Appendix – 2 ................................................................................................................................. 153
Questionnaire survey ..................................................................................................................... 153
vi| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
List of Figure
Figure 2.1 The Five rights of procurement .................................................................................. 5
Figure 2.2 Characteristics of procurement ................................................................................... 6
Figure 2.3 Traditional / General Method (a) .............................................................................. 48
Figure 2.4 Traditional / General Method (b) ............................................................................. 48
Figure 2.5 Traditional / General Method (c) .............................................................................. 49
Figure 2.6 Design and build ...................................................................................................... 50
Figure 2.7 Management method ............................................................................................... 51
Figure 2.8 Typical structure of direct manager method ............................................................. 52
Figure 2.9 The traditional triple constraints................................................................................ 58
Figure 2.10 Information versus its influence along project management phases. .......................... 58
Figure 4.1 Experience of respondents (years)............................................................................. 85
Figure 4.2 Recommended project delivery methods for road construction .................................. 86
Figure 4.3 Respondents’ perception on the method that meets project Cost and work on time .... 86
Figure 4.4 Respondents’ perception on Quality of projects ........................................................ 87
Figure 4.5 Respondents’ perception on effective in reducing administrative burden to the owner 88
Figure 4.6 Time Extension, Cost and Quality/Performance Claim .............................................. 88
Figure 4.7 Project delivery method used by consultant............................................................... 89
Figure 4.8 Innovative project delivery methods used by Consultants .......................................... 89
Figure 4.9 Willingness to Shift from the Traditional to the Innovative Method(s) ...................... 90
Figure 4.10 Priority Ranks of the Innovative Method(s)............................................................... 91
Figure 4.11 Respondents’ reason to shift to Innovative project delivery method ........................... 92
Figure 4.12 Procurement related factor that affects project performance ...................................... 94
Figure 4.13 Contractor and Consultant view regarding the essential procurement stage................ 94
Figure 4.13a Contractor view regarding subdivision of pre-construction procurement stage .......... 95
Figure 4.13b Consultant view regarding subdivision of pre-construction procurement stage ........... 95
Figure 4.14 Contractors view on tender evaluation system ........................................................... 96
Figure 4.15 Consultant View on tender Evaluation System .......................................................... 97
Figure 4.16a Contractor Respondent View on MoWUD Tender evaluation for road construction ... 97
Figure 4.16b Contractor Respondent View on PPA 2006 Tender evaluation for road construction .. 97
Figure 4.16c Contractor Respondent View on FPPPAA 2011 Tender evaluation for road construction
98
Figure 4.17b Consultant Respondent View on PPA 2006 Tender evaluation for road construction . 99
Figure 4.17c Consultant Respondent View on FPPPAA 2011 Tender evaluation for road
construction ............................................................................................................. 99
Figure 4.18 Performance Evaluation used for construction projects ........................................... 100
Figure 4.19 Performance Evaluation used for construction projects ........................................... 100
Figure 4.20 Satisfaction of Contractor on Ethiopian construction procurement practice ............. 101
Figure 4.21 Satisfaction of Contractor on Ethiopian construction procurement practice ............. 101
Figure 4.22 Percentage increment as well as original and revised contract price of sampled DBB
projects .................................................................................................................. 138
Figure 4.23 Percentage increment as well as original and revised contract price of sampled DBB
projects .................................................................................................................. 139
Figure 4.24 Percentage of time over run of sampled DBB projects............................................. 139
vii| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Figure 4.25 Contract price increment of sampled DB projects.................................................... 141
Figure 4.26 Original and Revised Contract Duration.................................................................. 143
List of Table
Table 2.1 Rights of procurement [6] ............................................................................................... 6
Table 2.2 Seven Characteristics of Procurement [6] ....................................................................... 7
Table 2.3 Procurement Classification [26] ...................................................................................... 7
Table 2.4 Major and minor deviations during tender evaluation.................................................... 23
Table 2.5 Pre-qualification procedural flow chart of ERA [26] ..................................................... 24
Table 2.6 Qualification Criteria recommended by PPA 2006 users guide [43] .............................. 29
Table 2.7 Qualification Criteria recommended by FPPPAA 2011 user’s guide [40] ....................... 31
Table 2.8 Delivery methods Advantage and disadvantage ............................................................ 53
Table 2.9 Project Management in Connection to Performance and Its Related Concepts ............... 56
Table 2.10 Tendering Processes of Construction Projects in China (source: Nanjing Municipal
Construction Commission) .............................................................................................................. 65
Table 2.11 Tender evaluation criteria used in Jiangsu Province, China (1999) .................................. 68
Table 4.1 Type of respondents` organization ................................................................................ 82
Table 4.2 Respondent Education Status ........................................................................................ 82
Table 4.3 Respondent Field of Specialization ............................................................................... 83
Table 4.4 Respondents Designation.............................................................................................. 83
Table 4.5 Client’s View on Tender Evaluation ........................................................................... 102
Table 4.6 Frequency of Performance Evaluation used for construction projects .......................... 103
Table 4.7 General Information Summary of Sodo Tercha Road upgrading Project Lot 2 ............ 106
Table 4.8 List of applicants who have collected bidding document and submitted their application
for post qualification and financial offer. ................................................................... 106
Table 4.9 Qualification Criteria and Applicant Evaluation .......................................................... 107
Table 4.10 General Information Summary of Sodo-Tercha Road Upgrading project Lot 1 ........... 109
for post qualification and financial offer. ................................................................. 110
Table 4.12 Qualification Criteria and Applicant Evaluation ....................................................... 111
Table 4.13 General Information Summary of Felegebirhan-Bahirdar Road Project..................... 113
for post qualification and financial offer. ................................................................. 114
Table 4.15 Qualification Criteria and Applicant Evaluation ...................................................... 115
Table 4.16 General information summary of design and construction works of Werabe-Bojecber
Road project........................................................................................................... 117
Table 4.17 List of applicants who have collected bidding document and submitted their
application for post qualification and financial offer. .............................................. 117
Table 4.19 General Project Information Summery for Efeson (Ataye) – Mehal Meda road project
121
Table 4.22 General Project Information Summery for Morocho–Dimtu–Bitena–Sodo Design and
Build Road Project: Contract I road projec ............................................................. 125
viii| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Table 4.25 Qualification Criteria of ERA and World Bank [41 & 44] ....................................... 130
Table 4.26 Original and Revised Contract Price and Contract Period of Sampled DBB Contracts
136
Table 4.27 Increment in Contract Price of Sampled DBB Contracts ......................................... 137
Table 4.28 Increment in Contract Period and Original and Revised Contact Period of Sampled
DBB Contracts ....................................................................................................... 138
Table 4.29 Original and Revised Contract Price and Contract Period of DB Contracts .............. 140
Table 4.30 Original and Revised Contract Price in percent ....................................................... 141
Table 4.31 Original and Revised Contract Duration.................................................................. 142
Table 2.5 Summary of Bidders Offer ..................................................................................... 152
ix| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Abbreviation
AHJ Authority Having Jurisdiction
AIA American Institution of Architects
BaTCoDA Building and Transport Construction and Design Authority
BC Building Contractor
BOT Design Built Operate Transfer
BS British Standard
CFP Bid Price Under Consideration
CI Construction Industry
CP Construction Program
CTP Technical Evaluation Score for the Bid Under Consideration
DB Design Build
DBB Design Bid Build
E.g Example
EJCDC Engineer Joint Contract Document Committee
ERA Ethiopian Road Authority
ETB Ethiopian Birr
FIDIC Federation Internationale Des Ingenieurs-conseils
FPPAA Federal Public Procurement and Property Administration Agency
FS Bid Price Score
GC General Contractor
GPN General Procurement Notice
HTP Highest Evaluation Technic
ICE Institution of Civil Engineering
ITB Instruction to Bidder
JV Joint Venture
LFP Lowest Bid Price
MOC Ministry of Construction
MoWUD Ministry of Works and Urban Development
NCB National Competitive Bidder
PER Professional Experience Resume
PMC Project Management Consultant or Project Management Contract
PPA Public Procurement Agency
QA Quality Assurance
QAS Quality Assurance System
QC Quality Control
QSAE Quality and Standards Authority of Ethiopia
RFP Request for Proposal
SPN Specific Procurement Notice
SWOT Strength, Weakness, Opportunity and Threats
TCM Tangible Construction Market
TSN Normalized Bid Technical Proposal
VAT- Value Added Tax
x| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Abstract
In Ethiopia, road construction projects are playing the major role in the Ethiopian economic
sector. The Ethiopian Roads Authority (ERA) is charged with the duties and responsibilities
of providing adequate road infrastructure to support the socio-economic development of the
country. To improve the Ethiopian economic somewhat appropriate and effective
procurement approach is essential to reduce the impact in construction budget, completion
time and performance in the road construction. The major aim of this research is to review,
analyze and recommend construction procurement practice and its impact on Ethiopian road
construction. Two major research methods are used to achieve the research objective,
namely, primary and secondary data collection. To address the problems, a questionnaire
was designed and distributed to contractors, consultants and employers participating in road
construction sector. To supplement the questionnaire, a desk study was conducted on
Ethiopian Road projects. A total of 91 questionnaires from client, consultants and
contractors were collected and a desk study of 12 completed and ongoing road construction
projects in Ethiopia were investigated. From the results it was found that most of the road
construction projects suffered both time and cost overrun. The rate of time overrun ranges
from a minimum of 25.75 % to the maximum of 79.86 % of the contract amount and cost
overrun ranges from a minimum of 0% to the maximum of 26% of the contract amount,
these results are based on the 12 projects. As a result, the findings show that the main
factors that affects procurement practice in Ethiopian road construction projects are:
improper planning, improper designing, construction methods, shortage of labor and
technical personnel, quality and shortage of materials, construction mistakes and defective
work, lack of training to project team in regard to procurement, lack of risk consideration,
technical and financial capability and past experience of contractor and consultant are not
verified in selecting contactor and consultant and poor monitoring and controlling, as well
unclear process of closing a procurement have been found as the areas that needs
improvement. Thus, provide training, seminars, workshop with regard to innovative project
delivery system, establish other tender evaluation system other than low bid method to
improve the cost overrun, time overrun and quality of the construction projects, and copy or
modifying other country method may not be work full for our county are some of the
recommendation made under this study on what actions should be taken in order to improve
project procurement practice in the project.
Key Words: Procurement, Procurement Approach, Contract, Planning, Road Construction
xi| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
CHAPTER ONE
INTRODUCTION
1.1 General
The construction industry is a large dynamic and complex industry that plays a major role in
Ethiopia. Construction work can involve building of new structure, renovation involve
additions, alterations, maintenance and repair of buildings or engineering projects such as
highways or utility systems.
Now days, construction industry adopts new technologies and practiced as like other
industries. Far from being a single activity, large scale construction is a feat of multitasking.
From multitasks, procurement and its process is the primary and essential method in
construction industry.
Procurement mean the framework in which construction projects are designed, financed,
constructed, used, transferred and residual disputes are resolved [1]. And also it has its own
process of designing, specifying, sourcing, issuing, ordering and arranging of material, service
and equipment’s within an organization. Nowadays, there are several types of project delivery
systems being widely used in the Ethiopian construction industry. Design and Build, Design-
Build-Operate, Management Contracting, etc. are some of project delivery systems, it has its
own procurement property. Each type of procurement method determines how the projects
would be managed from the commencement or/and design up to commissioning stage.
The selection of the procurement approach is very important to the successful completion of
any type of construction project. In order to decide what procurement strategy is appropriate,
we need to consider client’s objective, how design and construction obligations are to be
allocated and which party is accepting specific risks such as time, cost, and quality.
Cost, time and quality are the three most important parameters to measure project performance
in Ethiopian Road Construction. It has been stressed that in today’s highly competitive and
uncertain business environment, clients are demanding for better value from their investment.
They want their project to be completed on time, within the estimated cost and with the right
quality. The use of the various project procurement systems shows that the construction
industry is now trying to meet the clients’ needs. This is because the different procurement
1|Page AAU, AAiT School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
method will have different effect on the cost, time and quality of the project. Each project
procurement system has its own peculiarity in terms of the pre-tender and post tender activities
and processes, division of risks between client and contractors, and the effectiveness of project
monitoring and control.
It is very important at the very beginning of the project to carefully consider all factors when
selecting the most appropriate procurement approach for a construction project. This is because
each system has its own feature and uniqueness that will have effect on the cost, time and
quality of the project i.e. the project performance. For the successful execution of a project,
effective procurement process is vital.
1.2 Statement of the problem
Project procurement is distinguished from other forms of procurement in that it’s not a
onetime action taken rather it’s a series of procurement activities carried out during the
execution of a project. Based on this, Procurement can be seen as a fundamental part of
project management because it is crucial to the success of the project that procurement
activities are appropriately planned and executed (Jarocki, 2014).
According to PMBOK (2013), the Project Procurement Management processes include

planning procurement, conducting procurements, controlling and closing Procurements. Thus,
a project procurement management practice needs to consider these points in order to be
effective and efficient. A good procurement planning before undertaking a procurement
process is a key contributor to project success (Deme A., 2009). According to PMBOK
(2013), conducting procurements is about obtaining bidder responses, selecting a bidder, and
awarding a contract. As construction participant play a vital role in success of the
procurement it should be well conducted to have the desired outcome. Thus, having a
procurement practice well-defined in a project will be of favor to successful outcome of the
project.
It is an argued fact that Ethiopian road projects executed over the years were faced with the
project cost overrun, delay in project execution, completing projects at sums higher than the
initial sum. Therefore, working with accurate project evaluation is necessary at the
commencement of a project work, which would reduce uncertainty and provide a plat form
for project success. It is usually commented and discussed at different seminars, magazines,
institutional lectures, journals etc. that the client satisfaction from built facilities declined
2| P a g e AAU, AAiT, School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
May 2017
from time to time as a result of poor quality performance, in addition to the perennial
problems of time and cost overrun in the Ethiopian construction industry.
1.3 Research Question
 What type of procurement practices and project delivery are availability in Ethiopian
road construction industry?
 How can one project delivery system effectiveness of versus the other delivery system
 To what extent are the client, consultants, and contractor are satisfied in Ethiopian
procurement practice?
 To what extent procurement system influence project effectiveness, success from project
cost, quality, and completion time? and
 What are the factors that affects process of procurement in Ethiopian Road Construction?
1.4 Objective of the research

1.4.1 General objective of the research
The main objective of this research is;
 To study the different procurement practices in the Ethiopian road construction industry
and its impact in project budget, completion time and quality of work.
1.4.2 Specific objective of the research
 To identify availability of procurement Practices and project delivery in Ethiopian road

construction industry and effectiveness of one delivery system versus the other delivery
system
 To investigate extent of satisfaction of client, consultants, and contractor because of the
procurement system
 To compare the extent to which procurement system influence project effectiveness,
looking at success from project cost, quality, and completion time.
 To identify factors affecting process of procurement in Ethiopian Road Construction
May 2017
CHAPTER TWO
LITERATURE REVIEW
2.1 Construction Procurement
2.1.1 Definition of procurement
Different authors define procurement in different terms, some of them are:
Procurement means the framework in which development of projects are designed, financed,
constructed, used, transferred and residual disputes are resolved. And also it has its own
process of designing, specifying, sourcing, issuing, ordering and arranging of material, service
and equipment’s within an organization [1].
Procurement is a term which describes the activities undertaken by a client or employer who
is seeking to bring about the construction of a building [2].
Procurement is the purchase of good, services, or works from an outside external source. It is
a mechanism which provides a solution to the question: "how do I get my project built?" [3].
Procurement is the process of purchasing goods or services. There are many different routes
by which the design and construction of a building can be procured. The selected procurement
route should follow a strategy which fits the long-term objectives of the client's business plan.
Considerations are likely to include: speed, cost, quality, specific project constraints, risk,
asset ownership, and financing [4].
The simplest definition, according to Nagy, Kiss and Hornyak (n.d) described “Procurement as
the merging of activities undertaken by the client to obtain a building. When a client wishes to
choose any type of procurement method for realizing his project, his major concerns are: to
finish the project on time, the cost of the project and performance / quality, both in the design
and construction of the building.”
2.1.2 Construction Procurement
Procurement is an important administrative and financial function and process that allows a
project to obtain value for money expended on work, good and services. This is because;
1. On one hand, its effective and efficient use of financial resources in a competitive and
transparent manner, through a sound procurement process contributes to the achievement of
the operational and strategic goals of a project; and
May 2017
2. On the other hand, a project's procurement practice tends to present a reflection of

aspects of its administrative and financial management systems.
Generally, Procurement is meant to serve a major function to ensure qualification and
competitive offer for the project; that is:
1. Qualified for legal, eligibility and technical competence and capacity to the services or
works or goods intended to be procured;
2. Competitive to cover both commercial and financial evaluations necessary to bring the
competitor's to be evaluated on the same ground and from the same platform; and
3. Least to show the lowest among those qualified and evaluated based on the commercial
and financial evaluation (if need be technical as well in times of adopted composite
weightings).
Procurement fulfills the above requirements through ensuring the Five Rights and the Seven
Characteristics [6]. The Five Rights are Right Quality, Right Cost, Right Time, Right Quality
and Right Counterpart and the Seven Characteristics are Proof of Competition, Impartiality,
Formality, Neutrality, Objective, Transparency, and Accessibility. The Five Rights and the
Seven Characteristics are tabulated in Figure 2.1 and 2.2 and Table 2.1 and 2.2
Right Quality
Right Time Procurement Right Cost
Right Right
Quantity counterpart
Figure 2.1 The Five rights of procurement [6]
May 2017
Table 2.1 Rights of procurement [6]
The 5 R’s: This means:
• The Right quality of goods • Obtaining goods that are fit for the purpose to which they will be
put
• In the Right quantity • In quantities that are appropriate to your needs
• At the Right time • In time for when you need them so that you’re not waiting for
them to arrive or, at the other extreme, holding unnecessary
stocks
• From the Right supplier • From suppliers that understand your needs, with whom
you’ve agreed terms and that provide you with a high quality
service
• At the Right price • At prices that reflect market conditions and represent good value
i.e. paying less for the same quality of goods or paying the same
price for a higher quality (where that higher quality is justified)
Proof of
competition
Impartiality Formality
Procurement
Neutrality Objective
Transparency Accessibility
Figure 2.2 Characteristics of procurement [6]
May 2017
Table 2.2 Seven Characteristics of Procurement [6]
Characteristics Descriptions
Proof of Competition Open Competitive Tendering as much as possible.
Impartiality Equal treatment to all potential tenderers.
Formality Documented and Recorded procurement process.
Neutrality Avoidance of specifying a single product or firms.
Defining concise compliance & requirement

Objectivity
evaluation including verification methods
Public Procurement Process including
Transparency
Advertisement Notice
Bid documents shall be provided reasonably to all
Accessibility
bidders from clearly known place(s).
2.1.3 Procurement Methods
Procurement types can be classified based on the things to be procured and the way how they
are procured. There are six bases for classifying procurement methods, these are [26]:
Table 2.3 Procurement Classification [26]
Bases Things Bidders' Geographical Procurement Procurement

Procured Coverage Coverage Awareness Steps
Types Goods Competitive International General PN Single
Services Negotiated Regional Specific PN Two Staged
Works National Pre-Qualification
Local Post-Qualification
May 2017
1. Things to be procured: Goods vs Services vs Works;
Based on things to be procured, procurement types can be classified into three major
categories; namely, Procurement of Goods, Services and Works. Depending on the delivery
system chosen during the contract planning [26]
A. Procurement of Goods: Physical resources like Materials and Equipment’s are made
available using Procurement of Goods.
B. Procurement of Services: In the construction Industry (CI) procurement of services are
often termed as consultancy services procurement. These include services like Pre-
feasibility and Feasibility studies, Design and Contract Administration of projects,
Construction Management Consultancy Services, Research or Study based Consultancy
Services etc.
C. Procurement of Works: In the CI procurement of works mean the procurement of
contractors to carry out the actual physical infrastructures [30].
D. Procurements of Services and Works: Procurement of services and Works means the
procurement of consultancy and the construction of actual physical infrastructures done by
a single firm.
2. Bidders' Coverage: Competitive vs Negotiated Tendering
Generally, procurement types can be classified into Competitive and Negotiated Tendering
when bidders' coverage is taken as a basis for classification.
The objective of competitive bidding is to acquire the goods, or works, or services at the most
economic cost to the project owner. This type of tendering is commonly used for the selection
of better and capable winning bidder among the various eligible firms. Competitive bidding
can either be Open or Limited Competitive Bidding in the form their invitations [27].
As their name implies, while Open competitive bidding allows all eligible bidders to
participate; Limited competitive bidding allows a number of selected firms decided by the
Project Owners in consultation with concerned parties for qualification. The major difference
between open and limited competitive bidding is the addition of qualifying criteria beyond
eligibility imposed on the procurement type for limited competitive bidding.
Limited Competitive Bidding is often used when the nature and urgency of the work justifies
to do so. In this case limited numbers of eligible firms are invited to participate for the bid.
Commonly short listed is done, based on the firms past performance, work load at present,
presence of a firm in the vicinity of the projects, knowledge of similar type of works before
May 2017
and financial and technical capabilities of the firms. Besides, the listing shall take into account
the renewal of licenses of the firm and the specific requirements of the employer. These are
some of the qualifying criteria used for Limited Competitive Bidding. In such tendering,
bidders cannot be rejected as non-responsive for being unqualified technically. Usually in such
type of procurement, cost of projects might be higher than expected. To minimize such effects,
capable and competent professionals shall negotiate with the winning firm [26].
Negotiated tendering achieves a contract between a client and a contractor by direct

negotiation, rather than competitive bidding. This type of negotiation is used to procure
services in specialized areas [29].
Negotiated tendering occurs when the client approaches a single supplier based on their track-
record or a previous relationship and the terms of the contract are then negotiated.
Negotiating with a single supplier may be appropriate for highly specialist contracts (where
there may be a limited number of potential suppliers), or for extending the scope of an existing
contract. It can give the client the confidence of working with a supplier they already know,
can reduce the duration and costs of tendering and can allow early supplier involvement.
However, unless the structure of the negotiation is clearly set out there is the potential for an
adversarial atmosphere to develop, even before the contract has been awarded. Carrying out
negotiations in the absence of competition so that both parties feel the outcome is fair can be
complex and time consuming.
Negotiated tendering under certain circumstances, which shall be rare in practice. It can be
seen as anti-competitive and exclusive, with the potential for relationships to develop between
the client and the supplier. Negotiated tendering may not be permitted by some organizations
due to the perceived lack of accountability. On public projects, or projects that include a
publicly-funded element it may be necessary to advertise contracts [28].
3. Geographical Coverage: International vs Regional vs National vs Local Tendering
Procurement can be made using any of the four methods based on geographical coverage: these
are International, Regional, National and Local Tendering. Such types of procurements are
generally caused by three major factors. These are Local Capacity, Financial Sources and
Globalization.
When projects could not be carried out by local capacity, project owners are forced to make
tendering out of their localities. Policies of the financial sources dictate the type of tendering
May 2017
geographically. For instance, donor financed projects are often practicing International or
Regional Tendering. The World trend for Globalization and the principles of Free Trade and
Trade Liberalization also encourages international tendering [28]. In Ethiopia practice,
Preference Margins in the range of 7.5% are applied to local, national or regional tenderers,
which imply tender offers higher than 7.5% will be given preference to encourage local
participation [41].
4. Procurement Awareness: General and Specific Procurement Tendering
To enhance proof of competition and increase accessibility, projects are recommended to

create awareness starting from its initiation. Following this requirement, General Procurement
Notice is made during projects planning phase and it is only interests of the bidders are aroused
because sufficient tender documents are not available. This approach is used to the project
owners to identify interested bidders to issue invitations by letters and save time, to identify
bidders relevant for the procurement required and to protect loss of cost in preparing lots of
tender documents. And this approach is used to the bidders to give sufficient time to assess the
cost of the project, to protect loss of cost only to participate and to encourage competent
bidders who wary about law-balling to participate.
General Procurement Notice (GPN) is of two types. These two types are based on their purpose
why and when they are notified. The first type is when the purpose is to create awareness and
let bidders' prior information about.
Upcoming projects such that they can follow up its developed and include them in their plan.
This type of GPN is used for procurement of works and goods and is often announced as soon
as the design implementation service is started. The Second type is when the purpose is to
determine interested bidders who could be invited in the form of Limited Competitive
Tendering. This type of GPN is used for procurement of services and is often announce after
financial sources are determined. GPN covers the Employer and its financiers for its project;
Description of the project with its probable or planed implementation time; type of
procurement method and address where further information can be obtained.
Specific Procurement Notice (SPN) is an Invitation for Tender or a Request for Proposal when
the project is ready for implementation, SPN can be sent to those interested bidders identified
following GPN directly. Otherwise, it should be advertise on the bases of enlarging
opportunities [26].
May 2017
5. Procurement Steps: This includes Single vs Two Staged Tendering
Tender procedures will vary depending on the nature of the goods or services that are being
procured, but very broadly they can be classified as either single stage or two stages [26].
Single or Two Staged Tendering: Procurement can be made using a single or two staged
tendering process. They are related with whether tender packaging for submission separately
and their evaluations are staged for a single or two steps when invitations are made [29]. The
two staged biddings are made for the submission of technical and financial proposals
separately and their evaluations one after the other, According to Ethiopian Procurement
Regulations, the following shall be enforced to use Single or Two Staged Tendering: Pre or
Post Qualification Tendering
6. Pre or Post Qualification Tendering; Procurement can also be based on Pre - or Post -
Qualification processes
Prequalification is an internationally accepted practice in procurement management. It would

normally be required for civil works contract of which its nature and cost is large and complex.
So far in our country, there is no regulation on such applications but practiced based on Project
Owners, Regulators and Financiers initiatives. It is a procedure in which eligible bidders are
invited to provide evidence of their ability to perform the services required by the employer.
Prequalification is desirable because it enables the Employer to establish the competence of
companies subsequently evaluated. It is also in the interest of contractors since, if pre-
qualified, they will know that they are competing against a limited number of other firms, all of
whom possess the required competence and capability.
Pre - qualification can be of two types. The first is when companies are already considered
qualified during their licensing requirements which entitled them for a single stage tendering
process. For such types of tendering, the most important tender evaluation criteria become the
low priced bid. The second is when two staged tendering is used to pre-qualify tenderers for
their technical competency. Once bidders qualify for the tender, either the lowest price bidder
or the lowest evaluated bidder based on the weighted average of the technical and financial
score will be recommended for award.
Post - qualification is a tendering type where Financial Evaluation is carried out first and rank
bidders on the basis of their offer for tender price. That is, Technical Evaluation will be done
after the Financial Evaluation. However, Technical Evaluation is performed step by step
starting from the lowest financially evaluated bidder until technically or cumulatively qualified
May 2017
bidder is determined. The advantage of this approach is not to lose the lowest financially
evaluated bidder and to save time during technical evaluations. However, post qualification
approaches often cause to fix evaluators on financial results and be locked and blasted for
successive technical evaluation. Post qualification tendering type is recommended for projects
having high construction cost. Dams, high rising buildings and huge infrastructure are good
example for post qualification tendering.
2.1.4 Role of procurement in construction industry
To properly manage risks (project construction budget, completion time and quality of work) it
is important that procurement decisions are justifiable on the basis of documented facts and
analysis. Soundly based decisions involve a comprehensive exploration of a range of potential
delivery models and procurement methods to determine the approach best suited to each
infrastructure project. By methodically exploring all available options, project owners can
ensure that opportunities for achieving increased value-for-money and improved infrastructure
investment outcomes are readily identified and capitalized on [5].
An appropriate procurement strategy, which is typically developed during the ‘evaluation’ or

‘definition’ phases of a project, is a key determinant of successful project delivery. To develop
an effective procurement strategy, it is important to:
 fully understand the project including key drivers, constraints and risks
 assess agency and market capabilities and capacity
 strictly evaluate potential delivery models and procurement methods for suitability
 involve key stakeholders and experts as early as possible in the planning and
development process
 challenge assumptions in order to better achieve desired outcomes
 use practical analytical techniques in the decision-making process.
On most projects, clients (usually through their advisers or in-house teams) will start the
procurement process by devising a project strategy. With every project, the client’s concerns
focus on time, cost and quality (or performance) in relation to both the design and construction
of the project [3].
May 2017
2.1.5 History of public procurement in Ethiopia
2.1.5.1 Past development of procurement
Ethiopia historically uses procurement related laws and specific construction works related
standard Tender Document prepared previously by Public works (MOC, and MoWUD) and
nowadays by Financial and Economic Development (FPPAA) Authorities in order to
administer Construction service and works procurements.
Until 2005, there was no comprehensive procurement law at a national level. There were only
few articles in the civil code regulating the procurement procedure. In 2005, the Federal
government enacted a law providing a detailed procedure of Public Procurement (providing the
procedures of Public Procurement and establishing its Supervisory Agency Proclamation No.
430/2005.) This law also establishes a federal agency empowered with regulating the
procurement of works, goods and services by Federal agencies [10].
The main aim was to achieve better transparency, efficiency, fairness and impartiality in public
procurement and to enable the utilization of the large sum of public money spent on
procurement in a manner that ensures greater economy and efficiency by addressing
problems encountered in the course of implementation of the proclamation determining
the procedures of public procurement of the Ethiopian Federal Government [11].
2.1.5.2 Current situation of procurement in Ethiopia
After four years of the issuance of this law, it was revised and replaced by a new law (The
Ethiopian Federal Government Procurement and Property administration Proclamation
No.649/2009.) This second proclamation comes with more detailed and clear procedures. It has
also widened its scope by providing for the regulation of public property [10].
2.1.6 Procedure of procurement in the Ethiopian construction industry
Procurement procedures are methods used to acquire good quality without cost overrun and
time overrun. It explains how to accomplish a task and it also cover all aspects of the
procurement cycle. The type of procurements are documented in Chapter 2 sub sections 2.3,
each type of procurement has its own procurement procedure. There are two types of
procurement procedure;
2.1.6.1 Pre-construction (pre - contract) procurement
The pre-contract stage includes the following:
May 2017
1. Initiation
The Project Initiation Phase is the first phase in the Project Management Life Cycle, as it
involves starting up a new project. A new project is start up by defining its objectives, scope,
purpose and deliverables to be produced. We also hire our project team, setup the Project
Office and review the project, to gain approval to begin the next phase.
The Project Initiation Phase is the most crucial phase in the Project Life Cycle, as it's the phase
in which we define our scope and hire our team.
Only with a clearly defined scope and a suitably skilled team, we can ensure success. The
Project Initiation Templates will help us to do this, by giving all of the templates need to
initiate new projects now.
These templates describe in depth, the steps taken to initiate a project. They also include loads
of practical examples, tips and hints. Using these templates, you'll always have a head-start and
you'll never have to start-from-scratch.
2. Pre-Feasibility and Feasibility study
Prefeasibility Study
Before a resource project moves into the feasibility study stage, companies will undertake
what’s known as a prefeasibility study. Such studies are intended to help determine whether
it’s even worth it to move to the feasibility phase.
More specifically, studies are designed to select the base case for developing a project. This
may include factors such as output and process methods, and will be used to determine whether
or not the project is “feasible” and whether it may be developed further.
Before an organization commits to putting up several million dollars to collect information and
obtain the required permits, it wants to be sure its investment will pay off. Prefeasibility studies
act as one of the first explorations of a potential investment, following a preliminary
resource/reserve report and to creation of a model. Based on the data procured by various
assessments, a prefeasibility study may occur.
In addition to information relating to geological models and environmental design,

prefeasibility studies also take into account factors that may impact or interfere with the final
project. This can involve community issues, geographic obstacles, permit challenges and more.
While prefeasibility studies are conceptual in nature, there are some key factors investors will
want to be aware of. A comprehensive prefeasibility study should include detailed designs and
May 2017
descriptions for the project, as well as cost estimates, project risks, safety issues and other
important information.
There should also be multiple options included in the study for tackling different issues, as this
will provide organizations with more ways to overcome potential challenges.
If a prefeasibility study results in a positive base case, the company will likely move on to the
next stage: a feasibility study. If the study is negative, organizations may head back to
modified or abandon their potential project altogether.
Feasibility study
The next step, a feasibility study, is intended to evaluate whether a project is possible, both
technically and financially. Additionally, feasibility studies are used to help determine whether
a project will be profitable.
“A thorough feasibility analysis provides a lot of information necessary for the business plan.
For example, a good market analysis is necessary in order to determine the project’s feasibility.
This information provides the basis for the market section of the business plan.”
At this point in the process, organizations already have a lot of money at stake and a drive to
see their project through to completion. Therefore, feasibility studies are all about identifying
and solving potential issues that may complicate a project.
Feasibility studies are also more focused on the business side of things than prefeasibility
studies. For instance, a company will use a feasibility study to figure out how much money it
will likely need to meet operating expenses, as well as how much revenue a project needs to
bring in to make it worthwhile.
Feasibility studies cover many important issues, chief among them being the technical,
economic, legal, operational and scheduling issues related to a project. Good feasibility studies
should be able to answer questions regarding all these topics.
More specifically, a feasibility study should feature information about whether a project is
technically possible, how much it will cost, whether it’s in accordance with the law, how
operations will work and when it can be completed [42].
“A feasibility study is usually conducted after producers have discussed a series of business
ideas or scenarios,” “The feasibility study helps to ‘frame’ and ‘flesh-out’ specific business
scenarios so they can be studied in-depth. During this process the number of business
alternatives under consideration is usually quickly reduced.”
May 2017
In the end, whether or not to continue with a project or settle on a specific business plan comes
down to the judgment of the project leaders. A feasibility study is not designed to provide a
clear yes or no answer. Instead, it acts as a tool that hopefully provides much detailed
information as possible so that they can make intelligent and strategic decisions regarding a
project. Feasibility Study Outline is provided to give you guidance on how to proceed with the
study and what to include.
3. Design
The two parts of the design stage are schematic design and design development after which the
Contract document (or construction document) development stage results in fully completed
documents. The process is a continuum, with some overlaps and considerable similarity among
the topics and tasks. We begin by describing schematic design.
Schematic design:-The design professional is responsible for producing a set of preliminary

drawings as well as written report, for approval by the owner. On a building project, the
architect will take the leading developing a design concept with plan, elevation and sectional
views that meet the space and programmer requirements. Engineers will develop concepts of
how the various systems will fit to the facility: foundation systems, cooling and heating
systems and data communication systems. These preliminary drawings may be freehand
sketches, but they should illustrate the project’s character and emphasize such aspects as
harmony with the surrounding area and any improvements, architectural style, exterior
appearance, planning and zoning requirements overall structural concepts. Civil engineers will
become involved in site analysis and layout, based in part on legal and topographic surveys
prepared earlier, with some updating following site selection; features include topography, soil
conditions, parking, access, utilities, setback requirements, water features, drainage, required
easements and existing structures. Surveyors will continue their previous efforts with title
searches, photogrammetry and on-site surveying and mapping. Special consultants may play a
role in schematic design.
4. Tendering
Tendering is the process by which bids are invited interested body to carry out specific
packages of construction work. It should adopt and observe the key values of fairness, clarity,
simplicity and accountability, as well as reinforce the idea that the distribution of risk to the
party best placed to assess and manage it is fundamental to the success of a project.
May 2017
When organizations or individuals wish to have a new facility, or carry out renovation or
maintenance of an existing facility, they will be involved in some form of procurement. There
are a variety of different methods for procuring this new facility, not all of which involve
construction as a solution.
The two most commonly used methods of tendering are single-stage selective tendering or
two-stage selective tendering. Both involve the invitation of tenders from firms on a pre-
approved, chosen because they meet certain minimum standards in general criteria such as
financial standing, experience, capability and competence. The competition element of the
tender is provided on the basis of price and quality.
It is worth remembering that every activity in the tendering process has a time and cost
implication. It makes economic sense, therefore, not to overburden the participants with
unnecessary information requirements, and to concentrate on those which are relevant to the
work which is to be undertaken. Faced with competing financial pressures, most contractors
will carry out their own assessment of the jobs they wish to tender for, and will be less inclined
to bid for those where the procedures involved are perceived as overly complicated or difficult.
Also, since preparation costs are included in their overheads, these will ultimately be passed
on, in the form of higher prices. Preparation of this information will also be reflected in higher
consultancy costs for the employer's team.
The principle of tendering is to ensure that true competition is achieved, as it is evaluated by

applying certain criteria. These criteria may be expressed in terms of financial matters,
comprising a simple assessment relating to tender sums, or more complex financial evaluation,
including consideration of projected costs over the life cycle of the completed project. It could
also address other non-financial factors such as time and proposed methods or levels of
capability; or sometimes a mixture of both – collectively referred to as a 'quality/price balance'
or 'matrix'.
European legislation describes this concept as the assessment of the most 'economically
advantageous' option. In order for this to be achieved, however, each tenderer should be able to
bid on an equal basis, meaning that they must receive the same information – and most
importantly that this information should be sufficient in content and accuracy to allow them to
properly assess the implications and bid accordingly.
It is Relevant to all projects and aimed at clients, architects, surveyors, designers, engineers,
project managers, this important guide will allows adopting the key values of fairness, clarity,
May 2017
simplicity and accountability. It also aligns with the principles of sustainable development
which require the fair, ethical and transparent treatment of suppliers and the supply chain.
Procurement Preparation phase is meant for the formation of a Procurement Team; the
preparation of Tender Documents and their approval for procurement implementations,
Procurement Team: Ethiopian Procurement Regulation states that a Procurement team

consisting of a minimum of five members shall be established. As Tender Evaluation is a joint
technical and commercial exercise, the project owner shall consider that the necessary experts
shall be composed in the procurement team.
2.1.6.2 Construction Stage (post contract) procurement
The post-contract stage has its own project procurement. Project procurement is described as
an organized method, or process and procedure for client to obtain or acquire construction
products [13]. This stage includes the following:
1. Construction
Construction is the process of constructing a building or infrastructure. Construction differs

from manufacturing in that manufacturing typically involves mass production of similar items
without a designated purchaser, while construction typically takes place on location for a
known client [34]. Construction as an industry comprises six to nine percent of the gross
domestic product of developed countries. Construction starts with planning, design, and
financing and continues until the project is built and ready for use [35].
Large-scale construction requires collaboration across multiple disciplines. An architect

normally manages the job, and a construction manager, design engineer, construction engineer
or project manager supervises it. For the successful execution of a project, effective planning is
essential. Those involved with the design and execution of the infrastructure in question must
consider zoning requirements, the environmental impact of the job, the successful scheduling,
budgeting, construction-site safety, availability and transportation of building materials,
logistics, inconvenience to the public caused by construction delays and bidding, etc. The
largest construction projects are referred to as megaprojects [34].
In general, there are three sectors of construction: buildings, infrastructure and industrial.
Building construction is usually further divided into residential and non-residential
(commercial/institutional). Infrastructure is often called heavy/highway, heavy civil or heavy
engineering. It includes large public works, dams, bridges, highways, water/wastewater and
May 2017
utility distribution. Industrial includes refineries, process chemical, power generation, mills and
manufacturing plants [35].
2. Commissioning and hand over
Project commissioning is the process of assuring that all systems and components of a building
or road or industrial plant are designed, installed, tested, operated, and maintained according to
the operational requirements of the owner or final client. A commissioning process may be
applied not only to new projects but also to existing units and systems subject to expansion,
renovation or build.
In practice, the commissioning process comprises the integrated application of a set of

engineering techniques and procedures to check inspect and test every operational component
of the project, from individual functions, such as instruments and equipment, up to complex
amalgamations such as modules, subsystems and systems.
Commissioning activities, in the broader sense, are applicable to all phases of the project, from
the basic and detailed design, procurement, construction and assembly, until the final handover
of the unit to the owner, including sometimes an assisted operation phase.
The main objective of commissioning is to affect the safe and orderly handover of the unit
from the constructor to the owner, guaranteeing its operability in terms of performance,
reliability, safety and information traceability. Additionally, when executed in a planned and
effective way, commissioning normally represents an essential factor for the fulfillment of
schedule, costs, safety and quality requirements of the project [23].
For complex projects, the large volume and complexity of commissioning data, together with
the need to guarantee adequate information traceability, normally leads to the use of powerful
tools, known as commissioning management systems, to allow effective planning and
monitoring of the commissioning activities.
The handover of a project to the client at the end of construction is a very important stage of
the project procurement process and facility operation success. A well organized, efficient and
effective transfer of information from project works to the client is essential.
The transfer of ownership of the project from contractor to client can have an effect on health
and safety, reliability, standards of operation, maintenance and operational cost efficiencies to
the client. The transfer/handover period can be a very stressful time for contractors’ staff, and
owners and occupants alike as spaces become occupied and operation of the facility starts. The
May 2017
commissioning and fine tuning operations during handover can impact heavily on core
business of the client if not managed in a structured manner. The project management process
identifies broad activities of the project handover stage.
The handover program shall be organized by the project manager in conjunction with the head
contractor and subcontractors.
Projects will require a dedicated project meeting to discuss the project handover process and to
agree on requirements and outcomes. The meeting should be held no less than four weeks prior
to the proposed project completion date. The meeting agenda would include: introduction and
reason for the meeting, plant and equipment asset detail collection, Maintenance manuals,
prescribed essential safety and health features and maintenance during the defects liability
period (DLP), Understanding and process development, defects management and after-hours
callouts, connection and commissioning, systems operational training planning (includes
building operations), warranties and guarantees, and security systems (includes key handover
process) [22].
2.1.7 Procurement Management Processes in Ethiopia Road Authority
Procurement Management process can be idealized into three major processes. These include
Preparation, Tendering, and Evaluation (including Award Recommendation)
Procurement Preparation phase is meant for the formation of a Procurement Team; the
preparation of Tender Documents and their approval for procurement implementations,
Procurement Team: Ethiopian Procurement Regulation states that a Procurement team

consisting of a minimum of five members shall be established. As Tender Evaluation is a joint
technical and commercial exercise, the project owner shall consider that the necessary experts
shall be composed in the procurement team.
Tender Documents are prepared to:
 instruct bidders on the procedures for the preparation and submissions of bids,
 inform prospective bidders about the nature of things to be procured,
 inform bidders about the criteria for evaluation and selection of the successful bidder, and
 lay down the contract conditions, delivery system, procurement methods and contract
types of the project.
Tender documents include:
May 2017
 Form of Invitation to Tender or Request for Proposals

 Instruction to Tenderers (Standard and / or Particular information.) or Terms of
References;
 Prequalification Documents if necessary Refer procurement methods based on stages
 Forms of Contract Agreement
 General and Particular Conditions of Contract
 Bill of Quantities and Drawings
 Technical Specifications & Methods of Measurement
Approval of Tender Documents: Regulatory requirements enforced for:
 Budgeting, Credit, Assistance and Grant Policies;

 Health, Safety and Environmental Requirements; and
 Professional, Ethical and Legal Requirements
 Demand checking, renewal and approvals of Tender Documents
 Check list for review is the best practice used for Tender Documents approval.
Tendering Phase includes Invitation, Clarification, Submission and Opening of tenders.

Normally open tenders are floated for a period between 30 to 45 days, limited and negotiates
tenders can be invited between 7 to 15 days. Invitations shall widened opportunities to the
project owner by reaching all potential and eligible competitors. The invitation to tender shall
clearly state:
 the owner and his desirous service or works

 how long the tender will be floated,
 eligibility requirements,
 how should the tender offer be packed, and
 place to get further information,
 when and where submission and opening of tender will take place.
 where to purchase & submit tender documents,
Clarifications can either be requested by interested bidder or carried out using a pre - tender
clarification meeting. In both cases, issues clarified shall be sent (written) to all bidders
participating for the intended services or works. The bidders shall submit their offer on or
before the submission date and time. Late bids are automatically rejected.
May 2017
Tender Opening: Bids shall be opened in public on the date, at the time and place mentioned in
the invitation to tender and stipulated in the tender documents. Ethiopian practice in tender
opening for public construction projects is that, two representatives from MoWUD in addition
to the Project Owner, Consultant (if available), and Contractors (Who wish to attend)
representatives shall attend during the tender opening ceremony.
The following will be carried out during tender opening:-
 Tender Attendee members shall take their place and be registered,

 Tender box opened and checked for faulty things,
 Check the tender is the right one,
 Bids will be opened one after the other,
 All necessary data which deem useful such as Project Name, Name of bidder, Bid Bond
Amount, Tender Price, etc. will be read aloud and recorded at the opening of bids.
 Bidders representative shall sign a register to attest their presence during opening, and
 Tender committee members shall sign on the Tender documents.
Tender Evaluation Phase: is made to determine and make award recommendation for the
least evaluated bidder using preliminary and detail evaluations. The recommended winner may
or may not necessarily be the lowest bidder. Factors such as technical qualification, completion
time commercial terms of the offer, etc are used in determining the least evaluated bidder.
Preliminary Evaluations are made Eligibility and Arithmetic Review requirements. Before
commencing the actual evaluation, it is useful and recommended to complete a Basic Data
Sheet for each tender to record key information and enable coding.
Eligibility Requirements: Tenders are subjected to eligibility qualifications before they enter to
bid and their respective evaluations. Most often sited issues considered in eligibility
requirements are:
 Valid & Up to date Trade and Professional License,

 Valid & Up to date Membership to Financier Organizations,
 Valid provision of Bid Security or Bond,
 Completeness and submittals of all required documents
 Turnover requirements fulfilled
 Appropriate invitation, packaging and submission requirements and
 Power of Attorney, signature and sealing requirements
May 2017
These eligibility requirements together with basic alterations of the conditions of the tender
will be considered for responsiveness or not. If the bidder offer provided weighs a major
deviation from the tender condition, the tender will be considered non - responsive and could
not be further considered. But if it is minor deviation, either the procurement team use their
discretionary power to request clarification or the case will be recorded and taken up during
negotiation if the respective winner became the least evaluated tender. When the first approach
is chosen, the bidder is not allowed to change any information that can substantially affect the
tender evaluation. For guideline during tender evaluation: table - outlined when a tender is
considered major deviation or not.
Table 2.4 Major and minor deviations during tender evaluation
Major Deviations Minor Deviations

Affecting the validity of the bid Do not affect the triple constraints of the project
Rejection or Disqualifying conditions stated Do not result in change of Bid Price
Substantial effect on the Bid Price Non conditional tenders
Arithmetic Review: Most tenders are often submitted hastily. As a result, tenders are not
arithmetic error free. If tenders are processed without arithmetic checks, on the first piece
tenders are not evaluated on the bases of equal merits and if they become binding contracts
being over-sighted, they will be the cause for potential disputes. Therefore, it is a formal
evaluation process to review arithmetic before carrying out detail evaluations. Arithmetic
review can be done if and only when financial proposal are opened.
Detail Evaluations include Technical and Financial Qualification requirements. Evaluations at

this stage should first and foremost critically see the technical and commercial offers and
establish system that can ensure common bases for comparison. Finally, the financial offer will
be updated using Absolute Results from Commercial comparisons.
Financial Offer Comparison: After all comparisons are considered on the same bases; the
Tender offer will be adjusted based on the Cost - Benefit principle which involves adding costs
and benefits foregone. Besides, the preference margin will also be deducted and Least
evaluated Bidder is Determined.
Besides, Financial offers per groups of trades of works are compared in order to evaluate
whether tenders are front loaded or not. Front loading often cause disruption of projects or
overzealous contractual negotiations.
May 2017
Rejection of All Tenders though is solely the power of the employer to decide, for the sake of
fairness it is recommended that such rights shall be exercised in the following cases:
 All Tenders are found non — responsive during the Preliminary evaluations
 Evidences of lack of competitions such as collusion among bidders, monopoly, etc
 Lowest responsive offer is found unreasonably high.
The following procedural Flow Chart is recommended for Tendering following the Pre-
Qualification procedural flow chart.
Table 2.5 Pre-qualification procedural flow chart of ERA [26]
Procedure Employer / Consultant Contractors

Procurement  Check Eligibility
 Letter of Invitation  Check Competitive Advantage.
Document  Instruction to Bidders  Collect Information
Tender Document  Conditions of Contract  Decide to participate, Forms,
 Drawings, Bill of Quantities, Formats and Schedules. etc
Preparation
Issuance of Tender
 Advertisement or invitation
Documents  Project Scope, Location, Source of finance  Request and Obtain Tender
Tendering Phase  Issue, Submission and Opening dates of does.
Tenders, Forms, Formats and Schedules. etc
Clarification and Site

 Arrange date and Time for Pre Bid
Visit  Request & Obtain
Submission Meeting
Clarifications
 Send all clarifications to all bidders
 Request and Visit Site
 Arrange date and time for site visit
Tendering Phase  Acknowledge receipt of all
 Prepare and Issue Addenda for all
clarifications
Clarifications
Submission of offer
 Receive Offers  Complete and Submit Offers
Tendering phase  Record date and Time of Receipt together with relevant
 Reject Late Offers information.
Opening of Tender
 Open Tender in the presence of relevant
Tender Evaluation attendee  Attend Tender Opening
Phase  Announce and Record Tenderers and all Ceremony
offer information
May 2017
Evaluation of Tenders
 Review conformity and completeness of  Provide Clarification if
Tender Evaluation Tender  Requested Approval by
Phase  Evaluate-Alternative tenders and deviations Regulator & Financier
 Reject Substantially non Responsive and
non-conforming Tender
Selection and
 Select Least Qualified and Evaluated
Award Bidder
Recommendation  Propose Award Recommendations
 Decide if further Negotiation is required
Tender Evaluation
or not Approval by Regulator &
Phase Financier
In Ethiopia the major construction is the federal government. And the most common
procurement method is the low-bid procedure in which contracts are awarded to a responsive
contractor who offers the least price. The prequalification and bid evaluation processes
requires the development of necessary and sufficient criteria. The last two decades have
witnessed a huge development in project complexity and clients need and this has led to an
increasing use of alternative forms of project delivery systems. In contrast, the prequalification
and bid evaluation process, quantifying and assessment of criteria are still in its original form.
Prequalification provides a client with a list of contractors that are invited to tender on a
regular basis. This is the approach most currently used by many countries and in which many
and different types of criteria are considered to evaluate the overall suitability of contractors.
There are definite benefits and drawbacks to the low-bid award system. Promoting competition
amongst contractors is a clear benefit to the process. It compels the contractors to lower their
costs, usually through innovation, to ensure they win bids and maintain their profit margins. In
addition, the process is beneficial specifically to the public sector because of the transparency,
an important criterion of public policy (Photios, 1993). However, allowing projects to be
awarded based on the least price has inherent flaws. Delays in meeting the contract duration,
increment of the final project cost due to high variations, tendency to compromise quality, and
adversarial relationship among contracting parties are the major drawbacks associated with
responsive low-bid award procedure (Thomas, 2009). Moreover, the low-bid award system
encourages unqualified bidders in the competition and in contrary it discourages qualified
contractors to participate.
According to Hardy (1978), the criteria used for bid evaluation should reflect the client’s
objectives. These are that bids are fully responsive to the contract and bidders are sufficiently
well qualified to undertake the contract. The criteria for selecting the successful bidder are then
May 2017
that bid which maximizes the return on the client’s investment. Thus he has proposed that
bidders should submit a schedule of the payments they expect to fall due to them during the
contract.
In a survey conducted in Ethiopian Road Authority; compromising quality; and escalation of

the final project cost from the estimated cost and time overrun were the major problems
associated with the existing approach of Procuring projects (Lemma, 2006). Poor initial
funding of the project by the contractor and lack of timely resources of materials, machineries
and workforces are also the major factors identified as causes of delays during the construction
phase in Ethiopian construction industry (Abdo, 2006).
The construction process involves multi-organizational activity. Conflict and disputes can
therefore exist at all levels in the contractual chain: between client and consultant, client and
contractor, client and sub-contractor, and so on. Among many causes of disagreements in the
construction project, the project delivery system selected is one of the significant elements
(Abera, 2005).
2.1.8 Legal Aspects
The Federal Government of Ethiopia has statutes requiring submission of competitive bids for
construction projects. This statute requires public organizations to award such contracts to the
“lowest responsive bidder.” The word “responsive” is inserted to require that a successful bid
must also be adequately responding to the requirements of the project as specified. While it is
not too difficult to determine whether a bid is responsive because responsiveness is evaluated
based on the documents submitted by contractors, it takes considerable amount of time and
effort to ascertain whether a bid is responsible. The bidder must also have the requisite
judgment, skill, ability, and integrity to perform the contract according to its terms (Irtishad,
1993).
For two reasons application of this requirement becomes difficult. First, there is generally a
narrow window of time available between a bid opening and the award of the bid. Second,
although the law allows public organizations to reject any or all the bids, the rejection cannot
be done arbitrarily or in bad faith. When it is the low bid which is rejected, particularly close
scrutiny of the reasons given for the rejection is warranted. For these reasons, the decision to
reject a low bid on the ground that the bidder was not responsible enough is dependent on the
discretion of the organization. In most cases some degree of subjectivity gets involved in the
process of determining whether a particular bidder is responsible. As a consequence, these
May 2017
kinds of rejections frequently give rise to resentment and may end up in court. To avoid these
problems, many public organizations take only responsiveness of the bid in consideration
before making award decisions. Some public organs use a stringent and specific set of
prequalification procedures.
2.1.9 Federal Procurement Laws
The Ethiopian Federal Government procurement and property administration proclamation no

649/2009 article 33 (1) states six methods of procurement for public goods and services, viz.
open bidding, request for proposal (RFP), two stage tendering, restricted tendering, request for
quotation and direct procurement.
The proclamation, however, limits public bodies to use open bidding as the preferred
procedure of procurement except as otherwise provided in the proclamation to use other
options (article 33(2)). Restricted tendering is allowed only when the required object of
procurement is available only with limited suppliers and the cost of the procurement does not
exceed the limit in the directive issued by the Ministry; or where a repeated advertisement of
the invitation to bid fails to attract bidders in respect of a procurement subject to the directive
to be issued by the Ministry (article 49). The total contract value of procurement made by
restricted bidding is limited by the federal public procurement directive to 2 million birr for
works (article 23.3).
Direct procurement is allowed when there is no competitions for technical reasons and if the
required service can be supplied or provided only by one candidate. Or when there is a need of
similar service or repetition of works from one supplier and when the total contract value is not
exceeding the limit stipulated in the directives (article 51). The maximum contract amount
allowed in the directive for direct bidding for works is similar to the restricted bidding (article
9).
The third type of procurement for public bodies is request for proposal (RFP). RFP is allowed
only when the public body seeks to obtain consultancy services or contracts for which the
component of consultancy services represents more than 50% of the amount of the contract
(article 53).
The other two types of procurements are request for quotation and two stage bidding. Request
for quotation is allowed when there are readily available goods or for procurement of works or
services for which there is an established market, so long as the estimated value of the contract
does not exceed an amount stated in the procurement directives issued by the Ministry (article
May 2017
55). Two stages bidding on the other hand is permitted when it is not feasible for the public
body to formulate detailed specifications for the goods or works such as, contract for the
purpose of research, experiment, study or development etc. (article 57). The maximum contract
amount provided for works in the directive to use request for quotation is 250 thousand birr
(article 24.2).
In general, alternative procurement procedures other than the open bidding cannot be
applicable for most public bodies’ construction contracts as most public bodies’ construction
contracts are more than the limits specified in the maximum limit provided in the directive. In
addition, the conditions set forth for the use of other alternatives are not usually fulfilled for
construction work contracts except in rare cases.
Out of the six methods of procurement open bidding and restricted tendering are the only
procurement methods that applicable by ERA.
As this research focuses on construction works contract for public bodies under the federal
government of Ethiopia, Late us compeer examination and evaluation by Ministry of Works
and Urban Development Amendment on March 2001, Public Procurement Agency (PPA)
January 2006 and Public Procurement and Property Administration Agency (FPPPAA) April
2011 of bids in the open tendering procedure.
2.1.9.1 Examination and Evaluation of Bids
The proclamation defines the successful bidder as follows: the bid that is found to be
responsive to the technical requirements and with the lowest evaluated price (article 43(8)).
The responsiveness is determined by the technical evaluation of bidders. In order to participate
in public procurement, candidates must qualify by meeting the following criteria and such
other criteria, as the public body considers appropriate under the circumstances: that they
possess the necessary manpower, equipment, financial and technical capabilities; that they
have legal capacity to enter into the contract; that they are not insolvent; that they are
registered in the suppliers list, that they are not suspended from participating in public
procurement in that period; that they have renewed trade license and tax clearance; and that
they have a bank account (article 28).
Any requirements required by the public body will be set forth in the bid documents or other
documents for solicitation of proposals, and deemed to apply equally to all candidates. In
addition, in the process of selecting the successful bidder, the public body should only consider
May 2017
substantially responsive bids for further evaluation and comparison in accordance with the
criteria set forth in the bidding documents (article 43(6)).
Procurement of Works for National Competitive Biddings (NCB) Public Procurement Agency
(PPA) January 2006
In addition to the basic requirements defined in the proclamation article 28(1) and in
accordance to ITB Sub-Clause 4.5, bidders are required to meet the minimum qualifying
criteria set forth in the qualification criteria in the bid document (section 3: evaluation and
qualification criteria).
Table 2.6 Qualification Criteria recommended by PPA 2006 users guide [43]
No. Qualification Criteria Minimum Requirements
1. Average annual volume of At least [Ideally the minimum value of the annual turnover
construction work over the past [For of construction work should be set at not less than 2.5 times
major contracts, it is normally 5 years, the estimated annual cash flow for the Contract. For low risk
for smaller contracts 3 years would be works, this minimum could be reduced to 2 times or less]
sufficient]
2. Experience as a prime contractor in the Works of a nature and complexity equivalent to the Works
construction of at least [number of over the last [number of years, normally in the range of five
similar contracts, which should be in to ten. For smaller contracts, low risk works or a newly
the range of one to three, depending on established local industry, the number of years could be
the size of contract, risk of contractor reduced to 3] years (to comply with this requirement, works
default and market conditions] cited should be at least 70 percent complete).
3. Proposal of the timely acquisition of [List of equipment, For smaller contracts, the list should be
equipment’s (own, lease, hire, etc.) of limited to specialized items that are critical to the execution
the following essential equipment: of the contract and that may be difficult for the successful
Bidder to obtain quickly]
4. Personnel with specific qualification [Qualifications and experience required for key personnel
and experience e.g. “a Contract Manager with five years’ experience in
works of an equivalent nature and volume, including no less
than three years as Manager”. Personnel requirements
should be limited to key site management and technical
personnel, who will be responsible for major components
e.g. site superintendents, contract manager etc.]
5. Liquid assets and/or credit facilities net Of no less than [amount]. [The successful Bidder must
of other contractual commitments and demonstrate that it has or has access to the financial means
exclusive of any advance payments sufficient to meet the construction cash flow requirements
which may be made under the Contract for the contract. The minimum liquid assets and credit
May 2017
should normally be set as the estimated payment flow over

approximately 3 months at the average (“straight lined”)
construction rate.]
Procurement of Works for National Competitive Biddings (NCB) Public Procurement Agency
(PPA) January 2006
In addition to the basic requirements, in accordance to ITB Clause 22, bidders are required to
meet the minimum qualifying criteria set forth in the qualification criteria in the bid document
(section 3: evaluation and qualification criteria).
Construction Procurement Practices and It’s Impacts on Ethiopian Road Construction May 2017
Table2.7 Qualification Criteria recommended by FPPPAA 2011 user’s guide [40]
CRITERIA
Bidder
FACTOR Documentation
Requirement Joint Venture, Consortium or Association
Required
Single Entity All Partners At Least One
Each Partner
Combined Partner
1. Legal Technical of the Bidder

Must meet Must meet Must meet Bid Submission
1.1 Nationality Nationality in accordance with ITB Clause 4.2. n/a
requirement requirement requirement Sheet
1.2 Conflict of Must meet Must meet Must meet Bid Submission
No conflict of interest as described in ITB Clause 6. n/a
Interest requirement requirement requirement Sheet
1.3 Registration in Having been registered in the Public Procurement

Must meet Must meet Must meet Bid Submission
the FPPA's and Property Administration Agency's Suppliers n/a
requirement requirement requirement Sheet
Suppliers List List in accordance with ITB Clause 4.7.
1.1 Not having been debarred by decision of the

1.4 Debarred by 1.2 Must
Public Procurement Agency from participating in Must meet Must meet Bid Submission
decision of the meet n/a
public procurements for breach of its obligation under requirement requirement Sheet
PPPA previous contracts in accordance with ITB Clause 4.3.
requirement
1.5 Valid trade

Having been submitted valid trade license or
license or business Bid Submission
business organization registration certificate issued Must meet Must meet Must meet
organization n/a Sheet with
by the country of establishment in accordance with requirement requirement requirement
registration attachments
ITB Clause 4.6.
certificate
31 | P a g e AAU, AAiT School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
CRITERIA
Bidder
FACTOR Documentation
Requirement Joint Venture, Consortium or Association
Required
Each Partner
Combined Partner
Having been submitted VAT registration certificate

1.6 VAT Bid Submission
issued by the tax authority (in case of contract value Must meet Must meet Must meet
registration n/a Sheet with
of Birr 100,000.00 and above) in accordance with requirement requirement requirement
certificate attachments
ITB Clause 4.6.
1.7 Valid tax Having been submitted valid tax clearance certificate Bid Submission
Must meet Must meet Must meet
clearance issued by the tax authority (Domestic Bidders Only) n/a Sheet
requirement requirement requirement
certificate in accordance with ITB Clause 4.6. with attachments
Bidder
1.8 Government Must meet Must meet Must meet Certification of
Compliance with conditions of ITB Clause 4.4 n/a
Owned Entity requirement requirement requirement Compliance with
attachments
2. Professional Qualification and capacity of the Bidder
Bidder
2.1 Number of Must meet Must meet
At least staff currently work for the bidder. n/a n/a Certification of
Staff requirement requirement
Compliance
Technical
Among the staff mentioned in sub-Clause 2.1 Bidder
2.2 Personnel for Must meet Must meet Proposal Form
must demonstrate that it will have the personnel for n/a n/a
the key position requirement requirement PER 1 With
the key position that meet the following requirement;
Attachments
No. Position Total Work Experience Experience in similar Works
FACTOR CRITERIA
Bidder
Joint Venture, Consortium or Association Documentation

Requirement
Required
Each Partner
Combined Partner
3. Technical Qualifications, Competence, and Experience of the Bidder

The Bidder has successfully completed at least Must meet Must meet Bidder Certification
3.1 General contracts with a budget of at least that of this contract requirement requirement of Compliance with
n/a n/a
experience in the past years attachments
The Bidder has successfully participated as contractor

or subcontractor, in at least Must meet Must meet Bidder
3.2 Specific contracts within the last years, each with a value of at Must meet requirement requirement Certification of
n/a
experience least, that have been successfully and requirement for all for one Compliance with
substantially completed and that are similar to the characteristics characteristic attachments
proposed Works.
Non-performance of a contract did not occur within
the last years prior to the deadline for Bid
submission, based on all information on fully settled Must meet
requirement Must meet
3.3. History of non- disputes or litigation. A fully settled dispute or by itself or requirement by Bidder
performing litigation is one that has been resolved in n/a itself or as n/a Certification
contracts as partner to partner to past of Compliance
accordance with the Dispute Resolution Mechanism past or
existing JV or existing JV
under the respective contract, and where all appeal
instances available to the bidder have been
exhausted.
Must meet Must meet
All pending litigation shall in total not represent requirement by requirement by
3.4. Pending Bidder
more than percent of the Bidder's net worth and itself or as n/a itself or as n/a Certification
litigation
shall be treated as resolved against the Bidder partner to past partner to past of Compliance
or existing .JV or existing JV
CRITERIA
FACTOR Bidder
Requirement Documentation
Joint Venture, Consortium or Association Required
Single Entity
All Partners Each Partner At Least One
3.5. Equipment for The Bidder must demonstrate that it will have
the implementation available for the implementation of the contract the Must meet Must meet Technical Proposal
n/a n/a
of the contract requirement requirement with attachments
following equipment listed hereafter:
No. Equipment Type and Characteristics Minimum Number Requirement
4. Financial Standing of the Bidder

Submission of audited balance sheets and other
Bidder
4.1 Historical financial statements as required in the BDS Clause
Must meet Must meet Certification
Financial 17, for the last years to demonstrate the current n/a n/a
requirement requirement of Compliance
Performance soundness of the Bidder's financial position and its
with attachments
prospective long term profitability.
The average annual turnover calculated as total Bidder
certified payments received for contracts in Must meet % Must meet % Certification
4.2 Average Must meet Must meet
progress or completed within the last years must of the of the of Compliance
Annual Turnover requirement requirement
exceed times the amount of the financial proposal requirement requirement with
of the Bid. attachments
The Bidder must demonstrate access to, or Bidder
availability of, financial resources such as Must meet % Must meet % Certification
4.3 Financial Must meet Must meet
liquid assets, unencumbered realassets, lines of of the of the of Compliance
Resources requirement requirement
credit, and other financial means, other than any requirement requirement with
contractual advance attachments
May 2017
These are the major qualification criteria stipulated in the contract document. In addition, a
consistent history of litigation or arbitration awards against the Applicant or any partner of a
Joint Venture may result in disqualification. The detail however is determined by the nature
of the construction project.
According to the proclamation article 43(3), the public body regards a bid as responsive only
if it conforms to salient requirements set forth in the bidding document. And any public body
should not award a contract when the bid is not responsive (article 43 (5-c)). It is also clearly
stated in the PPA that The Employer will evaluate and compare only the bids determined to
be substantially responsive in accordance with Clause 26 (clause 28.1).A substantially
responsive Bid is one, which conforms to all the terms, conditions, and specifications of the
bidding documents, without material deviation or reservation. A material deviation or
reservation is one
(a) which affects in any substantial way the scope, quality, or performance of the Works; (b)
which limits in any substantial way, inconsistent with the bidding documents, the Employer’s
rights or the Bidder’s obligations under the Contract; or (c) whose rectification would affect
unfairly the competitive position of other bidders presenting substantially responsive bids
(clause 26.2).
Prior to the detailed evaluation of bids, the Employer will determine whether each Bid (a)
meets the eligibility criteria defined in ITB Clause 3; (b) has been properly signed; (c) is
accompanied by the required securities; and (d) is substantially responsive to the
requirements of the bidding documents (clause 26.1).If a Bid is not substantially responsive,
it will be rejected by the Employer, and may not subsequently be made responsive by
correction or withdrawal of the nonconforming deviation or reservation (clause 26.3).
The employer will award the Contract to the Bidder whose Bid has been determined to be
substantially responsive to the bidding documents and who has offered the lowest evaluated
Bid price (clause 30.1). However, the employer reserves the right to accept or reject any Bid,
and to cancel the bidding process and reject all bids, at any time prior to the award of
Contract, without thereby incurring any liability to the affected Bidder or bidders or any
obligation to inform the affected Bidder or bidders of the grounds for the Employer’s action
(clause 31.1).
May 2017
2.1.9.2 Tender Evaluation and Analysis Amendment by Ministry of Works and Urban
Development- March 2001
The Ministry of Works and Urban Development (MoWUD) was the authorized public body
in the procurement of all works under the Federal Government of Ethiopia until 2006.
However, after the establishment of Public Procurement Agency (PPA) in 2006, the
procurement of all Federal Government works and services have been guided by the rules and
regulations prepared by this agency.
The tender evaluation and analysis approach were modified by the Ministry of Works and
Urban Development in March 2001. The basis for the modification were, according to the
letter from the Ministry on the 14th day of March 1993 EC, Ref. no H1-T1 240/21, to improve
the procurement of public construction works by avoiding abnormally low bids. The
Ministry, accompanied to the letter referred above, has tried to show the modification through
the following example. For further investigation sample calculation is appended on Appendix
1.
2.1.9.3 Tender Evaluation and Analysis by Public Procurement Agency (PPA) January 2006
The evaluation and qualification on PPA 2006 is depends on section 1, Instruction to bidder
and section 2, Bid Data sheet , contain all the factors, methods and criteria that the Employer
shall use to evaluate and determine whether a bidder has the required qualification. No other
factor, method or criteria shall be used for technical evaluation.
It is a two stage bid evaluation system the first one is technical evaluation and the second one
is the financial offer. The first one is the technical evaluation, Bidders who score above 70%
will be participate for farther financial evaluation. The successful bidder will be the least
bidder whose offer is less than the other bidder.
2.1.9.4 Tender Evaluation and Analysis by Property Administration Agency (FPPPAA) April
2011
According to the methodology defined in the Public Procurement Proclamation and Directive
the Public Body shall select the successful Bid by applying the following method:
A. Lowest Bid Evaluation
The bids shall be examined to confirm that all documentary evidence establishing the
Bidders' qualifications requested. After confirming the bids comprise all mandatory
documentary evidence establishing the Bidder's qualification the Public Body will rule on the
May 2017
legal, technical, professional, and financial admissibility of each bid, classifying it as

compliant or non-compliant with qualification requirements set forth in the Bidding
Document. The Public Body will then analyze the bids' technical conformity in relation to the
technical specifications, classifying them technically compliant or non-compliant. The
Evaluation will continue until determined the substantial responsive with rectification of
nonconformities and omissions in bids, if any.
The Public Body shall examine all Bids to ascertain whether there are any arithmetic errors in
computation and summation. The Public Body shall notify Bidders on adjusted calculation
errors and request bidders to confirm that they accept the correction of the calculation error
within the time limit of three days from the receiving of the notification.
The final stage is awarding of the contract the Bidder who’s Bid has been determined to be
substantially responsive to the Bidding Documents and with the lowest price.
1. Evaluation of the Technical Proposal

All mandatory legal, professional, technical, and financial requirements have been met all
technically compliant Bids shall be evaluated and scored using the two-stage bid evaluation
and scoring method. In accordance with ITB Clause 38.3(f), the Public Body's evaluation of
the Bid will take into account, in addition to the bid price, the following technical evaluation
criteria in order of their importance and their proportional weight in the total system of
evaluation.
Individual weighted scores for all technical evaluation criteria shall be weighted according to
the set proportional weighting factors. The weighted result shall be calculated by multiplying
the score by the proportional weighting point of the individual criterion. Bidders getting score
less than [insert percent] percent in the technical evaluation shall be rejected.
2. Evaluation and Comparison of Bid Price

In the financial evaluation, the highest point shall be given to the lowest priced Bid, and
conversely, the lowest point shall be given to the highest priced Bid; among technically
qualified Bids. The points given to other Bidders shall be determined depending on their
price offers.
From the total merit points to be given for proposals submitted by Bidders in a bid for
procurement of Works, the share of Technical Proposal shall be [insert percent] percent and
the remaining [insert percent] percent shall be the share of the Bid Price.
May 2017
The formula for determining the financial score is the following:
 LFP 
 100
FS =  CFP  …………………………..…………………………………Eq 2.1
Where: FS = The Bid Price Score;

LFP = The lowest Bid Price;
CFP = The Bid Price under consideration
The Public Body shall then add the technical score to the Bid Price score to determine the
aggregated (total) Bid score and final ranking of Bids by applying the following method:
For each Technical Proposal its technical evaluation score shall be normalized according to
the highest evaluated technical score that will get 100 points according to which other scores
of technical criteria shall be proportionally ranked. Normalization is the transformation that is
applied equally to every element in the group of data so that the group has a specific
statistical characteristic.
The Public Body shall apply the following formula for the normalization of values of the
technical evaluation results:
 CTP 
TSN =  100 ………………………………………...……….………………….Eq 2.2
 HTP 
Where: TSN = Normalized Bid Technical Proposal Score;
CTP = The technical evaluation score for the Bid under consideration
HTP = The highest evaluated Technical Proposal score
The Public Body shall award the contract to the Bid that has the highest point in the total sum
of results of the technical and Bid Price evaluation. Where two Bidders get equal merit points
in the evaluation, preference shall be given to local Bidders. The Public Body may require
Bidders scoring equal merit points in the evaluation to submit further Proposals on certain
aspects of the Bidding Document with a view to identifying the successful Bidder. Where by
reason of the Bidders scoring equal merit points not submitting final proposals they are
invited to submit, or by reason of the evaluation result of the final proposals submitted by the
Bidders being still equal the successful Bidder cannot be singled out, the successful Bidder
shall be determined by casting lot in the presence, as far as possible, of the Bidders
concerned.
May 2017
2.1.10 Procurement related factor that influence project performance
Different procurement related factors that can affect project performance. Pre-construction
time, control of project design and cost and client’s control of construction projects are
procurement related factors whose influences were found on procurement methods of
Traditional, Design and Build and Management Contracting in construction industry [14].
Concentration on allocation of responsibilities, activities sequencing, process and procedure

and organizational approach as procurement related factors are affect project performance.
Important procurement related factors considered at the design stage as bid invitation, bid
evaluation, sub contracting selection, compensation factors and performance evaluation
which were termed procurement procedures were found to have effects on project
performance [15].
Researchers and organizations have focused on the three project performance criteria of cost,
time and quality. Recently, many studies have, however, included also other performance
aspects, such as health and safety, environmental performance, customer satisfaction, and
innovation [16.] Next, the six areas in which construction projects are evaluated will to brief.
1. Economic performance ( Construction Budget)
This has traditionally been seen as one of the most important areas – if the economy of the
project is off, the project can seldom be seen as a success. Overall project cost, i.e. the overall
cost that a project incurs from inception to completion, is of major interest as it shows the
resource usage in economic terms. Another important aspect regards cost predictability, that
is, whether the final overall cost is in line with the initial cost estimate [17]. Cost overruns
can be a source for problems for an otherwise successful project as contractors are frequently
criticized for the common occurrence of cost overruns (sometimes labeled cost growth) in
construction projects [18].
2. Time performance
Project duration is simply the number of days/weeks/months from start to completion of the
project. Since time can be a critical issue for many clients, project duration is often of prime
interest. However, schedule overruns may be an even more important issue [16].
Completing projects in a predictable manner on time (within schedule) is an important

indicator of project success and the construction industry is frequently evaluated for project
May 2017
delays. Schedule overruns (sometimes labeled time growth) are often very negative since
they hinder the client to start using the end product as planned.
3. Quality
Satisfactory time and cost performance is of little value if the project delivers low-grade
quality. The concept of quality is closely related to customer satisfaction, which has gradually
been elevated in importance in the construction industry [16]. Customer satisfaction is
commonly described as a comparison between the customer’s pre-construction expectations
and their post-construction perceptions. Hence, it involves the customer’s final feelings about
whether the outcome provided a satisfying or dissatisfying experience [19]. Since
construction industry products are highly modified and co-created during the construction
process, the concept of quality regards both the final product and the process during which is
produced.
The word quality has been used for several distinct purposes. These can be grouped into the
following three categories:
1. Comparative sense: as a degree of excellence, whereby, products may be ranked on a

relative basis, sometimes referred to as grade [38].
2. Quantitative sense: as in manufacturing, product release and for technical evaluations,
sometimes referred to as quality level [38].
3. Fit-for-purpose sense: relates the evaluation of a product or service to its ability to
satisfy a given need [20].
It is evident from the above that the prime direction of quality systems is to satisfy the
internal needs of the organization and its quality policies. Therefore, while these policies
need to be cost-effective, they should comply with the good practice that is acceptable within
construction industry [20].
4. Environmental performance
Environmental management in construction has become a critical issue in recent decades

since the actors start to acknowledge that the construction industry is one of the major
contributors to environmental problems. Environmental impact is affected by both the
activities performed during the construction process and the material and technical solutions
incorporated in the end product. Furthermore, the environmental performance depends not
only of choices made but also how these choices are executed. Hence, two main aspects can
May 2017
be identified within this area. First, it is in what degree the construction actors make
environmentally friendly choices of material and processes, i.e. in the planning and
procurement choose those material and those methods that will leave the least environmental
“footprint” over the construction’s life span (not only the construction period). Second, it is
about how the material and processes are used during construction, i.e. environmentally
friendly use of material and processes. With little concern over environmental impacts,
excess loss of material and improper waste treatment are always common in the construction
industry [16].
5. Work environment
Having a safe and healthy work environment for those involved in the construction process is
another important indicator for a successful project performance. Construction has a poor
record in this area and is still today generally a dangerous work place. However, this does not
mean that a project can allow the work environment to continue to cause project participants
to become ill or even die. Rather, it is the opposite. A construction project must not harm
those involved, if it can be helped. A failure to succeed with this may cause long-term
problems as it reduces the legitimacy of those responsible. A risk-free work environment is
today seen as necessary for achieving other goals linked to cost, time and quality [21]. The
most important sub-facets of work environment are health and safety. Health is concerning
the physical and mental well-being of those who are involved in a construction project.
Physical health issues (such as back injuries are more likely to concern those working at the
construction site, while mental health issues (such as stress) are more likely to be common
among off-site workers. Safety is about avoiding accidents of any kind that can cause injuries
or even fatalities for those involved in the construction process. A safe project has few
accidents in relation to the total man-hours worked on the specific project [18].
6. Innovation
Traditionally, the construction sector has been seen as a low technology industry, with little
innovation compared to other industries. Actually, many of the problems outlined in the
introduction can be seen as symptoms of a lack of new thinking and innovative action.
During recent years, innovation in construction has received increasing interest in an explicit
manner, both among practitioners and academics. Innovation thus seems to be a success
criterion to be reckoned with. There are two aspects of innovation. First, product innovation
implies innovation in the final construction, for instance in terms of innovative architecture or
May 2017
innovative features in other aspects of the building. Second, process innovation, is about
novel ways to work with the actual construction phase. It can comprise new ways to organize
the work, new construction methods, etc...
2.1.11 Applicable Laws, Rules, Regulations and Guidelines
The following Rules, Regulations and Guidelines are useful for Procurement and Contract
Management [26]:
• INCOTERMS, UNICETRAL and Other Internationally acknowledged Construction

Related Laws and Regulations
• Construction related Codes of Practices such as EBCS 1 — 12 by MWUD
2.2 Procurement, Contract and Contract Management
2.2.1 Introduction
Construction Industry involves procurement and contract management systems in order to

ensure fair competition and distributions of obligations and rights among stakeholders.
Competition helps:
• the Project Owners' to acquire the five rights (Counterpart, Cost, Time, Quality and
Quantity) s/he is entitled to, for detail information please refer sub section 2.1.2
• the Project Financiers' and Regulators' to value market principles and effective
utilization of finance such that lowest qualified bids takes the project , and
• the Project Providers' to get impartial and neutral opportunity for business.
Obligations and Rights help to allocate appropriate risks among contractual parties and their
remedial rights. That is, their entitlements and provisions are clearly stated and agreed upon.
Project Owners shall consider its own particular institutional and technical SWOT (Strength
Weakness Opportunity and Threats (including access to financing) before selecting which
procurement and contract forms to adopt for its projects. These include the design source,
allocation of coordination responsibilities and the pricing methods.
Each type of contracting affects, in its own way, the allocation of responsibility & the
demands on the Employer for coordination of the project. Through properly allocating these
responsibilities for the project to reflect the results and recommendations SWOT's, Project
Owners' can rationalize the contract price against its exposure to project risks. Project
May 2017
Owners' are at liberty to use either its own in-house capacity or to allocate them to one or
more other parties (Private and / or Public).
Procurement and Contract management has a strong linkage and relationship with
Construction Process and Stakeholders Management. The delivery system chosen, the
procurement method adopted and the contract types decided upon determine the construction
process involved and the relationships and roles of stakeholders along the process.
2.2.2 Procurement & Contract Management Process
Procurement and Contract Management involves three major processes: Contract Planning,
Procurement Management and Contract Management;
Contract Planning: Construction projects are components of a certain business or

development demands. That is, they are formulated if and only if such businesses or
development demands acknowledge their contribution and it is a must to involve them. This
requirement is dealt during the basic / strategic planning phase of the overall business. This
phase often pass through feasibility and financing stages of Programs or Protects. Contract is
a customary tool used to implement formulated programs or projects. As a result, contract
planning becomes part of this basic I strategic phase. Contract planning includes decisions on
proposed Delivery Systems, Procurement Methods and Contract Types to be followed and
used together with its provisions for alterations. This is because such decisions are related to
regulatory requirements such as:
• Ethical (Neutrality, Formality, and Impartiality);

• Economical: (Proof of Competition, Least Qualified and Evaluated Bidder);
• Accountable: (Obligations and Rights);
• HSE (Health, Safety and Environment); and
• Transparent: (Accessibility and Notice of Advertisement).
Procurement and Contract Management processes shall be based upon the approved contract
planning provisions; that is, the contract delivery system, the procurement method and
contract types decided upon. The approved contract provisions can only be changed
following the change process stated in the contract planning document and if only if:
• the Environment and Context considered are not correctly analyzed or changed,
• their application can remarkably affect the objective of the project, and
May 2017
• procurement management process justifies change of the Contract Types.
Once the validity of the contract provisions are checked once again and taken for granted or
other provisions are devised; Procurement Management followed by Contract Management
can be initiated, planned, implemented, monitored and closed.
Procurement Management: is a process of selecting individuals or organizations to carry

out the intended services and / or works. Procurement Management is carried out based on
the provisions made during the contract planning phase of the Procurement and Contract
Process. It involve the preparation of procurement documents, their invitation and submission
of tender proposal and opining and evaluation of tenders, on the base of results from tender
evaluations, the procurement team will recommended the lowest responsive bidder for
contract management phase The following issues are necessary for a successful Procurement
Management phase:
• knowing and ensuring the implementation of procurement related National and

International laws, rules and regulations,
• adherence to the provisions ma e during the contract planning phase including their
change processes, that is; wrt. Delivery Stems, Procurement Methods and Contract
Types,
• establishment of a flexible procurement team, and
• adhering to the principles of Proof of competition, Impartiality, Neutrality, Accessibility
and Formality.
Contract Management: is a process of reaching contractual agreement for implementation,

its administration and finally concluding the contract. Similar to the procurement
management process, it shall be based on the provisions decided during the contract planning
phase. It involves negotiation based on tender evaluation recommendations and signing of
contractual agreement followed by its administration for contractual implementation,
progress tracking, and changes, claim and disputes administrations.
The following issues are necessary for a successful Contract Management phase:
• knowing and ensuring the implementation of contract related National and International
laws, rules and regulations,
May 2017
• adherence to the provisions made during the contract planning phase including their
change processes, that is; wrt Delivery Systems, Procurement Methods and Contract
Types,
• identifying, recognizing and involving all potential or key stakeholders to form a
contract team,
• understanding, mapping and monitoring all contract conditions agreed upon, and
• ability to administer changes, claims and disputes.
2.3 Project Delivery system
2.3.1 Definition of project delivery system
Project delivery system is a system used by an agency or owner for organizing and financing
design, construction, operations, and maintenance services for a structure or facility by
entering into legal agreements with one or more entities or parties.
For a construction project to get off on the right foot, it is important for the owner to select
the right project delivery system. There are a wide range of construction project delivery
systems. These include the design-bid-build system, the design-build system, the
construction management model, and other methods such as program manager and
bridging. Each of these systems has its advantages and disadvantages which the owner must
consider before the project begins.
2.3.2 Types of construction project delivery system
Clients usually take the initiative to have construction design and build; they are the actor
who pays for the construction. The client’s policies, resources, organizational structure, and
preferred contractual arrangements will all need to be taken into account in choosing the right
procurement method for their project [7].
Successful procurement relies on all parties involved in the project complying with their
respective obligations, and identifying and dealing with risk appropriately from the outset.
There are four main Procurement (delivery) systems; they are presented as follows;
1. Traditional / General method
The design-bid-build project delivery system is the traditional method that has been used for
many years in both public and private construction projects. It is the project delivery system
May 2017
that is most widely used today and which is still required by some states. The design-bid-
build process is a well understood delivery system in which risk is minimized through the
owner's firm control of both the design and construction phases. The design-bid-build
process offers checks and balances between the constructions participants
Under the design-bid-build project delivery system, the owner contracts separately for the
design and construction of the project. The owner contracts directly with a design
professional for the preparation of plans and specifications and assistance in the bidding
stage. The design professional may also provide oversight of the project during the
construction phase. The owner enters a separate contract with the general contractor for the
construction of the project. Under the design-bid-build project delivery system, the owner
retains responsibility for overall project management. All contracts are executed directly
with the owner. The design of the project is complete before the contractor is selected and
the contractor is generally selected through a competitive bid process with the assistance of
the design professionals.
Some of the advantages of the design-bid-build process are that it provides checks and
balances between the design and construction phase of the project, it is widely used and
familiar to construction participants, and it is perceived to be a fair process in which the
lowest most responsible contractor is selected for the construction of the project.
Additionally, the owner is able to provide significant input into the process during the design
phase. When a competent contractor commits to a lump sum price, the owner can normally
rely upon the accuracy of the price and the owner is able to compare bids to obtain the best
price for construction.
Some of the disadvantages of the design-bid-build process are that it is a lengthy process, it
places the owner in the middle of disputes between the contractor and design professionals,
the cost of construction is unknown until bids are finalized, and it intensifies the potential for
change orders. The process requires a significant economic commitment by the owner at the
front end of the project by requiring the owner to complete the design before bidding the
construction of the project. Because the plans and specifications are completed prior to
bidding the construction phase, there is a potential that bids for construction may exceed the
owner's budget and hence require the owner to either redesign or abandon the project.
May 2017
The contractor is usually chosen after competitive tendering on documents giving complete
information. However, the contractor can be appointed earlier, either through negotiation or
on the basis of partial or notional information [8].
The client only has a contact with the designer and the contractor only has a relationship with
the design team. This model is only useful for simple and straightforward works.
Client
Financial relation and Instruction Products

Design
Team
Supervision and Instruction Production
Contractor
Figure 2.3 Traditional / General Method (a) [7]
Many constructions nowadays require multidisciplinary skills during the design process. The
design team, often an architect needs support from specialists, like constructors and
specialists in installation techniques. The design team may therefore have to procure services
of advisors and subcontractors. It is often necessary to involve subcontractors in the design
process, because they need to tailor their designs to the main design of the construction.
Client
Sub Adviser
Contract
Design
Team
Sub Adviser
Contract
Contractor
Figure 2.4 Traditional / General Method (b) [7]
The difficulty with the above-presented model is that design team needs to coordinate the
inputs of the different advisors. A lack in coordination often results in mismatching design
inputs and construction inputs.
In most situations, the contractor has to fill in or adjust the design provided by the design
team. For example the contractor ensures that the tolerance of materials matches.
May 2017
Furthermore, the contractor plans the delivery of the inputs. The procurement time of
specialist equipment may take more than the entire construction process. It may be necessary
to procure works from subcontractors well before the start of the construction.
The contractors also can advise the design team on practical implications of their designs. It
may therefore be possible that the contractor is already engaged during or before the design
phase [7].
Client
Sub Adviser
Contract
Design
Team
Sub Adviser
Contract
Contractor
Figure 2.5 Traditional / General Method (c) [7]
2. Design and Build
Under design and built arrangement, the contractor takes on the complete responsibility for
the design and construction (see figure 2.5). It places more responsibility and liability on the
contractors than any other form of procurement. Unlike with general contracting the lead
designer does not certify the works of the contractor.
A special form of design and build arrangement are the so called turnkey contracts. The client
procures the construction like it is buying standard (mass produced) product. It’s difficult for
the client to influence or control the quality of works [7].
Client
Sub Adviser
Contract Contractor
Sub Adviser
Contract
Design team
May 2017
Figure 2.6 Design and build [7]
The above-presented models (Figure 2.6) are single-point models. The client has a contract
with one organization. This organization insures the realization of the construction. The client
delegates a large part of control to this organization.
3. Construction Management Method
The construction management project delivery system is a process by which a "construction

manager" is added to the construction team to oversee some or all of the project. The
construction manager can be involved in overseeing scheduling, cost control, construction,
bidding, or the entire project. In many ways, the construction management process is not, by
itself, a separate construction delivery system but is a resource the owner can use to assist in
the construction project. The added cost of a construction manager must be weighed against
the benefits this consultant brings to the project. Often, the architect can fulfill the role
provided by a construction manager. However, depending upon the degree of sophistication
of the owner's in-house construction staff, and depending upon the complexity of the project,
a construction manager can provide an essential element to the construction project.
A construction manager is most useful on a large, complex project which requires a good deal
of oversight and coordination. A construction manager is also helpful to an owner who does
not have a sophisticated in-house construction team. A construction manager can help the
owner control costs and avoid delays on complex projects.
The owner must weigh the relative advantages and disadvantages of each construction
delivery system before beginning the project. Factors that the owner should consider are the
complexity of the project, the relative importance of cost or schedule and the in-house
expertise the owner has to manage the project. The model on Figure 2.7 is illustrates
Construction Management delivery system.
Client
Sub Adviser
Contract
Coordinator
Contractor Adviser
Design
Team
May 2017
Figure 2.7 Management method [7]
The general Construction Management variations are Construction Management-at-Fee (CM

at-Fee) and Construction Management-at-Risk (CM-at-Risk), and are discussed below.
In CM-at-fee method, the construction manager is responsible for project and site
management, but is not involved in actual construction work. The construction manager
monitors cost, time, quality and safety, but does not take responsibility for them. The
construction manager is paid a fixed or time based for services provided [37].
In CM-at-risk, the construction manager, apart from providing constructability inputs at the
design stage, is also responsible for construction means and methods and delivery of the
completed work, including quality and performance of the asset [37]. All procurement in the
project is done by the construction manager, and the contracts are between the construction
manager and the subcontractors. But, still, the client retains the final decision in project
delivery.
4. Client-led (Direct manager) Method
Sometime client want to be able to control the design team. Those clients often have series of
contracts with their partners. The client coordinates the construction process through
interlocking agreement by specifying the role of each participant. The simple schematic
presentation of client-led design and built is shown on Figure 2.8 after last paragraph.
This multi-point model has also advantage with regard to contract formulation. It’s easier to
formulate contracts for specific production. This method also allows clients to break the
construction process in orderly and manageable portions. Each portion ends with a concrete
production service, detailed design, tender documents, the construction and quality control.
Often clients may choose for breaking down their contractual obligations. They may first
appoint a design team. The design team with assistance of specialist firms, including
subcontractors may develop an integrated design meeting the specifications of the client.
After the client accepted the design and finds the design feasible, it signs the contract with a
contractor who builds the design. The design team is still under contract or contracted again
to monitor the progress and quality of the work [8].
May 2017
Design team
Sub Adviser
Contract
Client
Sub Adviser
Contract
Contractor
Figure 2.8 Typical structure of direct manager method [7]
5. Design-Build-Operate-Transfer (BOT) Method
In this project delivery method, a private company is responsible for the designs,
construction, operation, maintenance, and financing of the project for a specified concession
period [36]. The contractor assumes the risks of financing until the end of the concession
period.
During this concession period, the company collects revenues from operating the project to
recover its investment and to earn a profit. At the end of the concession period, ownership of
the project is transferred to the client/owner.
The advantage and disadvantage of the traditional and innovative delivery methods are
tabulated on table below 2.8.
May 2017
Table 2.8 Delivery methods Advantage and disadvantage
Delivery Method Advantage Disadvantage

 Long history of acceptance  Self-serving adversarial relations
 Owner flexibility  Usually cost overruns
 Open competition  Lack of innovation
 Distinct roles  Low bid - incentive for change
 Ensures work for contractors of all size orders
DBB  Low tender cost  Owner responsibility for errors and
 Allows the lowest contract price omissions
 Client control over project delivery  Linear process (takes too much time)
method  Design suffers from lack of input
 Pre-qualification encourages from contractors
better performance  Does not encourage technological
 Provides complete documentation improvement or integration of systems
allowing bill of quantity before construction  Lack of cost certainty
 Industry capability available  Multiple change orders
 Does not promote privatization
 Best-value selection  Limited experiences with DB
 Better build ability through  Less work possibility for small and
contractor contribution medium sized contractors
 Risk transfer  Limited competition in large projects
DB
 Innovation encouraged  Client experience may be lost or
 Develops industry via diminished
cooperation  Reduced flexibility
 Better relationships  High tendering cost due to
 Encourages integration of designing requirements
systems  Lack of aesthetic
 Shorten delivery process consideration
 Few change orders  Inadequate contractor
 Lowered administrative burden quality control and assurance
to owner
May 2017
 Managing and administering all phases  No contractual relationships with

of a project. trade contractors
 Treats Planning, Construction and  No contractual responsibility for
Design, as an Integral Task. outcomes of a project
 Cost and Schedule Control  Client retains the risks
CM-at- Free
 Constructability input at design stage  Additional cost for the Construction
Manager
 Good for clients with insufficient staff  Lack of capable construction

 Owner flexibility managers
 Responsible for cost and time overruns  Demanding work organization
 Holds and manages trade contractors  Lack of cost certainty for each work
 Constructability design review packages
 Legal position as a General Contractor  Lack of contractors who can provide
both construction management and
 Works closely as a teaming effort and
CM-at-Rick construction services
encouraging trust and partnering
 Fragmentation, as compared to DB&
 Phased construction (fast tracking)
BOT
possible
 No exactly defined work packages
(bill quantities)
 Completes projects when internal funding  Cost more in the long run
is not possible  Longer tendering process
 Integrates the process of design,  Costly tendering
construction, operation, and maintenance.  Future political change may disrupt
BOT
 Projects completed faster prior agreement
 Ownership transferred to the contractor  No capable local contractors
 Contractors not interested in all
works
2.3.3 Project delivery system selection criteria
Different authors have postulated different procurement selection factors that can assist
clients to choose the best procurement method. Client characteristics, project requirements
and external environment are the three factors that must considered during procurement
selection. The use of the three factors together expansively considers client requirements to
include cost related factors, time related factors and quality related factors. Several variables
of client requirements were measured under cost, time and quality related factors. Project
characteristics factors also include project type, size, cost, flexibility, complexity, site risk
factors and degree of innovative technology. External environment factors considered are
May 2017
market competitiveness, availability of materials, natural disasters, industrial actions amongst

other variables. [Studies of Masterman and Gameson (1994)]
Client characteristics, project requirements and external factors are considered with general
needs for investigating the procurement related factors that affect project performance. Cost
related factors of capital cost of the project, maintenance cost, pre-qualification cost, financial
risk amongst other variables can influence a client to select a particular procurement method
that meets all these client requirements. Time related factors of planning and design time,
construction time, early start of project, speed of construction and time overrun can help
client to select an appropriate procurement method. Quality related factors of design
reliability, aesthetic appearance of the building, workmanship amongst other variables are
considered in this study. General needs factors of involvement of parties, their transparency,
accountability, safety requirements and flexibility of the procurement process to client
charges are also considered in the study. Project characteristics factors are project type, size,
cost, degree of flexibility, complexity, time constraints, payment method, finding methods
and innovative technology. Moreover, external environment factors considered also include
nature of the market, government policies, government as major client, regulating feasibility,
technology feasibility amongst other variables. All these above factors can influence the
selection of an appropriate procurement method that can also affect project performance
(Project Budget, Time and Equality).
2.4 Project Performances
2.4.1 Performance: Concept Definition
Projects (Construction as well) can be traced back to the times of oldest civilization, and so
does their Performance and its Determination. Old pieces of historical documents showed
that the government officials and craftsmen used to carry out construction projects. These
include constructing residential houses, palaces, fortresses, roads, monumental
constructions and river improvements.
These projects were also assessed for performances in the context of their historical and
developmental stages. However, its concepts in the academia became relevant and have its
roots during the industrial revolution. It seems, performance is a simple and straightforward
notion for everyone, but this expectation is understood as a flaw and it differs as it is applied
to different contexts. Generally, when we speak of performance, there is a consensus among
May 2017
researchers that it represented the accomplishment of either Peoples or Materials /

Equipment’s / Plants or Methods / Techniques or Organizations or Products or their
combinations. But, their differences lie on the issue of determining whether these
accomplishments are poor or good performances. They often termed these accomplishments
as failures or successes in many literatures.
Performance as a concept remained complex, multi-dimensional, and hazy. Besides, there

are several terms used in connection with performance, largely based on their uses in
different contexts and in a variety of ways. These terms were collected from different
sources of the Glossary of Project Management for a feeling of its complexity.
Table 2.9 Project Management in Connection to Performance and Its Related Concepts
Basic Concepts Indicators Others

 Performance  Goal Performance  Performance Levels
 Performance Management  Scope Performance  Performance Period
 Performance  Cost Performance  Performance
Assessment/Review  Schedule Perspectives?
 Performance Inspection Performance  Success / Failure
 Performance  Quality Factors
Indicators/Criteria Performance  Performance
 Performance Measurement  Specification Evaluation Types
 Performance Reporting Performance  Uncertainty and
 Performance Control  Substantial changes
Performance Performance  Performance
 Evaluation Performance  Performance Objectives
Audit v Tolerance
 Performance Targeting v Performance Index
Sources: - IPMA, APM, AIPM, PM], OECD, and International Dictionary
of Management NB: - The list is not claimed completive.
Generally, there is a belief that the term performance was originally associated with artistic
play or exhibition. After a while, the use of the term has grown considerably and during the
industrial era it was highly associated with the term productivity. But, Performance is a
word that everybody is using when dealing with action and function related issues.
May 2017
Furthermore, Performances largely depend on their resolutions over which they can be
referred in terms of their Levels or Time frames or Purposes considered. These include
hierarchy with regard to:
 Objectives at the different Management levels or Geographical orientations;
 Time horizon in which performances were sought (the Past, the Present and the Future)
 The benefit or utility gained via Accountability / Control versus Learning
 Motivated approaches.
 Consequently, this study believed that performance is more vague and illusive than the
concept of a project itself. Following this, a single theoretical and practical definition
cannot be included in this dissertation.
2.4.2 The Two Contending Performance Demands: Successes or Failures
Analytical and Organizational factors on the one hand, and External (Contextual) and Internal
(Project specific) factors on the other hand contributed to the determination of successes and
failures of projects. They have also indicated that the major problem associated with such
determination is how to interpret the level of performance as good or poor.
Traditionally, project managers see project success or failure as a function of the triple
constraints: time, cost and quality to specifications (Figure 2.9). This however, changed its
meanings overtime to reveal the problem of traditional thinking that placed time, cost and plans
predictions as accurate and quality limited to satisfying specification requirements only.
Figure 2.9 showed that quality as a performance criterion is required to satisfy the stated
specification. This in construction projects are well taken care of by direct supervision, tests and
maintenance period after completion. That is, there is an inherent assumption that progress in
terms of time and cost will be reported if and only if the quality criterion is fulfilled. This
approach have assumed that needs or requirements can be well specified at the first place.
Besides this should ensure that the result is in accordance with specifications, but it does not tell
us anything about the quality of the specifications.
Planned versus Actual
Cost Time
Quality
As per specification
May 2017
Figure 2.9 The traditional triple constraints
The drawback of this tradition is related to the amount of information available to predictors, the
changes in scope and requirements of the project overtime, the attitude built up in the system
whether project management was considered as planning divorced from implementation and at
the same time whether too-control motivated or not, etc. However, information was believed to
be less reliable at the beginning of a project, and at the same time its influence in providing good
predictions and subsequent good performance is considerably high (figure 2.9).
Figure 2.9 showed the variations of information availability and its extent of influence along the
three project management phases: Project Definition, Project Implementation and Project
Completion Phases. These two figures (figures 2.9 and 2.10) implied that, the integration among
the triple constraints was weak and quality remained to serve the quality control paradigm which
has been forfeited by its two counterpart subsequent developments: Quality Assurances and
Total Quality Management.
Figure 2.10 Information versus its influence along project management phases.
Scope and requirement changes are becoming facts of life. Hence, the inability to accurately
specify these requirements, the case of expert-client relationships, and knowledge gap among
stakeholders dictated the prevalence of uncertainty and deviations during execution. These
undermined the attainment of results as predicted. The divorce between planning and
implementation has also created adversarial relationships, distrust, and volatile grounds mainly
due to its inherent scrutiny-oriented attitude developed between planners and implementers. As a
result, performance determination suffered and one of its major purposes (Learning) is
devalued considerably.
May 2017
In spite of all these; planning as early as possible, learning from failures and strive for more
information upfront together with a flexible approach such as:
 timely decisions adjusted to uncertainty, Isolation and Absorption of uncertainties,

and Overlapping of phases; Laufer, 1997;
 integration of planning and control, and Progressing wave planning; Harrison,
1997;
 integration of planning and implementation; Mintzberg, 1994
 contract as hierarchical documents; Stinchcomb, 1985
are necessary conditions for good performances. Following these, generally, recognition was
largely made such that triple constraint in its classical thoughts can only address parts of
success or failure factors. Recently, the debate has moved from defining success as coherent
to some general criteria to discussing which criteria must be met before we can call this
specific project a success.
Both project and performance concepts were uprooted and grown for and from practical
applications, or because there can be no universal theory that can guide performance
determination.
Kharbanda & Pinto, 1996 in their view 'Failure as a step to success' argued that, in the event
where failure considered detrimental to those who accepted it, it is often hidden (under the
carpet to use their terms) and not well acknowledged. This was because, they further pointed
out that failures hold moral issues what successes cannot. Hence, in project management
failure can be attributed to either of these or both of their accomplishments:
As a result, failure and success can share both these characteristics, and its distinct
determination is contextual and circumstantial. Most often, it is obviously difficult to label
certain projects as 'failure' or 'success'. Due to these, this study preferred to use similar terms
but with a different tone called 'Low Performances instead of failures and Good
Performances instead of successes.
Accordingly; 'Low performance is defined as low actual accomplishment rate compared to

predictions or planned values in completion time and cost measurements. This covers a
possible assessment for causal relationships including questioning the realism of the
predictions. To this added; stakeholder satisfaction based on performance indicators standing
for assessing quality requirements in addition to specification Performances. That is,
May 2017
negotiated changes using participation can be part of predictions as long as they qualify for a
boundary limit.'
Hence, this definition purely indicated that predictions together with its negotiated changes,
which set the 'performance criteria', are the key issue in performance determination. But, this
definition do not prescribe that low performances can imply failure of projects.
2.4.3 Performance Criteria
The fact that project success or failure is ambiguously defined and a highly aggregated
parameter; obliged many project managers to ascribe to simplistic formulae, i.e., the triple
constraints with its traditional connotation. However, a shift to consider Customers'
satisfaction as part of the performance criteria or part of quality requirements led researchers
to examine this shift further for clarity in applying and understanding its relation with project
successes and failures or at least determination of poor and good performances.
Poister edited by Kearney and Berman, 1999 indicated that performance indicators are
developed for two purposes: for tracking projects (Progress checking and for necessary
actions) and to communicate selected key indicators to external audiences (Accountability).
In addition, they are expected to provide information at various levels of management for
improving the successful implementation of projects.
Performance dimensions included cost of collecting information against its benefit,

stakeholders involved and their objectives, consequences of answerability to those omitted,
changes of performance dimensions over time, and the stages of the project along the project
management processes. Consequently, choice has to be made to include the most important
elements of these dimensions process.
These choices require three approaches to planning (Laufer, 1997); Systematic and
Integrative planning, Timely decisions adjusted to uncertainties, and Isolation and Absorption
of uncertain tasks. The first is similar to the traditional mindset and can serve as the baseline
for the performance criteria.
But, the latter two are essential for coping with changes and uncertainties encountered along
the management process during project executions. Hence, Performance criteria should be
updated, but by no means loose sight of comparison with the original prediction for learning.
This together with reduced flow of fund and its escalation, and tighter constraints resulted in
May 2017
cutbacks and changes in projects will make the project planning phase more critical and
continuously employed.
Knut Samset, 1998 indicated three levels of measurement of success and used five
performance criteria.
1. Efficiency: Delivery in terms of cost, time and quality as per specification

2. Effectiveness: Achievement of the common goal
3. Impact: Various effects of the project
4. Relevance: Response to needs and priorities
5. Sustainability: Continuation of its relevance
These criteria along its three perspectives showed the overall integration of the project.
Efficiency and Effectiveness; and Relevance was looked for contextual description. While,
Efficiency is attended in terms of comparing planned and actual deviations; Effectiveness is
targeted to ensure integration of objectives based on stakeholders' satisfactions.
2.4.4 Performance Measurement and Evaluation
Performance is highly related to measurement. Kelvin, emphasized the importance of

measurement with his statement as: 'If something in science cannot be measured, it has little
value'. Though this statement far addressed importance to objectivity and rationality over the
subjective and behavioral issues, it can however be used to identify the fact that less obvious,
less understanding and less use of measurement are common features in project management.
But one should not ignore that what can be measured can get attention or take more value or
easily have advantages than those which could not be measured in most instances. These
measures however, should make to consider not only the objective ones (if you can't count, it
does not count) but also the subjective values as well.
Measurement is basic for improving performances and assists in providing accountability and
learning in all business administrations. Performance measurement serves a variety of
functions in project management. These include the establishment of probable targets, the
tracking of performances and feedback to management. Measurements can also be used for
rewarding/punishing behavior, and modeling and predicting project performances. There
should also be an understanding that not all measures are good.
Besides, evaluations are generally serving two major purposes: feedback as a learning tool,
May 2017
and to make operations and results transparent aimed at improving both performances and
accountability (Gloria E. Grizzle, 1999). Therefore; Performance measurement and
evaluation is more important in projects due to the following two reasons:
1. Projects are often executed with borrowed resources on a need bases whose loyalties lie
to the least with functional departments, and
2. Project players continually changes to cause discontinuity in outlook and requirements
that tend to drift according to the interpretation of the latest players.
These reasons resolve accountability leading issues to fall through cracks, under carpet and
behind mirrors. Hence, inadequate level of follow-through and finger pointing when things
go wrong are more or less a usual practice. Consequently, no one seems answerable for
mainly bad decisions and actions. Therefore, implementing systematic, fair and rigorous
performance measurement and evaluation mechanisms can reinforce and strengthen
accountability in projects.
2.4.5 ERA Performance Evaluation of Contractors under Government Financed

Tenders
In works contracts of government financed projects, one of the major qualification criteria is
performance assessment of bidders on ongoing projects. For bidders having ongoing projects
with ERA, the performance assessment will be carried out following the below indicated
procedure (formula).If bidders do not have projects with ERA, the performance assessment
shall be carried out following qualitative assessment of bidder's performance based on written
feedback from their employers. The performance assessment is carried out every calendar
month. Under each evaluation, the performance of the bidder in the immediate previous
month (from the date/month of deadline for submission of the tender in reference) is used for
evaluation.
1. Performance Evaluation Formula for Local Contractors
The total contract duration is divided into three equal periods in such a way that:
• At the end of the first one third period, the minimum expected progress is 9%.
• At the end of the second one third period, the minimum expected progress is 38%
• At the end of the last one third period or at the end of the contract period, the minimum
expected progress is 70% and
May 2017
• Beyond contract period but only up to a period of one fourth of the contract period, the
project is expected to be completed 100%.
• Contractors, who fail to complete projects after elapse of one fourth period of the
contract duration, will be disqualified.
For the intermediate months, the following formulae will be used:
I. For the first one third duration of contract, the formula for determination of expected
minimum performance is, 9t1
Where t1 = (Elapsed time in months minus mobilization time in months)/ (One third of
the contract period in months minus mobilization time in months)
II. For the second one third duration of contract, , the formula for determination of
expected minimum performance is, 9+29t2
Where t2 = (Elapsed time in months minus One third of the contract period in months)/
(One third of the contract period in months)
III. For the last one third duration of contract , the formula for performance evaluation
is, 38+32t3
Where t3 = (Elapsed time in months minus 2 X One third of the contract period in
months)/ (One third of the contract period in months)
IV. Beyond contract period but only up to a period of one fourth of the contract period, the
formula for determination of expected minimum performance is, 70+30t4
Where t4 = (Elapsed time in months minus contract period in months)/ (One fourth of
the contract period in months) [39].
2.5 Chain’s Procurement Practices
2.5.1 Current Tendering Processes in Chain
The key steps and procedures for tendering, contract award and obtaining construction
permits is tabulated as Table 2. The processes shown in Table 2 are the ones used in Nanjing
City but other cities have similar processes/procedures. It is clear that the process is quite
complicated and involves many government departments. The following sections describe the
tendering processes in details.
May 2017
2.5.2 Tender Preparation by Clients
A tender evaluation committee must be formed for every construction project with a value of
more than $500,000 RMB (Chinese currency). The committee's responsibilities include call
for tender, deciding eligible companies (i.e. qualification check), selecting companies for bid
submission, releasing tender documents and project drawings, organizing site visits,
answering questions, developing evaluation criteria, opening tenders, evaluating bid
submissions, and determining which company should be awarded the contract. There are
strict requirements/guidelines/rules set by the government on the formation of a tender
evaluation committee:
1. The committee must have the required technical, economical and management abilities;
2. The committee should have the ability to calculate or audit the estimated project
cost/price (it is called "Biao-di" price in Chinese), and to verify the contractors'
qualification;
3. The committee should comprise members of: client representatives, the client's parent
company's representatives, qualified economic or technical experts, and representatives
from the tender management office (a department of the construction commissions);
4. The number of experts should be at least two-thirds of the total number in the committee
and
5. The experts should be randomly chosen by computer from the expert database.
2.5.3 Calling for Tender and Bidder Selection
Clients implement a significant portion of the work involved in "Call for Tender":
(1) Within 30 days after receiving all necessary government approvals, clients must register
their project for bidding through the electronic notice board and white board.
(2) The client calls for expressions of interest from registered contractors.
(3) The client prepares bid documents by themselves or a professional agent (i.e. a qualified
quantity surveying company). The bid documents are then vetted by construction commission
staff in the TCM (Tangible Construction Market) prior to actual bids being invited by the client.
Interested companies expressed their interest and formally lodge an application for
submitting bids.
May 2017
According to technical capability, financial capacity, past performance (reputation) and

company asset, every construction company is qualified as either Grade 1, Grade 2 or Grade
3 Phases by the Ministry of Construction. To be eligible to participate and submit tenders, all
contractors/suppliers of construction services are required to register with the Municipal
Construction Commission. Registration is a relatively straightforward process, requiring the
provision of details of relevant financial data, organizational experience and expertise, as well
as key staff and their past experience.
Table 2.10 Tendering Processes of Construction Projects in China (source: Nanjing Municipal
Construction Commission)
Phases Procedures Concerned bureaus or office Contents

Preparations License of land Nanjing Municipal Check the license of land
before tender Administrative
call Bureau for National Land
License of town Nanjing Municipal Bureau for Check the license of town
planning Town planning
Planning
Auditing before Nanjing Municipal Audit Bureau Check and handle the
commencement of auditing before
construction commencement of
construction
Registration of The information division of Register and publicize
construction project NCPTC information of public tender
(Nanjing Construction Project
Transaction Center)
Tendering of Tendering of Division 3 of NMAOT (Nanjing Handle affairs about the
construction construction Municipal Administrative Office tendering of construction
project Supervision Company of Tender) supervision and the
and the tendering of tendering of construction
construction equipment equipment
tendering of Division I of NMAOT Countercheck the
construction qualification of bidder and
handle the project of direct
contracting
Division 2 of NMAOT Check the tender call
documents, supervise the
procedures of opening and
evaluation bids.
countercheck the notification
of tender award
The director's office of NMAOT Countercheck the

notification of tender award
Other related Notarization of Nanjing Municipal Notarization Notarization of the
procedures tendering Bureau procedures on inviting and
submitting tender
Registration of local tax Nanjing Municipal Local Tax Registration of local tax
Bureau
May 2017
Management of Nanjing Municipal Countercheck the kinds of

construction cost Administrative Office of calculating construction cost
Construction Cost
Authenticate the Nanjing Municipal Authenticate the contract on
contract Administrative Bureau for project construction
Industry and Commerce
Registration of Nanjing Municipal Registration of the
construction enterprises Administrative Office of construction enterprises of
Construction tender award
Nanjing Municipal
Administrative Office of
Municipal Engineering
Supervising quality of Nanjing Municipal Draw the "Application Form
construction project Administrative Office of of Supervising Quality of
Supervising Quality of Construction Project"
Construction
Nanjing Municipal
Administrative Office of
Supervising Quality of
Municipal Engineering
Supervising safety of Nanjing Municipal Office of Draw the "Application Form
construction project Supervising Safety of of Supervising Safety of
Construction Construction Project"
Nanjing Municipal Office of
Supervising Safety of Municipal
Engineering
Management of solid Nanjing Municipal Handle affairs on solid
garbage Administrative Office of Solid garbage
Garbage
Construction License of construction The construction office of the Grant the license to the
Permission commencement Construction Committee of owner for according with
Nanjing Municipality conditions for
commencement of
construction
The qualification (i.e. Grade 1, 2 or 3) and past performance of each interested company is
checked against the selection criteria. When too many qualified companies express interest in
submitting bids, two methods may be used:
1. Random selection using a computer program or

2. By scoring -- scores are given to each company based on their past performance in terms
of quality and safety, capability etc. The selected companies are notified by the committee
to submit bids.
2.5.4 Tender Receipt, Open and Evaluation
The tender submissions (with company seal) are lodged in a double locked tender box. The
keys are kept separately by the client and officials of the construction commission department
May 2017
(or Notary Department). According to the Tendering Law of the People's Republic of China,
the deadline for tender submissions and the time of opening tenders is at the same time.
The tender opening is conducted in the TCM tender opening room under the supervision of
construction commission official or a person from the Notary Department, generally the day
after tenders are lodged. The bidders must also be present, or their bids become invalid. All
key processes are notarized by an official from the Notary Department.
The bid process is generally in two envelopes where the first envelope contains price details
and company information. This envelope is opened first and information is placed on a notice
board in the tender opening room to be reviewed by all present, including bidders. The
second envelope, containing the information of company profile, qualification, past
performance, safety accreditation, proposed project team and technical plan, subject to the
non-price evaluation criteria, is then opened in the presence of the bidders and notary
officers. The bidders then leave the room and independent evaluation experts are brought in
to conduct their evaluation, scoring each bidder without knowing the bidder's identify. When
the experts have completed their tasks, the scores are then computed, verified by the
construction commission's officials and the results read out, and posted on TCM notice
boards for the next two days. For most contracts, this process takes half a day, hence bidders
know their status on the day tenders are opened.
2.5.5 Tender Evaluation Criteria
The selection of a best suitable company for the construction work is not based on the rule of
"lowest price wins" but a multi-criteria including price, time, quality and construction plan
and company's profile, past performance as well as proposed project team. A detailed tender
evaluation criterion is normally specified in the tender document but in some cases prepared
by the tender committee one day before the opening of the tenders. A score system, normally
a 100-point system, such as the ones shown in Table 2.11 (adapted from Jiangsu Provincial
Construction Commission 1999, No. 335 Document) is used. Table 2.11 means the points
allocated to price components should not be less than 50 while the points for construction
plan/strategies should not be more than 20. Likewise, the composition of the project team
may gain up to 10 points (but no more than 10 points), and so on so forth. The total
maximum points should not exceed 100. Normally, the company obtaining the highest score
will be awarded the construction contract.
May 2017
Two major criteria - "price" and "construction plan" are discussed in detail below since they
are the most complicated and important components.
Table 2.11 Tender evaluation criteria used in Jiangsu Province, China (1999)
Component Points Allocation

Price ≥ 50
Construction plan/strategy ≤ 20
Project learn (Project manager's qualification and ≤ 10
performance)
Company past performance, financial capacity ≤ 10
Quality and time guarantee/assurance ≤5
Company reputation and qualification ≤5
Total = 100
The price component includes both the client's own estimated project price (it is called "Biao-
di" price in Chinese) and the bid prices submitted by all bidders. Each of this is validated and
then combined using a weighted average and percentage methods to derive a so-called
"Reasonable Price". Based on this "Reasonable Price" another price called "Optimal Price" is
then derived and used as the contract award price. Detailed discussion is provided in the
following sections.
Bid prices validation -- All submitted bid prices must be validated by comparing each bid
price to the "Biao-di" price. A bid price is not qualified/valid if it is outside a range of 92% -
I08% of the "Biao-di" price.
2.5.6 Construction Plan
The construction plans should include the main strategies that will be used for construction
and this plan is worth up to 20 points. The construction plan is evaluated by the experts
according to the following criteria:
 if the construction method is advanced and reasonable/logical;
 if the construction plan is scientific, reasonable/logical, and reliable;
 if the quality and safety strategies are reliable;
 if site layout and occupational measure is reasonable/logical and reliable;
 if main construction plant and equipment and labor allocation is reasonable; and
 if the project team (including management and technical personnel) is capable.
May 2017
The government guidelines recommend that, unless there are major mistakes in the
construction plan, the points given to each bid should not be less than 60% of pre-determined
total points. The time given to the experts to evaluate all bid submissions (mainly the
construction plans) is normally half to a full day.
2.5.7 Contract Award and Record Archiving
The tender selection committee combines the points for each bid and ranks the bidders
according to the total points they received and hands them to the client to make a contract
award decision. Normally, the bidder with the highest points will be awarded the contract.
Following the conclusion of the tender evaluation process, the client is required to obtain all
necessary pre-construction approvals before a contract can be executed. The contract must be
signed within 30 days from the time of tender opening. Once the contract is signed, an
archive file is made up, consisting of all key relevant transaction documents for the project to
this stage. This goes back to copies of the registration of the project with TCM to the actual
letter of acceptance. It also includes copies of all relevant approvals obtained from the
various "competent" authorities that have jurisdiction over the project. Other information on
the archived file includes: list of registered contractors who expressed interest; copy of
client's request to the TCM to call tenders; public tender notice; report on interested
registered contractors; copies of all correspondence between the client and TCM; evaluation
report of the experts. The file is archived in the TCM for two years, and is then forwarded to
the Municipal Archives. The file is readily accessible to MOC staff who would deal with the
complaint if indeed any arise about the bidding process [45].
2.6 Literature Review Summary
Procurement is a framework in which development of project are designed, financed,

constructed, used, transferred and residual disputes are resolved. It has its own process of
designing, specifying, sourcing issuing, ordering and arranging of material service and
equipment’s within an organization. Its classified based on the thing to be procured and the
way how they are procured.
In addition it’s an effective and efficient use of financial resource in a competitive and
transparent manner, through a sound procurement process contributes to the achievement of
the operational and strategic goal of a construction project.
In the construction industry Procurement has two types of process, Pre-construction (pre-
May 2017
contract) procurement and post contract (construction). Initiation, pre-feasibility and

feasibility study, designing and tendering is the subsection of pre-construction and
construction, commissioning and hand over are the sub-section of the second one.
To properly manage project budget, compilation time and quality of work, it is important that
procurement decisions are justifiable on the bases of documented facts and analysis. Soundly
base decisions involve a comprehensive exploration of a range of potential delivery models
and procurement methods to determine the approach best suited to each type of
infrastructures.
An appropriate procurement strategy is typically developed during the evaluation or

definition phase of a project, is a key determination of successful project delivery.
As part of the procurement process selection of the right type of project delivery methods
which is based on cost certainty, time certainty, insuring quality and reduction of
administrative burden to the public is essential for successful completion of the project. In
literature review it is found that, the different procurement method and the selection of the
right type of the form of contract will have different effect on the cost, time and quality of the
project.
According to the literature review different procurement selection factors can assist clients to
choose the best procurement method. Client characteristics, project requirements and external
environment are the factors that must considered during procurement selection. Several
variables of client requirements were measured under cost, time and quality related factors.
Project characteristics factors also include project type, size, cost, flexibility, complexity, site
risk factors and degree of innovative technology. External environmental factors considered
market competitiveness, availability of material, natural disasters; industrial actions are
amongst other variables.
After selection of the best suited delivery system, the next step is preparing the procurement
/tender document. Client shall prepare the tender document considering specific nature of
projects and avoid ambiguities, mistakes and inconsistent in the document. This document
consists of procurement and contract requirements and proposed contract documents.
Procurement includes biding negotiation and purchasing required documents to communicate
project information to the bidder or proposers and to facilitate the project delivery and pricing
process. This document consists of both written and graphical elements and typically
includes: contracting requirements, specification and contract drawings.
May 2017
Likewise, Contractor selection is a critical and crucial task for any client that may help to
control some of these risks and manage the complexities. Various procedures such as open
tendering, selective tendering, restricted tendering, registration/ pre-qualification, post-
qualification are followed for selecting contractors. In addition to the above, to select a
contractor for a project it is required to develop necessary and sufficient criteria to investigate
and assess the capabilities of the contractors to carry out a job if it is awarded to them.
The Ethiopian federal Government have public procurement and property administration
agency (FPPPAA) standard biding document (SBD) for different procurement type. Every
public body adopts this standard documents, SBDs can be adopted for any procurement
system and it gives a room to the user to specify according to project nature.
Generally, from the above literature review it is concluded that procurement procedures are
methods used to acquire good quality without cost overrun and time overrun.
In addition to the above paragraph I also conclude that, Procurement and project management
has strong linkage and relationship with construction process and stakeholders management.
The delivery system chosen, the procurement method adopted and the contract type decided
upon determine the construction process involved and the relationships and the roles
stakeholders along the process.……
May 2017
………………………………………
………………….
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter introduces the methodological approach and the research design best suited the
current research. It covers a description and justification of: the methodological approach and
examines the research questions; and the data collection and analysis procedures. The chapter
includes six sections on research methodology, starting from a description on the research
type and approach under which this research is conducted. The second section is a discussion
of the data collection approach is presented. That is, in section two, the desk study, and the
questionnaire survey are developed. The Next, section describes the sampling strategy, which
contains a description of the unit of analysis and unit of observation. In the fourth section,
about the data collection. Section five, presents the data analysis strategy and describes the
statistical assumptions, analytical techniques, and modeling strategy adopted by the current
study. After this the scope and research limitation are develop. Finally, the chapter summary
and Discussion and Conclusions will be going forward. The results of the investigation are
presented in this chapter as well as the recommendations will going forward.
Accordingly, in this chapter, the research design and methodology followed to achieve the
ultimate goal of the research which is specified at the beginning will be discussed. In a way;
data and information sources, research instruments, sample size and method of analysis are
presented. So that; using the design and methodology, the research draws up findings in a
way to make conclusions and forward recommendations on construction procurement
practices and its impacts in construction budget, completion time and performance in
Ethiopian road construction.
May 2017
Therefore, it is necessary to identify the variables and methods based on occurrences, in order
to rank their overall effects on the practice. This helps to prioritize the factors and, hence to
determine the mitigation actions to be taken.
Generally, this research part is expected to be an important stepping stone for examining the
various aspects of the problem under consideration, understanding and formulating guiding
principles to govern the research procedure and developing and/or testing the enhancement of
the existing situation, state or process.
3.2 Research Type and Approach
The research started as two staged study. Problem identification has been done through a
preliminary unstructured literature review and discussion with colleagues and professionals in
the sector. As an output of this initial phase, examine and analyze different procurement
practices in the Ethiopian road construction and its impact in project budget, completion time
and quality of work is identified as a proposed problem to be studied; where the research
questions were developed in view of investigating this problem.
Contextual and conceptual literature reviews have been done once the problem is identified to
have an in depth understanding on the research topic. The review includes books, journal
articles, internet sources and archival document such as issues related to prolongation
procurement practice in Ethiopia road construction projects. The document search was
mainly intended to collect how different construction procurement is implemented practically
and to check their compliance as provided in the contract provisions.
Once the specific question was determined, a suitable research design and methodology was
considered. Afterwards, the variables and research questions were used. This study is
therefore adopted only qualitative research method.
A qualitative research is a "subjective" assessment of a problem and takes the form of an

opinion, view, perception or attitude towards objects (that are referred to as an attribute,
variable, factor or question).
This survey-based research design has been selected as it is useful in demonstrating the
prevalence of the problem. Once the distribution of the problem has been determined and
major variables identified, it may be possible to get hints on how to prevent the challenges
May 2017
and problems. It also helps to identify differences among groups and to recommend possible
remedies to be taken by respective stakeholders.
To this effect, a questionnaire was designed following an in-depth contextual and conceptual
literature review, and distributed to selected stakeholders including contractors, consultants
and employers actively participating in Ethiopian road construction industry. To supplement
the questionnaire, a desk study was conducted. Checking, sorting and coding of gathered
data has been done for the selected method of analysis. Consequently; analysis of the data
obtained from questionnaires and Desk study have processed which involves simple
statistical approach, examining, tabulating and categorizing based on the chosen
measurement scale. After the collected data is analyzed, the findings and results are
discussed. Finally, the researcher has given his conclusion and recommendation, based on
the analysis and discussion.
3.3 Research Instrument
Tadesse, 2009) grouped the methodology of data collections under four headings, namely
opinion research, empirical research, archival research and analytical research. According to
Brukley; each method has its own strength and limitation, none of the above methods is
superior that of the other. The choice which one to use is decided based on the
research/survey objective, the nature of the information and resources available (Jobber cited
in Tadesse, 2009).
The data collection approach adopted for conducting this research includes both primary
and secondary sources. Questionnaire and desk study provide the primary data for this
thesis while the secondary data sources include renowned civil engineering journals those
especially in project and construction management, internet sources, as well as reviewing
related archival documents on contractual issues of road construction works. These
different methods of data collection have been used in order that the data or information
obtained from one can be supplemented by the others whereby the collected data will give
multiple evidences.
3.1.1 Questionnaire
Questionnaire provides first-hand information for the subject matter of a research as it is

focused on issues which further serves as a survey to understand the main concerns and
attitudes of respondents towards the problems (Kasiem, 2008). In this thesis, questionnaire
May 2017
was administered to some selected stakeholders of the construction industry such as domestic
and foreign contractors, consultants and Client. The questionnaire which consists of both
open and close ended question was distributed among these professionals.
They were also asked regarding the administration practice of the parties in handling the
effects of procurement in time, cost and quality based on their experience and rate the
potential variables provided regarding frequency of occurrence.
Finally, open and closed ended questions which were intended for the assessment of the
estimation methods and practices were directed to respondents; this is aimed to evaluate
whether the estimation process itself contribute to the problem.
3.1.2 Desk Study
In addition to books, journals and internet sources, archival document and claim documents
have been reviewed to understand the background of contract provisions, back up data and
practices in procurement in the Ethiopian road construction sector. These secondary sources
provide a general understanding of the subject area by presenting a wide range of ideas in the
field which help to supplement other specific information obtained from the primary data
sources.
In addition; desk studies on procurement practice in road construction were used in this
research to support or supplement responses and arguments found by questionnaire through
in-depth analysis of some cases of a project. Of course, as the nature of the cases focuses on
one aspect of a problem or practice, the conclusion drawn may not be generalized, but rather
related to one particular event (Naoum cited in Kasiem, 2008). For this reason, desk studies
under this research are used to supplement the findings obtained through questionnaire in a
way to bridge the gulf.
3.4 Sample Size Distributions
Professional Number of professionals
Contractor 107
Consultant 76
Client 1
May 2017
Source: Contractor: Ministry of urban Development and construction construction industry

development and regulatory bureau and Ethiopian Road Authority
Consultant: Addis Ababa city Administration and Ethiopian Road
Authority
To determine the minimum sample size, Kumasi Metropolis, Kish (1965) formula which
gives a procedure for the calculating minimum sample size.
n= 1 K 1………………….…………………..Eq 3.1
1+K
N
Where: n = Sample Size, N = Population Size
S = Maximum standard deviation in the population element (total error = 0.1at a confidence
level of 95%)
K = S2………………...…………………………………………..…………….E.q 3.2
V2
V = Standard error of sampling distribution = 0.05
P = the population elements.
S2 = P (1-P) = 0.5(1-0.5) = 0.25 ………………..…… ………………………..Eq 3.3
Therefore, in determining the minimum sample size of Contractor, given Contractor that N =
107, the population number of contractor that works with ERA for the past 10 years
(collected from ERA). But out of these contractors only 26 of them have license for GC-1
and RC-1. For this study N=26
K = S2 = 0.25 = 100
V2 0.052
May 2017
n= 100 .
1+100
26
n= 20.63
n = 20.63 means that, the minimum sample size of contractor to be used for the study is
approximately 21. The 21 contractor will help in establishing the actual sample size for the
study. Saunders et al (2007) however put forward a formula for calculating the actual sample
size. This formula according to Saunders et al (2007) considers irregularities such as refusal
to respond to questionnaires, ineligibility to respond to questionnaires, inability to locate
respondent which occur during distribution and collection of data. The formula is:
na = n*100 ……………………………………………………………………..Eq 3.3

re%
Where na is the actual sample size required, n is the minimum sample size, re% is the
estimated response rate expressed as a percentage.
Oladapo (2005) and other researchers such as Newman and Idrus (2002), Ellhag and
Boussabaine (1999) and others, have indicated that a response rate of 3% is good enough in
construction studies. Thus given that n=21, re%=35, na will computed as:
na = 21*100
35
na =60 is the actual sample size for the contactor.
Sample Size for the consultant

To calculating minimum sample size
n= 1 K 1
1+K
N
Where: n = Sample Size, N = Population Size
May 2017
S = Maximum standard deviation in the population element (total error = 0.1 at a confidence
level of 95%)
K = X2
V
V = Standard error of sampling distribution = 0.05
P = the population elements.
S2 = P (1-P) = 0.5(1-0.5) = 0.25
Therefore in determining the minimum sample size of consultant, given that N = 76 the
population number of Consultant collected from ERA, consultant that works with ERA for
the past 10 years. But out of these consultant only 13 of them are works with ERA for the last
Ten years. For this study N=13

K = S2 = 0.25= 100
V2 0.052
n= 1 K 1
1+K
N
n= 100 .
1+100
13
n=11.504is the minimum sample size
To calculate the actual sample size of the consultant

na = n*100 Thus given that n=12, re%=35, na will computed as:
re%
na =12*100
35
na = 35 is the actual sample size for the consultant
3.5 Data Collection
The study has used the data sources to produce the following basic documents: respondents'
documents and archival documents. The respondents' documents were collected using
questionnaire from client, contractors and consultants. Archival documents were mostly from
completed projects, in which contract documents, project reports, correspondence letters and
May 2017
payment certificates were investigated thoroughly which were very important in identifying
the recurrent problems related to Procurement practice and its effects on completion time,
project cost and performance in the Ethiopian road construction projects.
According to Ethiopian Road Authority data, two hundred seventeen different roads are
constructed (Access Road, Main Roads, Junction Roads and etc...) Out of those roads 12
recent road construction projects in Ethiopia were selected and investigated. Some of the
selected road projects are not completed. These projects discussed information regarding the
estimated time and actual completion date as well as estimated amount and actual amount.
3.6 Data Analysis
The questioner and desk study were analyzed in relation to the theoretical propositions. This
method of analysis helps to analyze the responses in actual numbers. Accordingly, Frequency
distribution was used to distribute the data into categories and determine the number of
individual or cases belonging to each category, presented in the form of table
3.7 Scope and Limitation
Construction procurement cover a wide range in the construction industry beginning from the
pre- tendering to the post tendering activity. Therefore, this thesis work attempts to assess the
current Procurement practice and the tender evaluation system and also to examine
alternative approaches that could improve the overall productivity of the road construction
industry in Ethiopia’s. Every attempt has been made to seek information from relevant
stakeholders, and to review different standard literatures.
However, the thesis work is limited by several factors. Due to shortage of time and budget
allocated for the research work, it has not been possible to visit actual sites of the projects
used for the study.
It is also worth mentioning that in the absence of the problems cited above, it could be
possible to assess many sample projects so that the entire analysis of the study would be more
informative, exhaustive, and reliable. Hence, some of the findings of the study are based on
twelve sample projects.
The other important limitation of the study was the lack of willingness of professionals to
complete and return the questionnaire by consulting firms and contractors. A series of
May 2017
briefings on the questionnaire was conducted to motivate respondents in completing the

questionnaire as its findings are for academic purpose. In addition, it is found difficult to
access documents related to procurement practice.
The methodology that will be followed to prepare this research is shown below in simple chart.
Exploration of Sources
Problem Identification
Discussion
Study Title
Establish Objective
Data Collection
Primary Data Secondary Data
Desk Study
Analysis
Questioner survey
May 2017
Organize
Conclusion and
Recommendation
CHAPTER FOUR
ANALYSIS AND DISCUSSION
4.1 Introduction
This chapter describes the Analysis and discussion of the data gathered from the desk study and
questionnaire survey. It includes construction procurement practices and its effect on
construction budget, compilation time and performance in Ethiopian Road Construction.
4.2 Results of Questionnaire
The Questioner surveys focus only on the Construction procurement practices and its impacts
in construction budget, completion time and performance in Ethiopian road construction.
Questionnaires were distributed to different organizations involved in the construction. The
organizations were selected randomly. The output depends on the respondents' general
knowledge on the construction. Construction professionals from different organizations in the
construction industry were asked through questionnaires.
4.2.1 Respondent characteristics
This part mainly designed to provide general information about the respondents in terms of the
respondent’s organization, position, education status, field of specialization and work
experience.
4.1.1.1 Type of respondent’s organization
In this study, 67.7 % (40) contractors, 100 % (1) owners, 50.00 % (15) consultants participated
in the questionnaire. The general response rate for contractors, owners and consultants was
60.44 % and the total number of respondents for the three parties was 56 out 91 respondents.
May 2017
The response rate of contractors was 67.7 % (40 out of 60 respondents), for the owner 100 %
(1 out of 1 respondents) and 50.00 % (15 out of 30 respondents) for consultants.
Table 4.1 Type of respondents` organization
Questionnaire Questionnaire
No. of respondents Response Rate
distributed Returned
Contractor 60 40 66.67%
Consultant 30 15 50.00%
Client 1 1 100.00%
Total 91 56 61.54%
4.1.1.2 Respondent Education Status
As can be seen in the next table (Table 4.1), 65% and 35% of the contractor respondents hold a
first degree and second degree respectively. Out of the 35% respondents 64% specialized in
Construction Technology and Management, 21% specialized in Highway Engineering and 14%
specialized in Geotechnical Engineer. On the Consultant side 47% of the respondent hold first
degree and the remaining 53% of the respondents hold second degree. From the 53% second
degree holder 75% specialized in Construction technology and Management, 13% specialized
in Highway Engineering and 18% specialized on Geotechnical Engineering.
Table 4.2 Respondent Education Status
Education Status Contractor Consultant Client
Bsc 26 7 1
Msc 14 8
Total 40 15 1
May 2017
Education Status Contractor Consultant Client
Bsc 65% 47% 100%
Msc 35% 53%
Total 100% 100% 100%
Table 4.3 Respondent Field of Specialization
Field of specialization Contractor In % Consultant In %

Construction Technology 3 21% 1 13%
and Management
Highway Engineering 9 64% 6 75%
Geotechnical Engineering 2 14% 1 13%
Total 14 100% 8 100%
4.1.1.3 Respondents’ designation
Table 4.4 shows that 23.08% (9) of contracting companies respondents were Manager /
Planning, monitoring and supervisor Engineer, 23.08 % (9) were Contract Administration
Engineer, 41.03 % (16) were office engineers, 10.26 % (4) were civil engineers and 2.56 % (1)
was Senior Construction Engineer. It has been found that 100.00 % (1) of client respondent
was Contract engineers. It has been founded that 53.33 % (8) of the consultants companies
respondents were resident engineers, 20.00 % (3) were office engineers, 6.67 % (1) was
highway engineer and 20.00% were project follow-up engineer. Totally out of 91 respondents
from the three parties’ contract administration engineer and office engineer takes the higher
place.
Table 4.4 Respondents Designation
Contractor Consultant Client

Respondents
Contractor Respondents Consultant Respondents Client Respondents
Designation
Rate Rate Rate
Contract
Administration 9 23.08% 8 53.33%
Engineer
Office engineer 16 41.03% 3 20.00%
Civil Engineer 4 10.26% 1 100%
May 2017
Senior Construction
Engineer / Highway 2 2.56% 1 6.67%
Engineer
Project Follow-up
3 20.00%
Engineer
Manager / Planning,
monitoring and 9 23.08%
supervisor Engineer
Total 40 15 1
4.1.1.4 Experience of respondents
Overall work experience of the contractor, consultant and client is indicated on the next bar
chart (Figure 4.1), From the contractor respondents 45% of them have 0-5 years of construction
experience, 35% of them have 6-10 years of construction experience, 8% in between 11-15
years and 13% of them have more than 15 years of experience. From the consultant side, 40%
of the respondents have 0-5 years’ experience, 33% of the respondents have 6-10 years of work
experience while the remaining 27% respondents have greater than 15 years of experience.
From the client 100% of the respondent have 11-15 years of experience. On the whole, most of
the respondents had a first degree with work experience of 0-5 years and 6-10 years. These
distributions provided that information collected from respondent were based on a wider
academic knowledge area and the respondents have overall work experience at different
position.
Work experience in the construction Sector

120% 100%
Persentage of work experience
100%
80%
60% 45%40% Contractor
35%33%
40% 27% Consultant
20% 8% 13%
0% Client
0%
0–5 6 – 10 11 – 15 >15 years
Years
Work experience in the road Sector

ntage of work experince in
120%
100%
100%
80%
56%
60%
Road
43% Contractor
36%
40% 28%
21% Consultant
84| P a g e AAU, AAiT, 20%
School of Civil and Environmental 13%
Engineering CoTM (Post Graduate Studies)
3% 0%
Client
0%
May 2017
Figure 4.1 Experience of respondents (years)
4.2.2 Contractor Respondent’s View
4.2.2.1 Comparison of Project Delivery System in Road Construction
All of the professionals reflect similar view that the Ethiopian Road construction industry is
better to shift in to the innovative project delivery methods and latest construction
technologies. Most of the respondents argue that something has to be done to improve the
situation. Many of the respondents specially who are actively participating in DB contract state
that the traditional project delivery method (DBB) undermines the possibility of contracting
firms providing broader and better services.
In this regard, the questionnaire of this study attempted to ask the delivery method that
effectively for the road construction. Accordingly, (Figure 4.2), majority of the informants
responded that (46%) DB project delivery method was effective for the road construction. The
second highest score (28%) was given to the DBB. The third highest score was to the BOT
method (21%). The fourth was given to the CM-at-Risk method (5%). And no one gave vote
for the CM-at-Fee delivery method (5%).
Even if DB project delivery system recommended as effective for the road construction, but it
has it on disadvantage and limitation; limited experiences with DB, less work possibility for
small and medium sized contractors, limited competition in large projects, client experience
may be lost or diminished, reduced flexibility, high tendering cost due to designing
requirements, lack of aesthetic consideration, inadequate contractor quality control and
assurance and higher overall cost are some of the limitation and disadvantage of DB project
delivery system.
Recommended project delivery system for the road construction

50% 46%
40%
Persentage
28%
30% 21%
20%
5% Recommended for the road
10%
0% construction
0%
85| P a g e AAU,DBB
AAiT, School
DB of Civil CM
andrisk
Environmental
CM withEngineering
BOT CoTM (Post Graduate Studies)
Free risk
May 2017
Figure 4.2 Recommended project delivery methods for road construction

In this regard, the questionnaire of this study attempted to ask the delivery method that effective
to meet project cost and execute the work on time for road construction. Accordingly, the
respondents responded that (41%) and (62%) DB method is effective to execute the work on
time and meet project cost respectively, because the contractor assumes all project
responsibilities, from design stage up to the concession period for project transfer, it
intentionally reduces the time schedules required to process the activities and project cost too.
The second score (18%) was given to the DBB method by meeting the project cost and
according to them, (28%) was given to BOT method meeting the estimated project duration.
Accordingly, equally 5% was given for CM risk Free and CM with Risk project delivery
method for the effectiveness to meet project cost and equally 8% for the effectiveness to
complete the work on time.
Comparison of Project Delivery System on Road

Construction
70% 62%
60%
Percentage
50% 41%
40% 28%
30% Advisable to meet project costs
18%15%
20% 10%
10% 5% 8% 5% 8%
Effective to execute the work on
0% time
DBB DB CM risk CM with BOT
Free risk
Project Delivery System
Figure 4.3 Respondents’ perception on the method that meets project Cost and work on time
In addition to this respondent also asked project delivery method that ensures a quality project
(both functional and aesthetic), (33%) DBB and BOT (Figure 4.4) got equal value by ensuring
quality project both in function and aesthetic. The reason is, as noted, this method creates
checks and balances between the design team and the contractor(s) so that the defects of one
party are not concealed. The respondents thought that the BOT method ensures a quality project
better than the DB.
May 2017
A significant number of respondents (28%) replied that the DB method is also effective in
ensuring a quality project (both functional and esthetic). This is because, as the respondents
mentioned, highly experienced construction management professionals are involved who can
give material quality, skilled labor, and cost control inputs both at the design and actual
construction stages. Moreover, Construction Manager at Risk and Construction Manager at Free
got equal vote as shown in the following figure.
Quality of projects
35% 33% 33%
30% 28%
25%
Percentage
20%
15%
Quality project (both functional
10% and aesthetic)
5% 3% 3%
0%
DBB DB CM risk CM with BOT
Free risk
Project Delivery Method
Figure 4.4 Respondents’ perception on Quality of projects
Respondents were also asked to express their opinion concerning the need for reduction of
administrative burden to the owner when choosing among the delivery methods. Accordingly, it
was reported by 41% of the respondents that they consider DB for reduction of administrative
burden to the owner. The second highest score (36%) was given to the BOT for reduction of
administrative burden to the owner. The third highest score was to the CM risk free method
(10%). The fourth was given to the CM-at-Risk method (8%). And their final choice was the
DBB method (5%).
Effective in reducing administrative

burden to the owner
60%
41%
Percentage
36%
40%
20% 5% 10% 8% Effective in reducing
0% administrative burden to
DBB DB CM risk CM BOT the owner
Free with risk
Project
87| P a g e AAU, AAiT, School of Civil andDelivery MethodEngineering
Environmental CoTM (Post Graduate Studies)
May 2017
Figure 4.5 Respondents’ perception on effective in reducing administrative burden to the

owner
The final question from the first section was the project delivery method that exposed to time
extension claim, to cost claim and to quality/performance claim. As per the respondent DBB
takes the highest place (67%) that exposed to time extension claim, (72%) to cost claim and
(45%) to quality/performance claim.
Time Extension, Cost and Quality/Performance

Claim
80% 72%
70% 67%
60% Exposed to time extension claim

50% 45%
39%
40% Exposed to cost claim
30%
20% 15% Exposed to quality/performance
8% 5% 5% 5% 5% 8% 8% 8% 8% claim
10% 3%
0%
DBB DB CM risk Free CM with risk BOT
Figure 4.6 Time Extension, Cost and Quality/Performance Claim
4.2.3 Consultant Respondent’s View
4.2.3.1 Project delivery methods used by Consultant
Next to the general information, the first question of the consultant respondents was to select
the project delivery method that used by the organization to procure at list one construction
projects. In this regard, the respondents’ response as presented on figure 4.7, (60%) they had
never used any of the innovative methods to deliver at least one construction project so far.
Hence, it has been noted that these offices have been using the traditional, DBB, method, even
if it’s not timesaving and is a costly method. And the remaining (40%) consultant has exposer
on innovative project delivery method. Accordingly out of the 40% consultant (67%) use DB
widely than the other innovative method. The second score were given for both CM-risk-free
and CM-at-Risk method (13%). And the final one was the BOT method (7%).
Project Delivery Method Used by Consultant
May 2017
Figure 4.7 Project delivery method used by consultant
Innovative Project Delivery Mothod Used By

Consultant
Design-Build (DB)
7%
13%
Construction Management
Free (CM)
13% Construction Management
67% Risk (CM)
Design-Build-Operate-
Transfer (BOT)
Figure 4.8 Innovative project delivery methods used by Consultants
4.2.3.2 Willingness to Shift from the Traditional to the Innovative Method(s)
Asked if they intend to shift from the traditional method of project delivery to the innovative
ones, 67% of the respondents preferred to sift to innovative method. However, the respondents
also mentioned problems like absence of timely project completion, cost overruns and poor
quality of the finished products as the main problems of the traditional project delivery method.
On the other hand 33% of the respondents prefer to stay in the traditional method, as they quote
lack of capable local contractors in the country, and absence of local standard conditions of
contract for the use of the innovative methods they chose to stay in the traditional. It’s presented
as shown in the figure below.
Willingness to Shift to Innovative

. Method
33% Yes
No
May 2017
Figure 4.9 Willingness to Shift from the Traditional to the Innovative Method(s)
4.2.3.3 Priority rank of the Innovative project delivery method
The next questionnaire survey asked the respondents to rank the innovative project delivery
method that they plan to shift; based on the figure 4.17 below the respondents only rank DB
project delivery method and it got the first priority (60%).
The reasons that respondents cited for their mixed feelings were:
i. Lack of capable local contractors, and
ii. Lack of local law allowing the use of these innovative methods.
Hence, for the sake of the reasons mentioned, the respondents’ perception that the local
construction industry lacks capable local contractors for adoption of innovative project delivery
methods could not be firm ground for not introducing or applying the innovative methods.
Respondents also mention construction law in Ethiopia excludes other methods than DBB
method. It is worth noting that the selection or use of specific project delivery methods may be
mandated for some owners. However, the local situation appears to be a bit relaxed in this
regards. Hence, the Standard Public Works Procurement Guideline for Competitive Bidding,
issued in January 2006, allows the application of the innovative methods. In this regard, it
recommends the adoption of the FIDIC Conditions of Contract.
The respondent chose ‘I do not know’ section for CM at Free, CM at Risk and BOT project
delivery system, the percent ranges from 60%-80%. It is logically true when we compare to the
real practices to the Ethiopian road construction.
DB CM @ Free
80% 60% 80% 60%
Percentage
Percentage
60% 60%
40% 30% 40% 30%
20% 10% 20% 10%
0% 0% 0% 0% 0% 0%
0% DB 0% CM @ Free
1st 2nd 3rd 4th 5th I do 1st 2nd 3rd 4th 5th I do
90| P a g e AAU, AAiT, School ofnot
Civil and Environmental Engineering CoTM (Post Graduatenot
Studies)
know know
May 2017
BOT CM @ Risk
70% 100% 80%
80%
Percentage
Percentage
60%
40% 20% 50% 10% 0% 10% 0%
20% 0% 0% 10% 0% 0%
0% 0%
BOT 1st 2nd 3rd 4th 5th I do CM @ Risk
1st 2nd 3rd 4th 5th I do
not not
know know
Priority Priority
Figure 4.10 Priority Ranks of the Innovative Method(s)
4.2.3.4 Respondents’ reason to shift to Innovative project delivery method
Farther question also asked for the consultants who intended to shift to innovative project
delivery system, “what was/were the reasons behind their decisions to shift to innovative
method?” As presented in the figure below 4.11 all the respondents only select DB delivery
system and rank based on redaction project cost, redaction project time, ensure project quality,
ensure project safety and to reduce administrative burden to owner.
First critical criterion they consider to select DB among the project delivery methods is to
maintain or, if possible, to reduce the project duration. As reported below 60% of the
respondents strongly agree DB reduce project duration and respondents were also asked to
express their opinion concerning the need for reduction of administrative burden to the owner
when choosing among the delivery methods, 60% of the respondents similarly strongly agree it
reduce administrative burden to the client.
Ensuring Project quality is given the second slightly agreeing priority (60%) in delivery
method. In Addition the need for cost reduction is considered as the third pressing (Neutral)
criteria (25%) for selecting among the delivery methods.
May 2017
Strongly Agree
70% 60% 60%
60% 50%
Percentage
50%
40%
30% 25%
20% 11%
10% Strongly agree
0%
To reduce To reduce To ensure To ensure To reduce
project cost project time project quality project safety administrative
burden to owner
Variable
Slightly Agree
67%
70%
60%
50%
Percentage
40% 33% 30%

30% 20%
20% 13%
10% Slightly Agree
0%
To reduce To reduce To ensure To ensure To reduce
project cost project time project quality project safety administrative
burden to owner
Varialble
Neutral
30% 25%
25% 20%
Percentage
20%
15% 11% 13%
10%
10%
5%
Neutral
0%
To reduce project To reduce project To ensure project To ensure project To reduce
cost time quality safety administrative
burden to owner
Variable
Figure 4.11 Respondents’ reason to shift to Innovative project delivery method
Lastly, under this part of the questionnaire, the procurement related factor that affecting project
performance were asked. All feedback from respondent tabulated and tries to find out critical
May 2017
factors which severely affect performance of construction. Accordingly, the respondents

responded that (54%) process and procedure of the construction organization is the prime
factor that affects project performance.
Up next control of project design (20%) takes the second highest rank that affects project
performance.
In addition Pre-construction and client interest got equal vote (13%) on procurement related
factor that affects project performance.
One of the respondent point out “The most important factors agreed by the owners, contractors,
and engineers as the main factors affecting the performance of construction projects: improper
planning, improper designing, site management, decision making, construction methods,
shortage of labor and technical personnel, quality and shortage of materials, construction
mistakes and defective work, productivity.
The owners and technical factors are more important than the operational ones. Development
of human resources in the construction industry through proper and continuous training
programs for construction performance enhancement. These programs can update participants’
knowledge and can assist them to be more familiar with project management techniques and
processes.
Engineers should perform their activities properly to improve productivity which helps
improvisation of construction projects. Contractors should not increase the number of projects
that cannot be performed successfully. Proper motivation and safety systems should be
established for improving the productivity performance of construction projects. Contractors
are counseled to minimize waste rates through project implementation for improving cost.
They should be more interested in conformance to project specification to overcome disputes,
time, and cost performance problems. Quality materials should be of a greater interest for
contractors in order to improve cost, time, and quality performance. This can be done by
applying quality training and meetings that are necessary for performing an improvement.
Contractors are urged to be more interested in sequencing of work according to schedule. In
addition, contractors should have a cost engineer in their projects to successfully control costs
and improving in performance of construction.”
Procurement related factor that affects project performance
13% Pre - construction time
93| P a g e AAU, AAiT, School of Civil and Environmental Engineering Control

CoTMof project
(Post designStudies)
Graduate
20%
May 2017
Figure 4.12 Procurement related factor that affects project performance
4.2.4 Contractor and Consultant Respondent’s View (Common Questioner Survey)
4.2.4.1 Respondent’s view regarding the essential procurement stage for road construction for
better performance
In this regard, the questionnaire of this study attempted to ask the essential procurement stage for
road construction for better performance (Figure 4.13). Accordingly, (72%) of the contractor and
(93%) of the consultant respondents responded that pre-construction stage is essential for better
performance than the construction stage.
Contractor Consultant
Pre-
Pre-
construction 7%
18% construction
/pre-contract
/pre-contract
procurement
10% procurement
Construction / Construction /
72% post contract post contract
procurement 93% procurement
Figure 4.13 Contractor and Consultant view regarding the essential procurement stage
It was observed that 72% of the contractor respondents indicated the pre-construction stage is
essential procurement stage for road construction for better performance (Figure 13). According to
these respondents select the subdivision of pre-construction procurement stage like these, 76%
select pre-feasibility and feasibility study as very high, 14% select Design as Very High and 10%
select as tendering as Very High subdivision of pre-construction procurement stage. Out of the
93% of the consultant respondent select the subdivision of pre-construction procurement stage like
Pre-Construction Stage
76%
80% 69%
May 2017
these, 67% pre-feasibility and feasibility study as very high, 20% select Design as High and 13%
select tendering as Very High .
Figure 4.13a Contractor view regarding subdivision of pre-construction procurement stage
Pre-Contract Stage
80% 73%
67% 67%
70%
60%
Percentage
50% Very High

40%
27% 27% High
30% 20%
20% 13% Medium
7%
10% 0% 0% 0% 0% 0% 0% 0% Very Low
0%
Pre-feasibility and Design Tendering Low
feasibility
Pre-Contract Stage
Figure 4.13b Consultant view regarding subdivision of pre-construction procurement stage
4.2.4.2 Contractor Respondents View on advantageous SBD for tender evaluation for road
construction
As shown on Figure below, Contractor Respondents asked which SBD is advantageous for tender
Evaluation and Analysis for the road construction, 32% of respondent select PPA 2006, 25% of the
respondent select MoWUD, 28% of the respondent select FPPPAA 2011 and 15% of them did not
select any of the SBD for Road construction.
It can be seen that (Figure 4.14) the majority of the Contractor respondents support least bidder
system (PPA 2006 Standard Biding Document) for tender evaluation system. PPA 2006 SBD
evaluation method is a two stage bid evaluation system the first one is technical evaluation and
the second one is the financial offer. The first evaluation is a technical evaluation, Bidders who
Advantageous SBD for tender evaluation for the road
May 2017
score above 70% in the technical evaluation will participate for further financial evaluation.
The successful bidder will be the least bidder whose offer is less than the other bidder.
Figure 4.14 Contractors view on tender evaluation system
4.2.4.3 Consultant Respondent View on advantageous SBD for tender evaluation for road
construction
As shown on Figure below, Consultant Respondents asked which SBD is advantageous for tender
Evaluation and Analysis for the road construction, 47% of respondent select FPPPAA 2011, 33%
of the respondent select MoWUD, 28% of the respondent select PPA 2006 and 13% of them did
not select any of the SBD for Road construction.
On the other hand most of the consultant respondents support FPPPAA 2011 Standard Biding
Document for tender evaluation system. The aggregate of technical and financial offers have
70% and 30% value respectively at the end of evaluation. The Technical Proposal evaluation
score shall be normalized according to the highest evaluated technical score that will get 100
points according to which other scores of technical criteria shall be proportionally ranked.
Normalization is the transformation that is applied equally to every element in the group of
data so that the group has a specific statistical characteristic. The same is true for the financial
offer. The winner of this bid will be the highest point in the total sum of results of the technical
and Bid Price evaluation.
Advantageous SBD for tender evaluation for the road

construction
13%
33% MoWUD
PPA 2006
FPPPAA 2011
None
47% 7%
May 2017
Figure 4.15 Consultant View on tender Evaluation System
4.2.4.4 Contractor Respondent View on Tender Evaluation and Analysis of different Standard Bid
Document
In this regard, the questionnaire of this study attempted to ask the impression about MoWUD, (The
tender evaluation and analysis approach were modified by the Ministry of Works and Urban
Development in March 2001), PPA 2006 and FPPPAA 2011 tender evaluation and analysis
approaches for road construction. According to respondent (Figure 4.16 a, b & c) as illustrates
below that 30% of the respondents gave very good to PPA 2006 tender evaluation and analysis
for road, 45% of the respondent gave Good for MoWUD evaluation system and 28% Fair for
FPPPAA 2011 tender evaluation and analysis approaches for road construction.
MoWUD Tender evaluation and analysis for road

construction
60% 45%
Percentage
40% 25%
15% 15% MoWUD tender
20%
evaluation and analysis
0% for road construction
Very Good Good Fair Poor
Scale of Measure
Figure 4.16a Contractor Respondent View on MoWUD Tender evaluation for road construction
PPA 2006 Tender evaluation and analysis approach for

road construction
40%
30% 30%
Percentage
30%
20% 20%
20% PPA 2006 tender
evaluation and analysis
10%
approach for road
0% construction
Scale of Measure
Figure 4.16b Contractor Respondent View on PPA 2006 Tender evaluation for road construction
FPPPAA 2011 tender evaluation and analysis for road

construction
40% 35%
97| P a g e AAU, AAiT,25% 28%
School of Civil and Environmental Engineering CoTM (Post Graduate Studies)
tage
30%
May 2017
Figure 4.16c Contractor Respondent View on FPPPAA 2011 Tender evaluation for road
construction
4.2.4.5 Consultant Respondent perception on Tender Evaluation and Analysis of different

Standard Bid Document
It was observed that 33% of the consultant respondents indicated MoWUD and FPPPAA 2011
as a very good tender evaluation for road construction. Next PPA 2006 and FPPPA 2011 (40%)
take the second scale of measure as good tender evaluation for road construction. And 33% fair
for MoWUD tender evaluation for road construction as shown in the following figure 4.17a, b
and c.
MoWUD tender evaluation and analysis for road

construction
40% 33% 33%
27%
Percentage
. 30%
20%
MoWUD tender evaluation
10% 7% and analysis for road
construction
0%
Scale of Measure
Figure 4.17a Consultant Respondent View on MoWUD Tender evaluation for road construction
PPA 2006 tender evaluation and analysis approach for road

construction
50%
40% 40%
40%
Percentage
30%
20% 13% PPA 2006 tender evaluation
7% and analysis approach for
10%
road construction
0%
Scale of Measure
May 2017
Figure 4.17b Consultant Respondent View on PPA 2006 Tender evaluation for road construction
FPPPAA 2011 tender evaluation and analysis for road

construction
50% 40%
40% 33%
Percentage
30% 20%
20% FPPPAA 2011 tender
7% evaluation and analysis for
10%
0% road construction
Scale of Measure
Figure 4.17c Consultant Respondent View on FPPPAA 2011 Tender evaluation for road
construction
4.2.4.6 Contractors Respondent Perception on Performance Evaluation used in Construction

Projects
Here also another question arises, about performance: “which performance evaluation is used
for construction projects?” The respondent answer is presented in Figure 4.18 from the
surveyed contractors; it was found that 70% of them select Economical performance evaluation
used most frequently. Other 60% of the respondents said time performance evaluation is occurs
rather than Quality, Environmental performance and working Environment performance. And the
rest 33% said Quality performance used frequently and least frequently. Their final choice was for
environment performance and working environment performance (38% and 45%) No
occurrence and least frequently respectively.
Performance Evaluation Used In Construction Projects

80%
70%
70%
60%
60%
Percentage
50% 45%
40% 33%33% 35%38% Most Frequantly
30%
30% 25% Frequantly
20%18% 18% 18%
20% Least Frequantly
10%13%8% 10% 10% 8%
10% 3% No Occurance
0%
Economical Time Quality Environmental Working
Performance Performance Performance Environment
Performance Evaluation
May 2017
Figure 4.18 Performance Evaluation used for construction projects
4.2.4.7 Consultant Respondent perception on Performance Evaluation used in construction

projects
Here also same question asked for the consultant, “Which performance evaluation is used for
construction projects?” The respondents replied their answer as presented in Figure 4.19 it was
found that 60% of them select Time performance evaluation used most frequently. Other 60%
of the respondents said Economical performance evaluation is occurs rather than Quality,
Environmental performance and working Environment performance.
Performance Evaluation Used In Construction Projects

70%
60%
60% 53%
50% 47% 47%
Percentage
40%
40% 33% Most Frequantly
30% 27% 27% 27% 27% 27%
20% 20% Frequantly
20% 13% 13% Least Frequantly
10% 7% 7% 7%
0% 0% No Occurance
0%
Economical Time Quality Environmental Working
Performance Performance Performance Environment
Performance Evaluation
Figure 4.19 Performance Evaluation used for construction projects
4.2.4.8 Satisfaction of Contractor on Ethiopian construction procurement practice
Lastly, under this part of the questionnaire, Satisfaction of Contractor on Ethiopian

construction procurement practice. As illustrated under the following (Figure 4.20) 42%, 38%,
15% and 5% Medium, Low, very low and high respectively. Owner wants to award to low bid,
over qualification criteria, corruption, lack of information regarding the project and lack of
local low allowing the use of innovative methods are the reason that responded suggested.
Satisfaction of Contractor on Ethiopian construction

procurement practice
100| P a g e AAU, AAiT, School of Civil and
5%Environmental Engineering CoTM (Post Graduate Studies)
May 2017
Figure 4.20 Satisfaction of Contractor on Ethiopian construction procurement practice
4.2.4.9 Satisfaction of Consultant on Ethiopian construction procurement practice
The same is true for consultant, lastly they asked there degree of satisfaction on Ethiopian
construction procurement practice. As described on the Figure 4.21 below 40% select Very
Low degree of satisfaction, 33% Vote for Medium, 27% Vote for Low degree of satisfaction,
and no one select high degree of satisfaction.
Satisfaction of Consultant on Ethiopian Construction

Procurement Practice
0%
High
40% 33%
Medium
Low
Very Low
27%
Figure 4.21 Satisfaction of Contractor on Ethiopian construction procurement practice
4.2.5 Client View
The General Information of the client is presented on the first section with the contactor and
consultant. From the distributed questionnaire to the client the first question asked was, client
requirements to select project delivery system. According to the respondent they use project
requirements and project plan (Project type, Size, cost, Flexibility, complexity and site risk) to
select project delivery but they company do not have specialized staff member who is
responsible to select type of project delivery system for new construction project.
The Ethiopian roads authority has experience with the DB innovative methods of project
delivery system in the road construction in addition to the traditional project delivery method.
However, owner’s primary goal in choosing a delivery method to ensure that the method to meet
May 2017
the project objectives and at the same time allow the project to be delivered on time and within
budget with better quality. ERA always use traditional delivery system and usually innovative
delivery system.
For the question raised about the project delivery method that is generally recommended for the
road construction, clients prefer DBB.
Even if clients in general consider DBB as an advantageous project delivery method they also
comment DBB exposed to time and cost claim in road construction. They also comment DB
project delivery system is effective to meet project costs and execute the work on time for the
road construction but it exposed to quality/performance claim. They also mention BOT project
delivery system ensures a quality project (both functional and aesthetic) and effective in
reducing administrative burden to the owner in the road construction.
The clients were also asked to explain their criteria to select the type of construction contract
document (construction contract document like MoWUD, PPA 2006, and FPPPAA2011),
according to their explanation the interest of the client takes the first priority, in addition to this
the project size, complexity and type of the project takes the second priority. But ERA use
World Bank standard biding document for projects greater than Ten Million US Dollar and PPA
for projects less than Ten Million US Dollar. As well, they select FPPPAA 2011 SBD as
advantageous tender evaluation for the road construction.
The clients select pre-construction Procurement stage to ensure good quality without cost
overrun and time overrun. And they also rank the sub title of the pre-construction, 50% for the
design, 25% for pre-feasibility and feasibility and 25% for tendering.
In this regard, the questionnaire of this study attempted to ask the impression about tender
evaluation system, the respondent satisfying is presented here below as table 4.5;
Table 4.5 Client’s View on Tender Evaluation
Priority
SBD
Very good Good Fair
MoWUD 
PPA 2006 
FPPPAA2011 
The other question arises was about performance; “which procurement related factor is
affecting project performance?” The respondent lists the factor that affects the performance as;
May 2017
 Pre - construction time

 Control of project design
 Clients interest and
 Process and procedure of construction organizational
As next which performance evaluation is used for construction projects from respondent is
tabulated below (Table 4.6)
Table 4.6 Frequency of Performance Evaluation used for construction projects
Performance Most Least No

Frequently
Evaluation Frequently Frequent Occurrence
Economic Performance √
Time Performance √
Quality √
Environmental √
Performance
Working Environment √
Lastly, under this part of the questionnaire, degree of satisfaction of the client on the Ethiopian
construction procurement practice was asked. The respondents mention as Low degree of
satisfaction.
4.3 Case Study on Ethiopian Road projects
In Ethiopia, the key parties involved in road projects implementations are the Government of
Ethiopia represented by the Ethiopian Roads Authority, Contractors and Consultants. The
Ethiopian Roads Authority (ERA) is charged with the duties and responsibilities of providing
adequate road infrastructure to support the socio-economic development of the country. The
task involves improving the condition of existing roads and expanding the network. ERA was
established in 1951 as Imperial Highway Authority and was responsible for the design and
implementation of road projects for about 60 years from its establishment by making use of
in house design and own force unit for construction. Later, recognizing the importance of the
road transport in supporting social and economic growth and its role as a catalyst to meet
poverty reduction targets, the Government of Ethiopia has placed increased emphasis on
improvement of the quality and extent of road infrastructure in the country. To address
constraints in the road sector, related to restricted road network coverage and poor condition,
the Government formulated the Road Sector Development Program in 1997
Currently, the Contractors taking part in road projects implementations are National and
International companies. Most of the local Contractors are of limited capacity and rarely do
May 2017
meet the requirements to participate in donor financed projects. Hence, international

Contractors, who meet the requirements, have been participating in donor financed projects.
The contracting company after winning the contract will take the responsibility to complete
construction of the project in accordance with the contract document. Consultants, like
Contractors, will take the responsibility for the design and/or supervision services they render
in accordance with the contract document. International Consultants’ have also been
participating in donor financed projects.
The tender document for the procurement of works in ERA is World Bank standard biding
document for projects greater than Ten Million US Dollar and PPA for projects less than Ten
Million US Dollar. For this research six projects were selected for the case study to assess the
procurement practices in ERA. The research intention was to investigate construction project
that procured under World Bank standard biding document so that all the selected projects are
procured under the World Bank standard bid document.
The project delivery method widely practiced by ERA is the traditional design-bid-build
approach. Now days ERA adapt the innovative project delivery system Design Built for few
projects. The DBB approach has three separate phases. First, the feasibility and/or design of a
project are undertaken by a Consultant, then a bid is floated to procure a Contractor, and
finally the selected Contractor completes the construction. But the DB approach has only two
stages, the first one is bid floated and them contractor selection.
For this research three DBB and three DB Ethiopian Federal Road Projects were selected for
the procurement practices study in the road sector. Due to shortage of time and budget
allocated for the research work, it has not been possible investigate additional project. In
addition to these project construction budget greater than 10 Million US dollar, Different
project delivery system, road length greater than 35km, and not terminated road projects are
the criteria for the selection.
During the desk study the Qualification Requirements, bidder who participate in the bidding
process, bid evaluation system, contract amount, contract time during signing of the contract,
actual cost and actual time at completion, Nature and complexity of the project were
investigated. These help to know whether the Construction procurement practice has impacts
in construction budget, completion time and performance in the Ethiopian construction
industry.
May 2017
The procurement of services and works were made on international competitive bidding, and
the projects were delivered with design-bid-build and Design build project delivery method.
The list of these projects is described hereunder;
Case Study One

4.3.1 Construction Procurement Practice
4.3.1.1 Design-Bid-Build Project Delivery Method
A. Sodo Tercha Road upgrading Project (Lot 2:Omo River-Tercha 83.4Km)

B. Sodo-Tercha Road Upgrading project (Lot 1: Sodo-Omo River 75.72)
C. Felegebirhan-Bahirdar Road Project (Contract-2: Zema River Bridg-Felegebrihan)
A. Sodo Tercha Road upgrading Project (Lot 2: Omo River-Tercha (83.4Km)
The works under this contract consist of the upgrading of the existing gravel surface road
which begins at the town of Tercha and ends at about Omo River at Km 139+000. The road
shall be upgraded to DS4 road class (ERA’s Geometric design Manual -2002). The upgrading
road shall have a cross section width of 7.0m outside town (with 1.5m shoulder on each side)
and 19 m width (including 3.5 parking lane and 2.50m pedestrian walkway) within town
section. The formation of the road is 20cm base course/wearing gravel, 27.5cm sub base and
30cm capping layer for widening.
The road traverses abundantly through mountainous terrain and has necessitated the
installment/rehabilitation of 138 minor/major drainages – RC pipes, box/slab culverts and
bridges, requiring new construction and provision of additional cells/rehabilitation as detailed
and presented in the engineering report of this contract. The provision of new construction
includes two bridges with span: 1*20 RCDG and 1*10 RCSS, Three slab/box culverts at km
58+284,108+780 &113+052 and Thirty nine pipe culverts.
The road will be constructed to an Asphalt Concrete Standard. The works under this contract
consists of the construction of 83.4 Km road to DS-4 standard with 7.0 m carriageway width.
The works also includes construction of several minor and major drainage structures. The
general summary of the project is tabulated below.
May 2017
Table 4.7 General Information Summary of Sodo Tercha Road upgrading Project
Lot 2
No. General Information Descriptions

1. Project Location
Southern Region
2. Length (km)
83.4
3. Road standard
DS-4
4. Width of Road
7.0m outside town (with 1.5m shoulder
on each side) and 19 m width
(including 3.5 parking lane and 2.50m
pedestrian walkway) within town
section
5. Type of Surface
Asphalt Concrete surface
6. Existing Road
upgrading of the existing gravel surface
7. Source of Finance for Construction
Government of Ethiopia
8. Type of Contracting (Contract Design-Build Contract
Delivery Strategy)
The Specific Procurement Notice for Invitation to bids for the subject Project was published on the
Ethiopian Herald on July 27 & 29, 2014. Pursuant to the notice of invitation, sixteen bidders have
purchase the tender documents before the deadline for submission of bids.
A pre-bid meeting of the tender was scheduled to be held on August 19, 2014 at 10:30AM at ERA
conference room.
Later some queries have been received from bidders in written forms and Addenda &
clarification to Queries were issued to all the bidders who have purchased the bidding
document.
Among the listed below sixteen prospective bidders who have bought the tender documents
from ERA, Eight of them have submitted their qualification applications and financial offers in
separate sealed envelopes before/on October 28, 2014 at 2:40 PM which is the latest date for
submission of bid. The table blow shows the list of bidder who have purchase and submitted
their application for post qualification and financial offers.
Table 4.8 List of applicants who have collected bidding document and submitted
their application for post qualification and financial offer.
No Name of Applicants Country of Submitted
May 2017
Registration
1. Alemayehu Ketema General Contractor Ethiopia No
2. China First Highway Engineering Co.,Ltd (CFHEC) China No
3. China Jiangxi Corporation for International China No

Economic and Technical Cooperation
4. China Railway No.3 Engineering Group Co., Ltd China No
5. China Seventh Group Co. China Yes
6. Defence Construction Enterprise Ethiopia Yes
7. DMC Construction Plc Ethiopia Yes
8. Enyi General Business Plc, Enyi Construction Ethiopia Yes
9. Ethio General Contractor Ethiopia No
10. Gemshu Beyene General Contractor Ethiopia Yes
11. SATCON Construction Plc Ethiopia No
12. SBI International Holdings AG Switzerland Yes
13. Sinohydro Corporation Ethiopia No
14 SUR Construction Plc Ethiopia Yes
15 Yencomad Construction Plc Ethiopia Yes
16 Zhongmei Engineering China No
Total 16 8
The evaluation of the bids is a two stage procedure; namely, Post Qualification and financial
Evaluation. First the qualification information shall thoroughly be checked whether it complies
with the criteria set out in the qualification document. Then the financial bids of bidders will be
opened only for those bidders whose post qualification information is found to be responsive.
The qualification criteria set by the employer; Legal Requirement, History of Non-performing
contracts, Historical Financial Performance, construction experience, construction turnover,
manpower requirements, proposed construction methodology and work program are itemized
below.
Table 4.9 Qualification Criteria and Applicant Evaluation
S.No Specified Criteria Required Qualification Assessment of

Applicants
May 2017
1. Legal Requirement Must be GC-1 All Pass
2. History of Non-Performing Non-performance of a contract did All Pass

Contracts not occur within the last Two (2)
years
3. Pending litigation All pending litigation shall in total All Pass

not represent more than 30% of
the Applicant's net worth
4. Historical Financial Audited balance sheets for the last All Pass
Performance five years
5. Cash Flow 115 Million Birr for local bidder All Pass
and 150 Million Birr for foreign
6. Annual Construction 320 Million Birr for local bidder All Pass
Turnover and 910 Million Birr for foreign
7. General Construction Five Years Required All Pass

Experience
8. Specific Construction One project with min. Project 1 fail /7 pass

Experience amount of 610 million Birr or
equivalent AC projects
9. Specific Construction Quantitative requirement for earth 1 fail /7 pass
Experience in Key Activities work previous execution.
10. Personnel Capabilities As required in execution of the All Pass

project
11. Proposal of work methods To present Proposal of work All Pass

and program methods and program
All are passed the post qualification criteria except one contractor, rejected due to failure to
fulfill the specific construction experience and specific construction experience in key activities
and found be non-responsive and rejection form further evaluation as listed above. The other all
contractor fully qualified and attended the financial offer opening.
The evaluation criteria is as stated in the above table, bidders qualified the post-qualification
evaluation criteria requested for financial bid evaluation. It’s a lowest evaluated bid price, out
of seven contractors’ one international contactor win the tender with an amount of
1,674,383,031.77 ETB including contingency specified provisional sum and VAT.
May 2017
On 14th of April, 2015, ERA has signed a construction agreement with the Contractor for the
construction works of the road. The original cost of the civil works contract is ETB
1,674,383,031.77 inclusive of VAT 15%.
B. Sodo-Tercha Road Upgrading project (Lot 1: Sodo-Omo River)
The work under this contract is located in the southern part of the country in the Southern
Nations, Nationalities and Peoples (SNNP) Regional States. The work consists of the
upgrading of the existing gravel surface road which begins at the town of Sodo and ends at
town of Tercha. The roads shall be upgraded to DS4 road class (ERA’s Geometric design
Manual -2002 having 75.72 km with asphalt Concrete Standard. The upgrading roads shall
have a cross section width of 7.0m outside town (with 1.5m shoulder on each side) and 19 m
width (including 3.5 parking lane and 2.50m pedestrian walkway) within town section. The
formation of the road is 20cm base course/wearing gravel, 27.5 sub base and 30cm capping
layer for widening.
The road traverses abundantly through mountainous terrain and has necessitated the
installment/rehabilitation of 155 minor/major drainages, RC pipes, box/slab culverts and
construction of 1 and 21 box and pipe culverts, respectively requiring provision of additional
cells/rehabilitation of 3bridges, 22slab/box culverts and 108pipe culverts. The general
summary of the project is tabulated below.
Table 4.10 General Information Summary of Sodo-Tercha Road Upgrading project

Lot 1

1. Project Location
Southern Region
2. Length (km)
75.72
3. Road standard
DS-4
4. Width of Road
7.0m outside town (with 1.5m
May 2017
shoulder on each side) and 19 m

width (including 3.5 parking lane and
2.50m pedestrian walkway) within
town section
5. Type of Surface
Asphalt Concrete surface
6. Existing Road
upgrading of the existing gravel
surface
7. Source of Finance for Construction
Delivery Strategy)
Ethiopian Herald and ERA’s websites on July 27 & 29, 2014. Pursuant to the notice of invitation,
sixteen bidders have purchase the tender documents before the deadline for submission of bids.
A pre-bid meeting of the tender was scheduled to be held on August 19, 2014 at 10:30AM at ERA
conference room.
document.
Among the listed below Eighteen prospective bidders who have bought the tender documents
from ERA, Seven of them have submitted their qualification applications and financial offers
in separate sealed envelopes before/on October 28, 2014 at 2:40 PM which is the latest date for
Country of
No Name of Applicants Submitted
Registration
2. ASER construction Ethiopia No
4. China Jiangxi Corporation for International China No
May 2017
Economic and Technical Cooperation
6. China Seventh Group Co. China No
7. Defence Construction Enterprise Ethiopia Yes
9. Enyi General Business Plc, Enyi Construction Ethiopia Yes
11. Gemshu Beyene General Contractor Ethiopia No
12. HUNAN HUANDA road and bridge corporation China Yes
13. SATCON Construction Plc Ethiopia No
14 SBI International Holdings AG Switzerland Yes
15. SINOHYDRO Corporation Ethiopia No
16. SUR Construction Plc Ethiopia Yes
17. Yencomad Construction Plc Ethiopia No
18. Zhongmei Engineering China Yes
Total 18 7
The evaluation of the bids is a two stage procedure; it is similar with (case study I) project. The
qualification criteria set by the employer; Legal Requirement, History of Non-performing
manpower requirements, proposed construction methodology and work program are
summarized below.
Assessment of
S.No Specified Criteria Required Qualification
Applicants
1. Legal Requirement Must be GC-1 All Pass

2. History of Non-Performing Non-performance of a contract did All Pass
May 2017
years
3. Pending litigation All pending litigation shall in total All Pass

4. Historical Financial Audited balance sheets for the last All Pass
5. Cash Flow 95 Million Birr for local bidder All Pass

6. Annual Construction 260 Million Birr for local bidder All Pass
7. General Construction Three years for local contractor All Pass

Experience and Five for foreign
8. Specific Construction One project with min. Project 1 fail /6 pass

Experience amount of 660 million Birr and
least 57Km length for local bidder
and two projects 1.1Billion each
and least 75Km length for foreign
9. Specific Construction Quantitative requirement for earth 1 fail /6 pass

10. Personnel Capabilities As required in execution of the All Pass

project
11. Proposal of work methods To present Proposal of work All Pass

All are passed the post qualification criteria except one contractor, rejected due to failure to
fulfill the specific construction experience and specific construction experience in key activities
and found be non-responsive and rejection form further evaluation as listed above. The other all
contractor fully qualified and attended the financial offer opening.
evaluation criteria requested for financial bid evaluation. It is lowest evaluated bid price, out of
seven contractors’ one international contactor win the tender with an amount of
1,328,412,050.02 ETB including contingency specified provisional sum and VAT.
C. Felegebirhan-Bahirdar Road Project (Contract-2: Zema River Bridg-Felegebrihan)
May 2017
The project road is located in the North West part of Ethiopia, Amhara Regional state. The
works under this contract consists of the construction of 83km of the Felegebrihan - bahirdar
road project contract-II. The project road starts from Abaya River Bridge, which is located at a
distance of 395 Km North West of Addis Ababa and stretches to south east direction and ends
at Felegebrihan town.
The road shall be construction to DS4 road class (ERA’s Geometric Design Manual-2002)
with an Asphalt concrete carriageway of thickness 50mm and it shall have a cross section of
10m (7m AC carriageway and 1.5m gravel shoulder on each side) or as per the drawings. The
work also includes the construction of minor and major drainage structures. The general
summary of the project is tabulated below.
Table 4.13 General Information Summary of Felegebirhan-Bahirdar Road Project
1. Project Location North West

2. Length (km) 83
3. Road standard DS-4
4. Width of Road 7.0m outside town (with 1.5m shoulder
on each side)
5. Type of Surface Asphalt Concrete surface
6. Existing Road New construction
7. Source of Finance for Government of Ethiopia
Construction
Delivery Strategy)
Ethiopian Herald newspaper on February 08 & 09, 2014. Pursuant to the notice of invitation,
Nineteen applicants have collected the tender documents before the deadline for submission of
bids.
A pre-bid meeting of the tender was scheduled to be held on March 19, 2014 at 10:30AM at ERA
conference room.
document.
May 2017
Among the listed below Nineteen prospective bidders who have bought the tender documents
from ERA, Seven of them have submitted their qualification applications and financial offers
in separate sealed envelopes before/on July 08, 2014 at 2:30 PM which is the latest date for
No Name of Applicants Country of Submitted

Registration
2. Chaina Railway 18th Bureau Group Co.,Ltd. China No
4. China Railway Seventh Group Co.,LTD (CRSG) China Yes
5. China Tiesiju Civil Engineering Group Co.,Ltd., China No
6. Diriba Defersha General contarctor Ethiopia No
7. DMC Construction Plc Ethiopia No
8. Emenete Endeshaw General Constractor Ethiopia No
9. Ethiopian Road Construction Cooperation (ERCC) Ethiopia Yes
10. Fermanoglu Construction Tourism Trade Industry Turkey Yes

Limited Company JV with STY construction
Tourism Trade Industry Limited Company
11. G/ Hiwot E/ Mariam General Contractor Ethiopia No
12. Hunan Huanda road and bridge corporation China No
13. Simplex Infrastructures LTD India Yes
14. Sinohydro Corporation Limited China Yes
16. Yemane Girmay General Contarctor Ethiopia No
17. Yencomad Construction Plc Ethiopia Yes
18. Yotek Consttruction Plc Ethiopia No
May 2017
19. Yuksel INSSAT A.S. Turkey No
Total 19 7
The evaluation of the bids is a two stage procedure; it is similar with (case study I and II)
project. The qualification criteria set by the employer; Legal Requirement, History of Non-
performing contracts, Historical Financial Performance, construction experience, construction
turnover, manpower requirements, proposed construction methodology and work program are
summarized below.
S.No Specified Criteria Required Qualification Assessment of

Applicants
1 Legal Requirement Must be GC-1 All Pass
2 History of Non-Performing Non-performance of a contract did All Pass

years
2 Pending litigation All pending litigation shall in total All Pass
3 Historical Financial Audited balance sheets for the last All Pass
4 Cash Flow 120 Million Birr for local bidder All Pass
5 Annual Construction 330 Million Birr for local bidder All Pass
6 General Construction Three years for local contractor All Pass

Experience and Five for foreign
7 Specific Construction One project with min. Project All pass

and two projects 1.4 Billion each
and least 85Km length for foreign
8 Specific Construction Quantitative requirement for earth All pass

9 Personnel Capabilities As required in execution of the All Pass

project
May 2017
10 Proposal of work methods To present Proposal of work All Pass

All are passed the post qualification criteria except Three contractor, rejected due to failure to
submit acceptable bid security, performance record on ongoing ERA’s and other client
projects. The other all contractor fully qualified and attended the financial offer opening.
evaluation criteria requested for financial bid evaluation. It is lowest evaluated bid price, out of
four contractors’ one international contactor win the tender with an amount of
1,126,931,063.88ETB including contingency specified provisional sum and VAT.
On 13th June 2013, ERA has signed a construction agreement with the Contractor, for the
construction works of Felegebirhan-Bahirdar Road Project (Contract-2: Zema River Bridg-
Felegebrihan road project. The original cost of the civil works contract is ETB
1,126,931,063.88 inclusive of VAT 15%.
4.3.1.2 Design-Build Project Delivery Method
A. Design and construction works of werabe-Bojecber Road project

B. Design and construction of Efson(Ataye)-Mehamed Road project
C. Morocho–Dimtu–Bitena–Sodo Design and Build Road Project: Contract I:Moricho-
Dimtu-Bitena (60.8km)
A. Design and construction works of werabe-Bojecber Road project
The project road is located in the central part of Ethiopia, Southern Nation Nationality and
People Regional State (SNSPR). It is the design construction of approximately 38.5Km road
with design class of DC-5 Double Bituminous Surface Treatment (DBST) Standard. The work
includes demolishing and removal of substandard structures, and construction of new culverts
and bridges if required. The road will have a carriageway width of 7m (two lanes of DBST
each 3.5m with). In rural section, shoulder width of 1.5m in flat and rolling terrains, and 0.5m
in mountainous and escarpment terrains will be provided in both side; whereas, in town section
of zonal seats, 3.5m parking lanes and 2.5m footway (both side) and 2.5m median will be
provided. For the town/village section travers by the road, the regional, zone, woreda and
kebeke seat typical cross sections shall be used according to the administrative setup of the
town/village. The existing werabe – Bojeber road is a gravel surface except the last 6Km road
segment between terega and Bozhober village which is recently constructed to DBST standard.
May 2017
The period of completion is 36 months for design and construction including 120 calendar
days of mobilization. The general summary of the project is tabulated below.
Table 4.16 General information summary of design and construction works of Werabe-
Bojecber Road project

1. Project Location
Southern Nation Nationality and
People Regional State
2. Length (km)
38.5
3. Road standard
DC-5
4. Width of Road
7.0m outside town (with 1.5m shoulder
on each side)
5. Type of Surface
DBST
6. Existing Road
Upgrading except last 6km
7.. Source of Finance for Construction
Delivery Strategy)
The notice for Invitation for bid was published on the Ethiopian Herald Newspaper and ERA
website on May 15, 2015. Pursuant to the notice of invitation, Thirty Five applicants have collected
the tender documents before the deadline for submission of bids.
Among the listed below Thirty Five potential bidders who have bought the tender documents from
ERA, Sixteen of them have submitted their qualification applications and financial offers in
separate sealed envelopes before/on November 19, 2015 at 2:30 PM which is the latest date for
submission of bid. The table blow shows the list of bidder who have purchase and submitted their
application for post qualification and financial offers.
Country of
No Name of Applicants Submitted
Registration
1. Afro Tsion Construction Plc Ethiopia No
3. Aster Mengistu GC Ethiopia No
May 2017
4. Awash Welday General Contractor Ethiopia Yes
5. CCECC Ethiopia Construction PLC P.R. China No
6. China communications Construction Company Ltd. P.R. China No
7. China Wu Yl Co.Ltd P.R. China No
8. Cross-Land Construction Ethiopia Yes
9. Defense Construction Enterprise Ethiopia Yes
10. Diriba Defersha General Construction Ethiopia Yes
12. Eshetu Lema Construction Ethiopia Yes
14. Ethio-Canadian Business Group Plc (Construction) Ethiopia Yes
15. FAL General Contacor Ethiopia Yes
16. G/Hiwot E/Mariam General Contractor Ethiopia No
17. Gemshu Beyene Construction Plc Ethiopia No
18. HAWK International Finance and Construction Yemen No

Co.Ltd.
19. Henok and Family General Business Plc. Ethiopia Yes
20. Homa Construction Ethiopia No
21. Macro General Contarctor and Trading Plc Ethiopia No
22. Markan Trading Plc Ethiopia Yes
23. Melcon Construction Plc Ethiopia No
24. Orchid Business Group Plc Ethiopia No
25. Powercon Plc Ethiopia Yes
26. Queiroz Galvao No
27. Rama Construction Plc Ethiopia Yes
28. Samson Chernet GC Ethiopia No
29. Shed General Contractor Plc Ethiopia Yes
May 2017
30. Sunshine Construction Plc Ethiopia No
32. Tekleberhan Ambaye Construction Plc Ethiopia No
33. Yemane Girmay General Contractor Ethiopia Yes
34. Yencomad Construction Plc Ethiopia No
35. Yotek Construction Plc Ethiopia Yes
Total 35 16
The evaluation of the bids is a two stage procedure; it is similar with the DBB projects. The
qualification criteria set by the employer; Legal Requirement, History of Non-performing
manpower requirements, proposed construction methodology and work program are
summarized below.
Assessment of
Applicants
1 Legal Requirement Must be GC-1 2 fail / 14 All Pass
2 History of Non-Performing Non-performance of a contract did All Pass

Contracts not occur within the last Five (5)
years

May 2017
4 Cash Flow 46 Million Birr for local bidder All Pass

5 Annual Construction 94 Million Birr for local bidder 2 Fail / 14 Pass

6 General Construction Two years for local contractor and All Pass
Experience Five years for foreign
7 Specific Construction One project with min. Project All pass

and two projects 500 Million each
and least 38.5 Km length for
foreign
8 Specific Construction Quantitative requirement for earth All pass


project
10 Equipment Capabilities As required in execution of the All Pass

project
11 Proposal of work methods To present Proposal of work All Pass

Nine contractors passed the post qualification criteria except, Three of the contractor rejected
due to failure to submit acceptable bid security, the other two of the contractor reject due to
failure to meet the eligible requirements and the other two of the contractor reject due to failure
to meet the average annual construction turn over.
Bidders qualified the post-qualification evaluation criteria were requested for financial bid
evaluation. It is lowest evaluated bid price, out of the Nine contractors’ one National
Competitive bidder win the tender with an amount of 458,445,650.00ETB including
contingency specified provisional sum and VAT.
On 20th May, 2016, ERA has signed a construction agreement with the Contractor for the
construction of Design and construction works of werabe - Bojeber Road project. The original
cost of the civil works contract is ETB 458,445,650.00 inclusive of VAT 15%.
B. Design and construction of Efson (Ataye)-Mehamed Road project
May 2017
The Efeson (Ataye) – Mehal Meda road project is found in the Amhara National Regional
state, northern part of Shewa and Southern Wollo provinces which traverses Efratana Gidim
and Lala Midirna Woreda. The project road starts on the Junction on Tarmaber- kombolcha
trunk road at Efeson town which is about 262 km far from the capital of the county, Addis
Ababa, and traverses to west and the project end up at Mehal Meda town. The Efeson- Mehal
Meda road project is approximately 60km.
Table 4.19 General Project Information Summery for Efeson (Ataye) – Mehal Meda
road project
No. Descriptions
General Information
1. Project Location Amhara National Regional State
2. Length (km) 60 km
4. Width of Road 10 m (7m DBST and 1.5m gravel
shoulder on each side)
5. Type of Surface Double Surface Treatment (DBST)
6. Existing Road N/A
7. Source of Finance for Construction Government of Ethiopia
8. Type of Contracting (Contract Delivery Design-Build Contract

Strategy)
9. Type of Contract (Based on Payment Lump Sum Contract
Modality)
The project involves identifying the best route alignment based on technical, economic, social
environmental and administrative reasons, designing and constructing of the road to DS5 with
Double Surface Treatment. The work includes demolishing and removal of substandard
structure such as fords, pipes, bridges and vented causeways if any and construction of new
culverts and bridges as required and supported by the detail design analysis and submittals.
The road connects the two towns, Mehal Meda and Efeson (Ataye), as well as villages and
large rural settlement areas in between these towns. It provides unique accesses to markets,
hospitals, schools and other infrastructures including important administrative centers.
Tendering was conducted following an open tender procedure. Specific Procurement notice for
Invitation to bids for the subject project was published on the Ethiopian Herald on March 01
and 02, 2014 and the same was posted on ERA web site. Pursuant to the notice of invitation,
May 2017
Twenty One have collected the tender documents before the deadline for submission of
applications as shown in table below.
S.No Name of Applicants Country of Submitted

Registration
1. AL ASAB General Transport & Contracting UAE Yes
Establishment
2. China Gezhouba Group Compnay Limited Ethiopian China No

Branch
3. China First Highway Engineering Co.Ltd China No
4. GIBB Africa Consulting Design Management Kenya No
5. FAL Trading General Contractor Ethiopia No
6. China State Construction Engineering Corp. Ltd China No
7. China Railway No. 3 Engineering Group Co. Ltd. China No
8. Hawk International Finance & Construction Co. Ltd. Yemen No
9. Fermanoglu Construction Tourism Trade industry Turkey No
10. Hunan Huanda Road & Bridge Corporation China Yes
11. MACRO General Contractor & Trading Plc Ethiopia Yes
12. Emnete Endeshaw General Contractor Ethiopia No
13. Sunshine Construction plc Ethiopia Yes
14. Sur Construction Plc Ethiopia No
15. YENCOMAD Construction Plc Ethiopia Yes
16. Yemane Girmay General Contractor Ethiopia No
17 Raubex Construction (pty) ltd Ethiopia No
18 Rotation International Trading Plc Ethiopia No
19 DMC Construction Plc Ethiopia No
20 PAKSOY INS. TUR.SAN.VE TIC.AS. Ethiopia No
May 2017
21 Tekleberhan Ambaye Construction Plc Ethiopia Yes
Total 21 6
As indicted in above table a total of twenty one bidders respond to invitation but only six
bidders submit.
ERA specifies qualification criteria for Efeson (Ataye) – Mehal Meda road project tender
process participants must fulfil including; legal requirements, historical non-performing
contracts, historical financial performance, general and specific experience etc. Qualification
requirement for participate in Efeson (Ataye) – Mehal Meda road project tender process
summarized in table below.
Assessment of
Applicants
2 History of Non-Performing Nonperformance of a contract did not All Pass
Contracts occur within the last Two (2) years
3 Pending litigation All pending litigation shall in total not All Pass
represent more than 30% of the
Applicant's net worth
4 Historical Financial Audited balance sheets for the last five All Pass
Performance years
5 Cash Flow 105 Million Birr for local bidder and All Pass
140 Million Birr for foreign
6 Annual Construction 209 Million Birr for local bidder and 1 Fail/5 Pass
Turnover 426 Million Birr for foreign (peak)
7 General Construction Two years for local bidder and Five All Pass
Experience Years Required for foreign bidders
8 Specific Construction For local bidders ETB 314 Million or 2 fail /4 pass
Experience project of length 66km for foreign
bidders ETB 1.004 Billion or project of
length 88 km each
9 Specific Construction Quantitative requirement for earth work 2 fail /4 pass
May 2017
Experience in Key previous execution.

Activities
10 Personnel Capabilities As required in execution of the project All Pass
11 Proposal of work methods To present Proposal of work methods All Pass
and program and program
From total of six bidders only four found to be responsive for qualification criteria set by ERA and
pass this stage and proceed to next stage, the other two considered non responsive and rejected
from further evaluation. Out of the four contractors’ one National Competitive bidder win the
tender with an amount of 1,352,642,535.82 ETB including contingency specified provisional
sum and VAT.
On 24th January 2015, ERA has signed a construction agreement with the Contractor, for the
construction works of Efeson (Ataye) – Mehal Meda road project. The original cost of the civil
works contract is ETB 1,352,642,535.82 inclusive of VAT 15%.
C. Morocho–Dimtu–Bitena–Sodo Design and Build Road Project: Contract

I:Moricho-Dimtu-Bitena (60.8km)
The project work is the design and construction of road surfaced with Asphalt Concrete,
located in Southern part of the country within the bounds of Southern Nations, Nationalities
and Peoples Regional State (SNNPRS). The road will have a carriageway width of 7 m (two
lanes of Asphalt Concrete each 3.5m width) and an approximate length of 60.8km.In Zonal,
Woreda and Kebele Seats, the respective typical road cross sections and pavement layers as
indicated in the drawings will be applied.
Bridges and culverts shall be maintained or Rehabilitated or constructed as new as necessary

with reinforced concrete. Culverts shall have Inlet and out let structures together with erosion
protection as recommended on appropriate sections.
The sub-base course shall be natural, screened or crushed material or an approved blend of
these materials that meet the requirements of the Specifications. The base course layer shall be
constructed from crushed aggregate which should meet the specification requirements. The
riding surface shall be an Asphalt Concrete meeting the requirements of the specifications. The
general summary of the project is tabulated below.
May 2017
Table 4.22 General Project Information Summery for Morocho–Dimtu–Bitena–Sodo

Design and Build Road Project: Contract I road projec
1. Project Location Southern Nations, Nationalities and

Peoples Regional State
2. Length (km) 60.8 km
4. Width of Road 10 m (7m DBST and 1.5m gravel

shoulder on each side)
5. Type of Surface Double Surface Treatment (DBST)
6. Existing Road N/A
7. Source of Finance for Construction Government of Ethiopia
8. Type of Contracting (Contract Delivery Design-Build Contract

Strategy)
9. Type of Contract (Based on Payment Lump Sum Contract

Modality)
Tendering was conducted following an open tender procedure. Specific Procurement notice for
Invitation to bids for the subject project was published on the Ethiopian Herald on September
5, 2013. Pursuant to the notice of invitation, Sixteen contractors have collected the tender
documents before the deadline for submission of applications as shown in table below.
Country of
S.No Name of Applicants Submitted
Registration
1. AL ASAB General Transport & Contracting UAE Yes
Establishment
2. China Civil Engineering Construction Corporation China Yes
May 2017
3. China First Highway Engineering Co.Ltd China No
4. China Railway No.3 Engineer Group Co.Ltd China No
5. China Railway Seventh Group Co.LTD (CRSG) China No
6. China Tiesiju Civil Engineering Group Co.Ltd China No
7. ETHIO General Contractor Ethiopia No
8. Defence Construction Enterpries Ethiopia Yes
9. Fermanoglu Construction Tourism trade industry Turkey Yes
10. Hunan Huanda Road and bridge corporation China No
11. MACRO General Contractor & Trading Plc Ethiopia No
12. SINOHYDRO Corporation Ltd China No
13. Sunshine Construction plc Ethiopia Yes
14. Sur Construction Plc Ethiopia Yes
15. YENCOMAD Construction Plc Ethiopia Yes
16. Yemane Girmay General Contractor Ethiopia No
Total 16 7
Among the above listed prospective bidders who have bought the tender documents seven of
them submitted their qualification application and financial offers.
ERA specifies qualification criteria for Morocho-Dimtu-Bitena-Sodo Design and Build road
project tender process participants must fulfill including; legal requirements, historical non-
performing contracts, historical financial performance, general and specific experience etc.
Qualification requirement particularly for Morocho-Dimtu-Bitena-Sodo road project tender
process is summarized in table below.
Assessment of
Applicants
2 History of Non-Performing Nonperformance of a contract did not All Pass
Contracts occur within the last Two (2) years
May 2017

not represent more than 30% of the
Applicant's net worth
5 Cash Flow 91 Million Birr for local bidder and All Pass
121 Million Birr for foreign
6 Annual Construction 255 Million Birr for local bidder and All Pass
Turnover 546 Million Birr for foreign
7 General Construction Three years for local bidder and Five All Pass
Experience Years Required for foreign bidders
8 Specific Construction One project with min. Project amount All Pass
Experience of 455 million Birr and least 36Km
length for local bidder and two
projects 728 Million each and least
48 Km length for foreign
9 Specific Construction Quantitative requirement for earth All Pass
project
11 Equipment Capabilities As required in execution of the All Pass
project
12 Proposal of work methods and To present Proposal of work methods All Pass
program and program
From total of Seven bidders Six of them found to be responsive for qualification criteria set by
ERA and pass this stage and proceed to next stage, One contractor considered non responsive and
rejected from further evaluation. Out of the Six contractors’ one National Competitive bidder
win the tender with an amount of 995,018,921.34 ETB including contingency specified
provisional sum and VAT.
The agreement was signed between ERA and the contractor on 22 of December, 2014 for the
construction works of Contract I: Morocho–Dimtu–Bitena–Sodo Design and Build Road
Project (60.8km) road project. The original cost of the civil works contract is ETB
995,018,921.34 inclusive of VAT 15%.
May 2017
4.3.1.3 Summary of findings (case study 1)
The qualification criteria’s are similar for both DB and DBB projects. The criteria for all
selected case study projects are according to World Bank standard biding document.
There is qualification criteria set by ERA, it’s tabulated as table 25 some of the requirements
are difficult to quantify but construction turnover, cash flow requirement and general
experience are based on the formula given in Table 4.25
The History of non-Performing contracts, pending litigation, historical financial performance,

personnel requirement, equipment requirement, Proposal of work methods and work program
of the case study projects are also based on Table 4.25
As discussed on literature review section 2.1.6 (construction procurement procedure) ERA use
all the Procurement Management process, includes Preparation, Tendering, and Evaluation
(Including Award Recommendation)
The preparation of Tender Documents include:
 Form of Invitation to Tender

 Instruction to Tenderers or Terms of References;
 Prequalification Documents
 Forms of Contract Agreement
 General and Particular Conditions of Contract
 Bill of Quantities and Drawings
 Technical Specifications & Methods of Measurement
Tendering Phase: includes Invitation ( Invitation to bidder are posted in Ethiopian Herald
Newspaper and ERA Website), Clarification, Submission and Opening of tenders. Normally
open tenders are floated for a period between 30 to 45 days.
Clarifications can either be requested by interested bidder or carried out using a pre - tender
clarification meeting. In both cases, issues clarified sent (written) to all bidders participating
for the intended services or works. The bidders were submitting their offer on or before the
submission date and time. Late bids are automatically rejected.
Tender Opening: Bidding documents opened in public on the date, at the time and place
mentioned in the invitation to tender and stipulated in the tender documents. In addition to the
May 2017
Project Owner, Consultant (if available), and Contractors representatives attend during the
tender opening.
The following criteria’s are carried out during tender opening by the client (ERA):-
 Tender Attendee members shall take their place and be registered,

 Tender box opened and checked for faulty things,
 Check the tender is the right one,
 Bids will be opened one after the other,
 All necessary data which deem useful such as Project Name, Name of bidder, Bid Bond
Amount, Tender Price, etc. read aloud and recorded at the opening of bids.
 Bidders representative sign a register to attest their presence during opening, and
 Tender committee members also sign on the Tender documents.
Tender Evaluation Phase: As stated in the above case study project, evaluations include both
Technical and Financial Qualification. Technical Evaluation take the first place, it includes the
evaluation of construction turnover, cash flow requirement, general and specific experience,
history of non-performing contracts, pending litigation, historical financial performance,
personnel requirement, equipment requirement and proposal of work methods. Each of the
Qualification requirements has its own value for the technical evaluation.
Finally, Financial Evaluation is take place, to determine and make award it must necessarily be
the lowest bidder. Preliminary Evaluations are made Arithmetic Review requirements. Most
tenders are often submitted hastily. As a result, tenders are not arithmetic error free. Almost all
the projects listed above on the case study have arithmetic error. Arithmetic review can be
done only for bidders who qualify the post qualification criteria.
After all comparisons are considered on the same bases; the Tender offer will be adjusted
based on the Cost - Benefit principle which involves adding costs and benefits foregone.
Besides, the preference margin will also be deducted and Least evaluated Bidder is
Determined.
Table 4.25 Qualification Criteria of ERA and World Bank [41 & 44]
Qualification Tender Type Qualification Requirements

Criteria World Bank’s SBD ERA’s Bidding Documents
For locals For foreign
ACT= EE x F AT(Average )=EE* F AT(Average)=EE* F
ICB yrs
Yrs Yrs
Annual construction Where F=0.7 F= 2.5 to 1.5.
turnover (ACT) EE = Engineer's Estimate
Yrs = Contract period in Years
NCB The multiplier F=2 may be reduced As above but F=0.5 As above but F=1.5
for very large projects but shouldn’t
be less than 1.5.
ICB/ NCB CF= EE* F CF= EE* F CF= EE *F

Liquid asset/cash Months Months Months
Months=Construction period in Months=Construction period in Month= Construction period in
flow requirement
months months months Factor F = 4
(CF)
Factor F should not be more than 4
Factor F = 3
months.
5 or more years may be reduced to 3 5 to 10 years of general experience in

General Construction ICB Three years’ experience
years in agreement with the Bank. construction.
experience The firmsexperience could be

reduced to two years to support 5 years of general experience in
NCB the participation of the newly construction
Qualification Tender Type Qualification Requirements
established/ infant local
construction industry.
i ) 1 to 3 contracts normally 2 i) 1 Project i) 1-3 projects

depending on the size and complexity ii) 50%of the estimated Value ii) 80%of the estimated Value of the
Specific construction
of the subject contract, the exposure of the intended contract or intended contract or equal length
projects experience
of the Employer to risk of contractor 75% of the length of the to the subject project.
i) Number of
default, and country conditions. intended project. iii) works of a nature and complexity
projects
iii) Similarity of the project equivalent
ii) Value of the
ICB i i ) 80% of the estimated value could be one standard work
project
of the subject contract. below.
iii) Nature,
Complexity &
i i i ) Similar to the proposed works.
Similarity of
The similarity shall be based on the
Projects
physical size, complexity, methods/
technology.
World Bank’s SBD ERA’s Bidding Documents

Specific i) 1 project i) 2 projects
construction ii) 25% of the valueof the intended ii) Value of
experience project or half of the length of the the project 80%of the
i) number of intended project. intended contracts or
projects iii) As exceptional,for less complex length to the subject
ii)value of the and less risk projects this project.
NCB
projects requirement iii) Similarity of
iii) nature, could be relaxed to 15% the project could be of
Complexit iv) One level below the similar sizeand
y& standard of the intended project or complexity.
Similarity higher level.
of projects
80% of the estimated monthly or annual
production rate of key activities. 60% of the estimated monthly or annual 80% of the estimated monthly
Specific
ICB production rate of key activities or annual production rate of
construction key activities
experience in key
80% of the estimated monthly or annual 40% of the estimated monthly or annual 80% of the estimated monthly
activities
production rate of key activities. production rate of key Activities. or annual production rate of
NCB
key Activities.
i) Non-performance of a contract did not In addition to the World Bank’s In additionto the World
occur within the last two (2) years prior guideline special attention shall be paid Bank’s guideline special
to the deadlinefor Qualification for this criterion as contract non- attention shall be paidfor
submission based on all information on performing is CRITICAL in the current this
ICB fully settled disputes or litigation. A Ethiopian situation. Criterion as contract non-
Historical fully settled dispute or litigation is one Therefore: performingis CRITICAL
contract non & that has been resolved in accordance i. Record of progress shall be in the current Ethiopian
– performing with the Dispute Resolution Mechanism kept accurate; situation.
records NCB under the respective contract, and where ii. Evaluationof contractors Therefore:
all appeal instances available to the performance contractors i) Recordof progress shall
Bidder have been exhausted. performance shall be conducted be kept accurate;
ii) If the Employer, based on full monthly; ii) Evaluation of contractors
documentary evidence, establishes iii. Any contractor’s performance shall performance shall be
continued poor performance by any be evaluated based on the ERA’s Conducted monthly;
Bidder engaged in similar works in contractor’s performance iii) Any contractor’s
Africa and other developing countries, assessment framework and rated performance shall be
on any contracts carried out over the last accordingly. The minimum evaluated based on the
2 years, the Employer may use this acceptable performance on ongoing ERA’s contractor’s
information in the assessment of the contract shall be revised to reflect performance assessment
Bidder. The documentary evidence to the actual situations. The minimum framework and rated
support the assessment and acceptable performance on ongoing accordingly.
final decision by the Employer will be contracts is set time to time by
fully disclosed to the applicant ERA board
Other criteria:
o Legal Status Is required Is required Is required according to the respective

ICB & NCB
financiers’ guide
o Major Equipment Is required Is required Is required according to the respective
ICB & NCB
financiers’ guide
o Key Personnel ICB & NCB Is required Is required Is required according to the respective
o Proposal for Sub- financiers’ guide Is required according
ICB & NCB Is required Is required
Contracting to the respective
o Proposal of work
ICB & NCB Is required Is required Financiers’ is required
methods and programs
o Pending Litigation ICB & NCB Is required Is required Is required according to the respective
o Historical Financial Is required according financiers guide to the
Performance respective financiers’ guide
o Current Contract Is required according to the respective
Commitments financiers’ guide
o Declaration of Site
Is required according to the respective
Visit and Understanding ICB & NCB Is required Is required
financiers’ guide
of the Work
May 2017
Case Study -2
4.3.2 Construction procurement impacts in construction budget, completion time and

performance in Ethiopian road construction (DB and DBB project Delivery
Method)
To conduct the Construction procurement impacts in construction budget, completion time and
performance in Ethiopian road construction, the researcher considers 3 of ongoing DB projects
and 3 DBB highway projects. A total of 6 projects were selected. All the 6 (3 DBB and 3 DB)
projects are currently ongoing highway projects being built in Federal Democratic Republic of
Ethiopia and all of them are 90% and completed.
Projects that executed greater than 90% or completed, construction budget greater than Ten
Million US dollar and different project delivery system are the selection criteria’s for the case
study – 2.
4.3.2.1 Design-Bid-Build Road Projects
The projects were delivered with DBB project delivery method in the Federal road projects of
Ethiopia. All of the three selected projects are 100% completed. Sample projects of DBB
projects are presented, as given in Table 4.26 to assess the status of the construction road
projects implemented in the federal road construction projects. The table has been used to
show the associated time and cost overruns, as per the sampled projects.
Table 4.26 Original and Revised Contract Price and Contract Period of Sampled DBB
Contracts
Data of Contact Contact Amount Contract Time

Project Contact
No Contract
Name Commence- Original Revised Original Revised
Signing Date
ment Date
1 Tsegede
Junction –
Ketema 06/Sep/12 05/Dec/12 408,300,125.60 516,442,158.68 5/Dec/2015 6/Jun/2016
Nigus Road
Project
2 Arecite
Hosaina 09/Jul/2015
27/Jun/2011 7/Oct/2011 549,471,508.44 618,998,415.32 06/Apr/2014
Road
project
Lunam 4/Jan/2016
3 30/Aug/2013 24/Sep/2013 1,369,965,425.79 1,369,965,425.79 30/Jun/2015
Dlmarka
136 | P a g e AAU, AAiT School of Civil and Environmental Engineering CoTM (Post Graduate
Studies)
May 2017
The total percentage of contract amount increment of the above DBB projects have been
collected and arranged in the table below to show the significance of the contract amount cost
overrun whose mean value is 13%. The Contract price cost increment and its respective
percentages are presented in Table 4.27.
Contact Amount Percentage

Increase in
No Project Name Increment in
Original Revised Contract Price
Contract Price
Tsegede Junction –
1 Ketema Nigus Road 408,300,125.60 516,442,158.68 108,142,033.08 26%
Project
2 Arecite Hosaina Road
549,471,508.44 618,998,415.32 69,526,906.88 13%
project
3 Lunam Dlmarka road
1,369,965,425.79 1,369,965,425.79 0 0%
Project
Mean 13%
Table 4.27 Increment in Contract Price of Sampled DBB Contracts
From the desktop study data the contract price overrun that has been experienced in the DBB
projects can be presented for better visualization in figure 4.22 below to show the comparison
easily. As it is indicated on the figure, though the mean value of the percentage increment in
contract price is only 13%, the individual percentage of the revised contract price increment is
also presented.
DBB Cost Overrun

1,600,000,000.00
1,400,000,000.00
Contarct Amount
1,200,000,000.00
1,000,000,000.00
800,000,000.00
600,000,000.00
400,000,000.00
200,000,000.00
0.00
Tsegede Junction – Arecite Hosaina Road Lunam Dlmarka road
Ketema Nigus Road project Project
Project
Projects
Original Contact Amount Revised Contact Amount Contarct Increment
May 2017
Percentage increment
30% 26%
25%
Percentage
20%
15% 13%
10%
5% 0% Percentage increment
0%
Tsegede Junction Arecite Hosaina Lunam Dlmarka
– Ketema Nigus Road project road Project
Road Project
Projects
Figure 4.22 Percentage increment as well as original and revised contract price of sampled
DBB projects
The increasing days of the total contract period and its percentage of increment of the DBB
projects is shown in table 4.5 below to show the significance of the contract period overrun.
The Contract period or schedule overrun and its respective percentages are presented in Table
4.28.
Table 4.28 Increment in Contract Period and Original and Revised Contact Period of
Sampled DBB Contracts
Original Revised Increased Percentage

No Project Name Contract Contract Contract Period Increment in
Period Period (days) (days) Contract Period (%)
1 Tsegede Junction –
Ketema Nigus 730 1313 583 79.86%
Road Project
2 Arecite Hosaina
1095 1554 459 41.90%
Road project
3 Lunam Dlmarka
730 918 188 25.75%
road Project
49.17%
Mean
The above Tables signifies that the budget and time overruns range from 13 % to 26 % of the
initial costs with mean value of 13% and from 25.75 % to 79.86 % with mean value of 49.17%
of the initially estimated time respectively.
From tables Table 4.27 and Table 4.28 it can be seen that, on average, there is about 13 % cost
increment beyond the initially estimated budget and about 49.17 % time overrun. From the
May 2017
above tables one can conclude that the construction work on the federal road projects have not
been running as per the durations and the budgets estimated before the commencement of the
actual construction in ERA.
Among the sampled projects the minimum status of completion is Lunam Dlmarka road
Project which is 97.84%and the maximum is Tsegede Junction – Ketema Nigus Road Project
which is 79.86%.
DBB Time Overrun

2000
1554
Contarct Period
1500 1313
1095
918
1000 730 730
583
459
500 188
0
Tsegede Junction – Ketema Arecite Hosaina Road project Lunam Dlmarka road Project
Nigus Road Project
Projects
Original Contract Period Revised Contract Period (days) Increased Contract Period (days)
Figure 4.23 Percentage increment as well as original and revised contract price of sampled
DBB projects
Percentage Increment in Contract Period (%)

90.00% 79.86%
80.00%
70.00%
60.00%
Percentage
50.00% 41.90%
40.00%
30.00% 25.75%
20.00% Percentage Increment in Contract
Period (%)
10.00%
0.00%
Tsegede Junction Arecite Hosaina Lunam Dlmarka
– Ketema Nigus Road project road Project
Road Project
1 2 3
Projects
Figure 4.24 Percentage of time over run of sampled DBB projects
May 2017
Consideration given to the time and cost analysis of the above three projects based on the
actual time elapsed against accomplishment indicates that the, overall time extension ranges
from 25.75 % to 79.86 % with an average value of 49.17 %.
4.3.2.2 Design-Build Road Projects
Sample projects of DB projects are presented, as given in Table 4.29 to assess the status of the
currently under construction road projects implemented in the federal road construction
projects.
Data of Contact Contact Amount Contract Time
No Project Name Contact

Contract Revised
Commence- Original Revised Original
Signing Date
ment Date
1 F2-F1-Hana (F3- 28/May/2016
2/Oct/2013 14/Nov/2013 651,111,224 651,111,224 15/Nov/2015
F1-Hana)
2 F2-F3(F3-F4) 19/Dec/2013 15/Jan/2014 459,460,272 459,460,272 15/Jul/2016 9/Sep/2016
Fiyel Weha – Abi

Adi Road project
Contact 2-Tekeze Not Revised
3 22/May/14 25/Jun/2014 2,146,302,500 2,146,302,500 24/Jun/2017
River-Abi Adi
(Km34+980-Abi
Adi)
Table 4.29 Original and Revised Contract Price and Contract Period of DB Contracts
Sampled data from the selected DB projects have been collected and arranged in the tables
below to show the significance of these problems. The percentage of time and cost overruns
are presented in Table 4.30 and Table 4.31.
Contact Amount Percentage

Increase in
No Project Name Increment in
Original Revised Contract Price
Contract Price
1 F2-F1-Hana (F3-F1-Hana) 651,111,224 651,111,224 0 0%
2 F2-F3(F3-F4) 459,460,272 459,460,272 0 0%
Fiyel Weha – Abi Adi Road

project Contact 2-Tekeze
3 2,146,302,500 2,146,302,500 0 0%
River-Abi Adi (Km34+980-
Abi Adi)
May 2017
Mean 0%
Table 4.30 Original and Revised Contract Price in percent
As per the survey data gathered for those 3 DB projects the results of the research indicated that
projects delivered using the DB project delivery system approach performed less increment in the
contract price than those delivered through the DBB delivery systems. As it is indicated in the
figure 4.30 below the percentage of the increment in the contract price is 0% which is perfect when
it is compared against the previously described DBB project delivery system.
Contract price increment

2,146,302,500
2,500,000,000
2,146,302,500
2,000,000,000
1,500,000,000 651,111,224 459,460,272
1,000,000,000
651,111,224 459,460,272
500,000,000 0 0% 0 0% 0 0%
0
F2-F1-Hana (F3-F1-Hana) F2-F3(F3-F4) Fiyel Weha – Abi Adi Road
project Contact 2-Tekeze
River-Abi Adi (Km34+980-Abi
Adi)
Contact Amount Original Contact Amount Revised

Increase in Contract Price Percentage Increment in Contract Price
Figure 4.25 Contract price increment of sampled DB projects
The survey highlights that significant numbers of the sampled DB projects were associated
with shorter overall project time than conventional system. It is also calculated that the
reduction of the overall project period is attributed to the system’s ability to overlap the design
and construction phases.
It is observed also that cost and completion time is firmer under the Design and Build
procurement method. This means the client knows his total financial commitment in the early
stage of the project; the contractor does not introduce any changes throughout the project.
Because there is no provision for bill of quantities, adequate arrangements for evaluating any
changes on the price or on cost basis can be carried out earlier by including in the contract.
As it is seen in Table 4.30 and Table 4.31, in most of DB procurement form, the final cost does
not exceed the project budget, because as it is the fixed fee the calculate risks and the cost
variations are absorbed by the contractor. In this respect, Design and Build certainly presents a
May 2017
better chance of the client obtaining his completed building within budget, because as it is
fixed fee the cost variation is absorbed by the contractor.
Table 4.31 Original and Revised Contract Duration
Contact Time Percentage

No Project Name Increase in Increment in
Original Revised Contract Time Contract time
1 F2-F1-Hana (F3-F1-Hana) 15-Nov-15 28-May-16 74 10%
2 F2-F3(F3-F4) 15-Jul-16 09-Sep-16 56 7%
Fiyel Weha – Abi Adi Road

project Contact 2-Tekeze 24-Jul-17 Not revised 0 0%
3
River-Abi Adi (Km34+980-
Abi Adi)
Mean 8.5%
The above Tables signifies that the budget and time overruns range from 0.0 % to 0.0 % of the
initial costs with mean value of 0.0 % and from 0.0 % to 10 % of the initially estimated time
with mean value of 8.5 % respectively.
Cost savings may also result in time saving. The overall effects is reduction in the employer’s
financing charges, lesser effect of inflation and faster construction operation, which, in a
commercial context, produces an earlier return on the capital, invested. From the above two
tables it can be seen that, on average, there is no cost increment beyond the initially estimated
cost and about 8.5 % time overrun.
The results of the research indicated that projects delivered using the DB project delivery
system approach performed less increment in the contract price than those delivered through
the DBB delivery systems. As it is indicated in the figure 4.26 below the percentage of the
increment in the contract price is from 0% which is very small when it is compared against the
previously described DBB project delivery system.
May 2017
Contract Price
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000 Contact Amount Original

Contact Amount Revised
0
F2-F1-Hana (F3- F2-F3(F3-F4) Fiyel Weha – Abi
F1-Hana) Adi Road project
Contact 2-Tekeze
River-Abi Adi
(Km34+980-Abi
Adi)
Figure 4.26 Original and Revised Contract Duration
Consideration given to the time and cost analysis of the three DB projects based on the actual
time elapsed against accomplishment as shown in figure 4.26 indicates that the overall time
overrun 0 %.
May 2017
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
5.1 Introduction
This chapter includes the conclusions and recommendations of this research. The main
objective of this study was to examine and analyze different procurement practices in the
Ethiopian road construction industry and its impact in project budget, completion time and
quality of work. The following conclusions and recommendations are, therefore, presented in
line with the specific objectives designed to meet the main objective.
Questionnaire survey was used to examine Construction procurement practices and the factors
that affecting construction procurement and causes of time overrun, cost overrun and
performance. Desk study was also used to identify the existence and extent of time and cost
overrun on road construction projects in Ethiopia.
5.2 Conclusion
 The practice of procurement by Ethiopian Road Authority is good. This question is aimed to
look at the views of the respondents with respect to whether ERA prepares procurement
plan considering the project scope and limitation, the procurement process, procurement
resources, procurement risks and opportunities, and capability and capacity of the client.
However, the construction procurement is the fundamental baseline for execution of the
project which sets acquisition strategy and helps guide program execution across the entire
project lifecycle which investigates the projects requirements, market conditions, project
risks, contract awarding processes and construction phase. Hence, problem on the
procurement will affect the overall performance of the project.
 The Ethiopian Road Authority does not, currently, seem ready to practice the innovative
project delivery system except DB. ERA broadly uses DBB project delivery system
compared to DB project delivery system. In relation to the general evaluation, the DB
project delivery system is evaluated to be more effective for the Federal Road Construction
Projects due to the following reasons:
May 2017
I. The increment of Construction Budget is lower in DB projects than in DBB in Ethiopian

Federal Road Construction Projects. But the overall cost of DB project delivery system is
higher than DBB Delivery system.
II. The Total Time Extension is lower in DB projects than in DBB projects for Ethiopian
Federal Road Construction Projects.
III. DB project delivery system reduce administrative burden than DBB in Ethiopian Federal
Road Construction projects
IV. DB project delivery is recommended for the road project than DBB for Ethiopian Federal
Road Construction Projects by ERA.
V. The traditional procurement system also provides a high degree of quality certainty and
functional standards. It is also a system that provides an opportunity for the owner to
combine the best design, management and construction expertise between consultants
and contractor. It also provide more time for client and consultants to review and fully
develop the design and specification thus allowing better documentation preparation.
However, this system does not provide opportunities for contractor to contribute his
construction technology and management expertise because they only come into the
scene after the design has been fully developed and approved.
VI. Generally, escalation of the final project cost from the estimated cost and time overrun
were the major problems associated with the existing approach of delivering projects.
 Client, Contactor and Consultant are main players in the construction industry, that’s why
this specific objective choice only on clients, contractor and consultants to investigate extent
of satisfaction in construction procurement practice in Ethiopian construction industry.
Based on the questioner collected degree of satisfaction of respondents on average is low
degree of satisfaction.
 The use of the various project procurement systems shows that the construction industry is
now trying to meet the clients’ needs. This is because the different procurement method will
have different effect on the cost, time and quality of the project. Each project procurement
system has its own peculiarity in term of the pretender and post tender activities and
processes, division of risks between client and contractors, and the effectiveness of project
monitoring and control. It is very important at the very outset of the project to carefully
consider all factors when selecting the most appropriate procurement approach for a
construction project. This is because each system has its own feature and peculiarity that
will have effect on the cost, time and quality of the project i.e. the project performance.
May 2017
 Awarding the project to the least bidder and unnecessary requirement. In addition to the
above factors improper planning, designing, communication, site management, decision
making, construction methods, shortage of labor and technical personnel, quality and
shortage of materials, construction mistakes and defective work, productivity, construction
methods complexity of project, quality assurance, availability of equipment’s & failure,
unforeseen site condition, weather condition, finance & payment of completed work, major
disputes & negotiation, productivity, construction mistakes & defective work, client’s
satisfaction are factors that affects process of procurement in Ethiopian federal road
construction.
 In ERA projects, awarding construction contracts is typically based on the low bid method
where the construction firm who fulfils the required qualification criterion and submitting
the lowest bid. However, as part of the evaluation process it is found that the performance
assessment of contractors in their ongoing projects is strong. The performance assessment is
made only based financial progress and duration of projects disregarding quality and overall
management of projects and formula used for calculation of the expected performance of
contractors is not in line with the actual expected cash flow progress. In addition, the
performance assessment is made in monthly basis and may results contractors to focus in
fulfilling a performance requirement of a specific month based on the intention to
participate specific tender and non-uniform disqualification of contractors. The study also
identifies that qualification criterion of local contractors is exceptionally relaxed and no
strong mechanism to control the workload contractors’ in relation to their capacity.
Moreover, the technical and financial capacity of contractors is not properly evaluated like
the financial standing of the contractor, the capacity of the contractor in terms of equipment
and technical staffed on the study, it is found that the existing evaluation and qualification
criteria will result in selection of unqualified contractor who do not have the capability,
capacity and good performance. This affects the overall performance and results in delays,
cost overruns and poor quality of projects. In addition, incapable contractors as compared to
the project scope might not have the capacity to study the projects in detail before
submitting their bids come up with unnecessarily very low offer which results projects
delays and poor quality.
5.3 Recommendation
Based on the findings of the study, the following recommendations are put forward for
improvement of the current practices in Ethiopian road construction projects.
May 2017
 Development of human resources in the construction industry through proper and

continuous training programs for construction performance enhancement. These programs
can update participants’ knowledge and can assist them to be more familiar with project
management techniques and processes. Engineers should perform their activities properly to
improve productivity which helps improvisation of construction projects. Contractors
should not increase the number of projects that cannot be performed successfully. Proper
motivation and safety systems should be established for improving the productivity
performance of construction projects. Contractors are counseled to minimize waste rates
through project implementation for improving cost. They should be more interested in
conformance to project specification to overcome disputes, time, and cost performance
problems. Quality materials should be of a greater interest for contractors in order to
improve cost, time, and quality performance. This can be done by applying quality training
and meetings that are necessary for performing an improvement. Contractors are urged to be
more interested in sequencing of work according to schedule. In addition, contractors should
have a cost engineer in their projects to successfully control costs and improving in
performance of construction.”
 It is very important at the very outset of the project to carefully consider all factors, client’s
policies, resources, organizational structure, and preferred contractual arrangements, when
selecting the most appropriate procurement approach for a construction project. This is
because each system has its own feature and peculiarity that will have effect on the cost,
time and quality of the project.
 ERA should provide training, seminars, workshop with regard to innovative project delivery
system, BD project delivery system, to executing the projects within construction budget,
time and good quality. Moreover, senior staffs who have past experience in executing
innovative project delivery projects should be able to educate others, share knowledge and
keep communication to their junior about the innovative project delivery system.
 ERA is expected to establish other tender evaluation system other than low bid method to
improve the cost overrun, time overrun and quality of the construction projects.
 Copy or modifying other country method may not be work full for our county condition to
that finding of the problem and fixing this issue will be solution and it will be applicable for
better construction procurement.
May 2017
6. Reference
1. William C. Charvat, AIA, CSI, Excerpt from the Architect’s hand book of professional
practice, 13th edition @ 2000
2. Anvuur, A. & Kumaraswamy, M. ‘Conceptual model of partnering and Alliancing’.
Journal of construction Engineering and management.@ 2007
3. www.gep.com/Procurement/Transformation Section of a construction procurement system
posted on June 2013
4. http://www.designingbuildings.co.uk/wiki/Procurement_route, The construction industry
knowledge base, Last edited 04 Feb 2016
5. Australian procurement and construction council, Building and Construction Procurement
Guide Principles and Options, First Published 2014
6. Wubishet Jekale Mengesha (Dr. Eng.), critical reflection on FPPAA draft amendment on
some qualification requirement, November 2015
7. John van Rijn, Development, Procurement in the construction industry, Edition 2005
8. Hugh Clamp, Stanley Cox, Sarah Lupton, RIBA Publishing, What is contract, August
2007
9. Masterman and Gameson (1994), Rowlinson (1999), Alhazini and McCaffer (2000),
Shiyamni et al. (2006) as cited in Soyombo and Ogunsanmi (2011), and Shiyamni et al.
Construction Procurement Selection: Comparative Study of Routine Projects vs. Disaster
Reconstruction Projects
10. Abrham Yohannes, Ethiopian Public Procurement Law applicable only to the private
sector, on February 16, 2012
11. Keffyalew Gebremedhin, Ethiopia Public procurement law on grounds of its in
applicability to state agencies, on March 31, 2011
12. http://www.theconstructor.org › Construction tendering method, The constructor - Civil
Engineering Home, (2015)
13. http://nairaproject.com/project/867.html The impact of procurement system on
construction cost and delivery
May 2017
14. Hashim M.B, the effect of procurement method on performance of construction project,
Ph.D. thesis of University technology Malaysia, Faculty of built Environment, on May,
1999
15. Rasid, R.A Taib, Effect of procurement systems on the performance of construction
Industry, on June 2006
16. Per Erik Eriksson, university of Technology, Sweden, Effects of Procurement on
Construction Project Performance, Published Journal.
17. Swan, W. & Khalfan, M., Objective Setting for Partnering Projects in the Public Sector'.
Engineering, Construction and Architectural Management, on September 2007
18. Chan, A., Chan, D., Fan, L., Lam, P. & Yeung, J. 'Partnering for Construction Excellence
- A Reality or Myth?' Building & Environment, on 2006
19. Forsythe, P., A Conceptual Framework for Studying Customer Satisfaction in
Construction. Construction Management and Economics, on 2007
20. Hosein N. Rad and Farzad Khosrowshahi, Quality Measurement In Construction Projects
21. Koehn, E. & Datta, N. Quality, Environmental, and Health and Safety Management
Systems for Construction Engineering, Journal of Construction Engineering and
Management, on 2003
22. https://www.scribd.com/document Project handover guidelines ( form 41 and 42) revision
4.1 August 2011
23. Asian Development bank, e-handbook on project implementation, Project Commissioning
and completion, section 6.5
24. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) - Fourth
Edition, on July 2013
25. Peter W.G. Morris, Managing project Management Knowlage for organizational
Effectiveness, on 1997
26. Wubishet Jekale Mengesha (Dr. Eng.), Procurement & Contract Management, Addis
Ababa, Ethiopia, April, 2007
27. http://www.economicshelp.org/blog/glossary/competitive-tendering/ Competitive
Tendering, edited on November 28, 2012
28. http://www.designingbuildings.co.uk/wiki/Negotiated_tendering The construction
industry knowledge base, last edited 20 June, 2016
29. F. Lawrence Bennett, PE, PhD Emeritus Professor of Engineering Management, The
Management of Construction: A Project Life Cycle Approach, University of Alaska,
Fairbanks, published on 2003
May 2017
30. Dr. Silas Gachanja Kinyeki Procurement, Tendering And Contracts Administration in
Developing Countries, Dmi-St Eugene University, Lusaka, Zambia, 2012.
31. Project manager competency Enhancement training by HABCON consult, sponsored by
and organized by Ethiopian Road Authority , July 2013
32. Chitkara, K. K. (1998), Construction Project Management, New Delhi: Tata McGraw-Hill
Education, retrieved May 16, 2015
33. Georg Fekadu, Impacts of procurement process on contractor selection in Ethiopian road
authority, AAiT, School of Civil and Environmental Engineering, Addis Ababa, Ethiopia,
October 2013.
34. Merriam-Webster.com (Merriam-Webster) the process of building something retrieved
February, 2016
35. Halpin, Daniel W.; Senior, Bolivar A. (2010), Construction Management (4th edition),
Hand book, NJ: John Wiley & Sons, retrieved May 16, 2015
36. Pakkal a, P.2002. Innovative project delivery methods for infrastructure: An international
perspective, Finland road Enterprise , Helsinki
37. Tiina, K., and L. Pertti. 2004. The Current and Future Performance of Road Project
Delivery Methods, VTT Technical Research Center of Finland.
38. British Standard Institution (BSI) part 1 and 2 , by the Engineering Standards Committee,
1991
39. ERA Performance Evaluation of Contractors under Government Financed Tenders,
Volume -1, 2016
40. Standard bid document for procurement of works prepared by the FPPA version I, August
2011
41. Ethiopian Road Authority bidding document, qualification criteria of ERA, Volume-1,
2010
42. Rodney Overton, Feasibility studies made simple, national library of Australia, published
on July 2007
43. Standard bid document for procurement of works prepared by the FPPA, January, 2006
44. Standard Bidding Documents, Procurement of Works, The World Bank Washington, D.C,
May, 2004
45. Patrick X.w. ZOU, An Overview Of China's Construction Project Tendering, Faculty of
the Built Environment, The University of New South Wales, UNSW Sydney 2052
Australia.
May 2017
Appendix - 1
Sample Calculation
Project Estimate
Project estimate means 50% engineer’s estimate and 50% estimate of the Ministry. The project
estimate shall be indicated in the bid document.
Engineer’s estimate = ETB 152,000,000.00
Ministry’s estimate = ETB 150,000,000.00
Project estimate = 50 %( 152,000,000.00 + 150,000,000.00) = ETB 151,000,000.00
Bidders qualified for detail evaluation
Bidder’s who are submitted the required bid security and whose offer is within plus or minus
20% of the project estimate will be subjected to detail evaluation. This criterion shall be clearly
indicated in the bid document.
= 151,000,000.00+20% (151,000,000.00) = 181,200,000.00
= 151,000,000.00-20% (151,000,000.00) = 120,800,000.00
Therefore, bidders whose offer is between ETB 181,200,000.00 and 120,800,000.00 will be
subjected to further evaluation. Bidders whose offers are outside the limit will be rejected.
iii. Detail Evaluation
The winning bidder will be the least bidder whose offer is within -15% of the adjusted project
estimate. The adjusted project estimate is 25% of the project estimate and 75% from the
average of the offer from the bidders who are subjected to detail evaluation.
May 2017
Table 2.5 Summary of Bidders Offer
Bidder Offer (ETB) Remark
A
176,000,000.00 176,000,000.00
B
143,000,000.00 143,000,000.00
C
124,000,000.00 124,000,000.00
D Rejected
192,000,000.00
E Rejected
118,000,000.00
F
165,000,000.00 165,000,000.00
G
130,000,000.00 130,000,000.00
H Rejected
183,000,000.00
738,000,000.00
Bidders D, E and H are non-responsive because their offer is not within plus or minus 20% of
the project estimate.
Average offer from contractors = 738,000,000/5 = 147,600,000.00
Adjusted project estimate =25 %( 151,000,000.00) +75 %( 147,600,000.00) =148,450,000.00
The minimum acceptable bid offer =148,450,000.00-15 %( 148,450,000.00) =126,182,500.00
May 2017
Therefore, the winner of this bid will be the least bidder whose offer is greater than ETB
126,182,500.00. In this particular example, bidder C whose offer is ETB130, 000,000.00
(Seven million one hundred thousand birr) will be awarded.
Appendix – 2
Questionnaire survey
QUESTIONNAIRE FOR RESEARCH THESIS
Introduction
This questionnaire is prepared to obtain information from key informants with semi- structured
questions. The information is required for the academic research entitled "Construction
procurement practices and its impacts in construction budget, completion time and
performance in Ethiopian road construction", which is being conducted as partial fulfillment of
MSc in construction technology and management.
The questionnaire consists of three sections. Section 1 General Profile of the Respondent,
Section 2 General Question Related to Project Delivery System and at the end there is a space
that left for general comments regarding the research topic at Section 3.
Your response, in this regard, is highly valuable and contributory to the outcome of the
research. All feedback will be kept strictly confidential, and utilized for this academic research
only.
Thank you,
Bilen Abera
Post graduate student, Construction technology and management
Addis Ababa Institute of Technology, School of Civil and Environmental Engineering
Department
May 2017
Addis Ababa
Ethiopia
Supervised by Prof. (Dr. –Ing) Abebe Dinku
Questionnaire for the Client

(Code A)
Section 1: General profile of the Respondent
1.1 Name: _____________________________________________ (optional)
1.2 Position: _____________________________________________
1.3 Organization/Working Place_____________________________________________
1.4 Address: ___________________________________________________ (optional)
a) Mobile:____________________________________________
b) E-mail: ____________________________________________
1.5 Educational status? If your answer is MSC, please choice your field of specialization at 1.6.
 BSc  MSc
Others; please specify_______________________________________________
1.6 What is your field of specialization?
 Construction Technology and Management  Transportation engineering
 Highway engineering  Geotechnical engineering
Others, please specify______________________________________________
1.7 Work experience
a. In the construction Sector
May 2017
 0 – 5 years  6 – 10 years  11 – 15 years  More than 15 years
b. In the road sector
Section 2: General Question Related to procurement and tender evaluation
DBB=Design Bid Built, DB=Design Built, CM at Free = Construction Management at

free, CM at risk = Construction management at risk, BOT = Design Built Operate
Transfer
Traditional delivery system is a design-bid-build project delivery method, the Owner first
contracts with a Design Professional who provides the design. After the design the bidding
system is take place. Finally the owner enters a separate contract with the general contractor
for the construction of the project.
Innovative project delivery methods are Design-Build, Construction Management (CM), and
Design-Build-Operate-Transfer. Design-Build: - the design-build team is works under a single
contract with the project owner to provide design and construction services. One entity, one
contract, one unified flow of work from initial concept through completion. Construction
Management (CM):- The construction management project delivery system is a process by
which a "construction manager" is added to the construction team to oversee some or all of the
project. The construction manager can be involved in overseeing scheduling, cost control,
construction, bidding, or the entire project. Design-Build-Operate-Transfer: - a private
company is responsible for the designs, construction, operation, maintenance, and financing of
the project for a specified concession period.
2.1 What are client requirements to select project delivery system?
a) Client characteristics (Cost, Time and Quality related factors)
b) External Environment (Market competitiveness, Availability of material, and
Natural Disaster)
May 2017
c) Project requirement (Project type, Size, cost, Flexibility, complexity and site risk)
d) Other
_______________________________________________________________
2.2 Do you have specialized staff member who is responsible to select type of project delivery
system for new construction project?
a) Yes b) No
2.3 Which type of tendering is better for projects to complete the work with in estimated
Construction time, budget and quality for road construction project?
a) Open tendering b. select tendering c. multi-stage tendering d. Invitation
tendering
2.4 Indicate the project delivery methods used by your organization to procure at least one
construction projects.
Project delivery method Yes No Do not know
Traditional
Innovative
2.5 If your organization has ever used the innovative methods, indicate them.
Innovative project delivery methods Yes No Do not know

Design-Build (DB)
Construction Management (CM) Fee
Risk
Design-Build-Operate-Transfer (BOT)
Priority
Method
2.6 How often has your organization used the traditional or the innovative methods?
Delivery method Always Usually Some times Rarely Not used
Traditional
Innovation
2.7 If you have been always employing the traditional method so far, do you intend (i.e. plan)
to shift to the innovative project delivery methods?
2.7 A) If your answer is Yes, please rank them.
a) Yes b) No c) Mixed feeling
May 2017
1st 2 nd 3rd 4 th 5 th I do not know

DBB
DB
Free
CM Risk
BOT
2.7 B) If yes, what is\are the reason\s behind your decisions? Order your reasons.
Please indicate the significance of each factor by ticking the appropriate boxes.
Add any remarks relating to each factor on the other raw.
St.A = Strongly agree (1) Sl.D = Slightly disagree (4)
Sl.A = Slightly agree (2) St.D = Strongly disagree (5)
N = Neutral (3)
Priority
Method Reasons 1st 2nd 3rd 4th 5th I do not know
To reduce project cost
To reduce project time
DBB To ensure project quality
To ensure project safety
To reduce administrative burden to owner
Others
DB To ensure project quality
Others
CM At To ensure project quality
free To ensure project safety
Others
May 2017

Ris k
Others
BOT To ensure project quality
Others
2.8 How do you choose any of the method (traditional or innovative)?

a) After considering the merits and demerits of each.
b) Because it is the customarily used method.
c) Others (indicate).
2.9 Which method do you think is particularly recommended for the road construction?
a) DBB b) DB c) CM risk Free d) CM with risk e) BOT f)
Other
2.10 Which method do you think is specifically advisable to meet project costs for the road
construction?
Other
2.11 Which project delivery method ensures a quality project (both functional and aesthetic) for
the road construction?
Other
2.12 Which project delivery method is effective in reducing administrative burden to the owner
for the road construction?
Other
May 2017
2.13 Which project delivery method is exposed to time extension claim on the road
construction?
Other
2.14 Which project delivery method is exposed to cost claim on the road construction?
Other
2.15 Which project delivery method is exposed to quality/performance claim on road
construction?
Other
2.16 Which project delivery method is effective to execute the work on time on the road
construction?
Other
2.17 What criteria are clients use to select the type of construction contract document
(construction contract document like MoWUD , PPA 2006, FPPPAA2011)
____________________________________________________________________________
____________________________________________________________________________
______________________________________________________________.
2.18 Which procurement stage is essential for road construction for better performance?
a) Pre-construction /pre-contract procurement

b) Construction / post contract procurement
Other _____________________________________________________________
If your answer is “a” please rank table 5.1 by ticking the appropriate boxes and if
your answer is “b” please rank table 5.2 by ticking the appropriate boxes.
V.H = Very High = 1 M = Medium = 3 L = Low = 5
H = High = 2 V.L = Very Low = 4
May 2017
Pre contract Stage Rank

1 (V.H) 2 (H) 3 (M) 4 (V.L) 5 (L)
Pre-feasibility and feasibility
Design
Tendering
Table 5.1
Post contract Stage Rank

1 (V.H) 2 (H) 3 (M) 4 (V.L) 5 (L)
Construction
Commissioning
Handover
Table 5.2
2.19 Which construction standard bid document is advantageous for tender evaluation system
than the other for the road construction?
a. MoWUD b. PPA 2006 c. FPPPAA 2011

d) other ________________________________________________
2.20 What is your impression about MoWUD tender evaluation and analysis approach for road
construction?
(The tender evaluation and analysis approach were modified by the Ministry of Works and
Urban Development in March 2001. Bidder’s offer must be within plus or minus 20% of
the project estimate will be subjected to detail evaluation. Project estimate means 50%
engineer’s estimate and 50% estimate of the Ministry. Bidders whose offer is within 20%
and least price will be the winner.)
a. Very good b. Good c. Fair d. Poor
2.21 What is your suggestion about PPA 2006 tender evaluation and analysis approach for road
construction?
(It is a two stage bid evaluation system the first one is technical evaluation and the second
one is the financial offer. The first one is the technical evaluation, Bidders who score above
70% will participate for further financial evaluation. The successful bidder will be the least
bidder whose offer is less than the other bidder.)
May 2017
2.22 What is your opinion about FPPPAA 2011 tender evaluation and analysis approach for
road construction?
(The aggregate of technical and financial offers have 70% and 30% value respectively at
the end of evaluation. The Technical Proposal evaluation score shall be normalized
according to the highest evaluated technical score that will get 100 points according to
which other scores of technical criteria shall be proportionally ranked. Normalization is the
transformation that is applied equally to every element in the group of data so that the
group has a specific statistical characteristic. The same is true for the financial offer. The
winner of this bid will be the highest point in the total sum of results of the technical and
Bid Price evaluation. )
2.23 Which procurement related factor is affecting project performance?
a. Pre - construction time

b. Control of project design
c. clients interest
d. Process and procedure of construction organizational
e. Others
______________________________________________________________
2.24 Which performance evaluation is used for construction projects
M.F = Most frequently = 1 LF = Least Frequent =3
F = Frequently = 2 N.O = No occurrence = 4
Performance 1 (M.F) 2 (F) 3 (L.F) 4 (N.O)

Evaluation
Economical
Performance
Time Performance
Quality
Environmental
Performance
Working
Environment
2.4 Your degree of satisfaction on the Ethiopian construction procurement practice?
a) High b) Medium c) Low d) Very low
e) other __________________________
May 2017
2.25 In your opinion, what are the criteria that affects the process of construction procurement?
______________________________________________________________________
_____________________________________________________________________.
Section 3: General Comments Regarding the Research
I am interested in any other comment you might have concerning procurement practices
in Ethiopian construction project industry? Please use the space provide below for any
of your comment.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_______.
Questionnaire for Consultant

(Code B)
Section 1: General profile of the Respondent

1.1 Name: _____________________________________________ (optional)
1.2 Position: _____________________________________________
c) Mobile:____________________________________________
d) E-mail: ____________________________________________
1.5 Educational status? If your answer is MSC, please choice your field of specialization at 1.6.
 BSc  MSc

May 2017
1.7 Work experience
c. In the construction Sector
d. In the road sector
DBB=Design Bid Built, DB=Design Built, CM at Free = Construction Management at free, CM at

risk = Construction management at risk, BOT = Design Built Operate Transfer
construction, bidding, or the entire project. Design-Build-Operate-Transfer:- a private
May 2017
const
ructi Innovative project delivery methods Yes No Do not know
on
Design-Build (DB)
proje
cts.
Risk
Priority
Method 1st 2 nd 3rd 4 th 5 th I do not know
DBB
DB

Traditional
Innovation

Traditional
Innovative
2.11 If you have been always employing the traditional method so far, do you intend (i.e.
plan) to shift to the innovative project delivery methods?
May 2017
Free 2.4 A)
CM Risk If your
BOT answer
is Yes,
please rank them.
a) Yes b) No c) Mixed feeling
Table 2.4 a
2.5 B) If yes, what is\are the reason\s behind your decisions? Order your reasons.
Please indicate the significance of each factor by ticking the appropriate boxes.
Add any remarks relating to each factor on the other raw.
St.A = Strongly agree (1) Sl.D = Slightly disagree (4)
Sl.A = Slightly agree (2) St.D = Strongly disagree (5)
N = Neutral (3)
Priority
Method Reasons 1st 2nd 3rd 4th 5th I do not know
DBB To ensure project quality

Others
DB To ensure project quality

Others
free To ensure project safety
Others
May 2017

Ris k
Others
BOT To ensure project quality
Others
Table 2.4 b

e) After considering the merits and demerits of each.
f) Because it is the customarily used method.
g) Others (indicate).
b) DBB b) DB c) CM risk Free d) CM with risk e) BOT f)
Other
2.8 Which method do you think is specifically advisable to meet project costs?
b) DBB b) DB c) CM risk Free d) CM with risk e) BOT f) Other
2.9 Which project delivery method ensures a quality project (both functional and aesthetic)?
2.10 Which project delivery method is effective in reducing administrative burden to the
owner?
2.11 Which project delivery method is exposed to time extension claim?
2.12 Which project delivery method is exposed to cost claim?
May 2017
2.13 Which project delivery method is exposed to quality/performance claim?
2.14 Which project delivery method is effective to execute the work on time?
2.15 Do you have specialized staff member to assist clients on select the project delivery
system for new construction project?
b) Yes b) No
a) Open tendering b) select tendering c) multi-stage tendering d) Invitation tendering

c) Pre-construction /pre-contract procurement

d) construction / post contract procurement
Other _____________________________________________________________

1 (V.H) 2 (H) 3 (M) 4 (V.L) 5 (L)
Design
Tendering
Table 5.1

1 (V.H) 2 (H) 3 (M) 4 (V.L) 5 (L)
Construction
Commissioning
Handover
May 2017
Table 5.2
a) MoWUD b) PPA 2006 c) FPPPAA 2011 d) None
construction?
a) Very good b) Good c) Fair d) Poor
construction?
road construction?
Bid Price evaluation.)
2.22 Which procurement related factor is affecting project performance?
f. Pre - construction time

g. Control of project design
h. clients interest
May 2017
i. Process and procedure of construction organizational

j. Others______________________________________________________________
M.F = Most frequently = 1 L.F = Least Frequent =3

Performance Evaluation 1 (M.F) 2 (F) 3 (L.F) 4 (N.O)
Economical Performance
Time Performance
Quality
Environmental Performance
Working Environment
b) High b) Medium c) Low d) Very low
e) other __________________________
______________________________________________________________________
_____________________________________________________________________.

I am interested in any other comment you might have concerning procurement practices in
Ethiopian construction project industry? Please use the space provide below for any of
your comment.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
.
May 2017
Questionnaire for contractors

(Code C)
Section 1: General Profile of the Respondent
1.1 Name: _____________________________________________ (optional)
1.2 Position: _____________________________________________
e) Mobile:____________________________________________
May 2017
f) E-mail: ____________________________________________
1.5 Educational status? If your answer is MSC, please choice your field of specialization at 1.
 BSc  MSc
1.7 Work experience
e. In the construction Sector
f. In the road sector
DBB=Design Bid Built, DB=Design Built, CM at Free = Construction Management at

free, CM at risk = Construction management at risk, BOT = Design Built Operate
Transfer
May 2017
construction, bidding, or the entire project. Design-Build-Operate-Transfer: - a private
construction projects.

Traditional
Innovative
Innovative project delivery methods Yes No Do not know

Design-Build (DB)
Risk

Traditional
Innovation
h) After considering the merits and demerits of each.
i) Because it is the customarily used method.
j) Others (indicate).
May 2017
c) DBB b) DB c) CM risk Free d) CM with risk e) BOT f) Other
2.28 Which method do you think is specifically advisable to meet project costs at road construction?
2.29 Which project delivery method ensures a quality project (both functional and aesthetic) for
road construction?
2.30 Which project delivery method is effective in reducing administrative burden to the owner
on the road construction?
2.31 Which project delivery method is exposed to time extension claim on road construction?
2.32 Which project delivery method is exposed to cost claim on road construction?
2.33 Which project delivery method is exposed to quality/performance claim on road
construction?
2.34 Which project delivery method is effective to execute the work on time at road
construction?
e) Pre-construction /pre-contract procurement

f) Construction / post contract procurement
Other _____________________________________________________________
May 2017

1 (V.H) 2 (H) 3 (M) 4 (V.L) 5 (L)
Design
Tendering
Table 5.1

1 (V.H) 2 (H) 3 (M) 4 (V.L) 5 (L)
Construction
Commissioning
Handover
Table 5.2
b. MoWUD b. PPA 2006 c. FPPPAA 2011 d. None

construction?
b. Very good b. Good c. Fair d. Poor

construction?
May 2017
road construction?
bid price evaluation. )
a. Open tendering b. select tendering c. multi-stage tendering d. Invitation

tendering
M.F = Most frequently = 1 LF = Least Frequent =3

Performance Evaluation 1 (M.F) 2 (F) 3 (L.F) 4 (N.O)

Economical Performance
Time Performance
Quality
Environmental Performance
Working Environment
c) High b) Medium c) Low d) Very low
e) other __________________________
May 2017
_____________________________________________________________________
____________________________________________________________________.
I am interested in any other comment you might have concerning procurement practices
in Ethiopian construction project industry? Please use the space provide below for any
of your comment.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
_______________________________________________________.

Bilen Abera

Uploaded by

Copyright:

Available Formats

Bilen Abera

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bilen Abera

Uploaded by

Copyright:

Available Formats

Construction Procurement Practices and It’s Impacts on

Ethiopian Road Construction

Case Study: - Ethiopian Road Authority

A Thesis Submitted to the School of Civil Engineering

Partial Fulfillment of the Requirements for the Degree of Master of Science

Addis Ababa University

ADDIS ABABA UNIVERSITY

ADDIS ABABA INSTITUTE OF TECHNOLOGY

Signed by Examining Committee:

Internal Examiner Signature Date

External Examiner Signature Date

Advisor Signature Date

Co-Advisor Signature Date

School or Center Chair Person

NAME: BILEN ABERA

ADDIS ABABA UNIVERSITY

ADDIS ABABA INSTITUTE OF TECHNOLOGY

SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING

DATE: MAY, 2017

2.3.1 Definition of project delivery system ........................................................................ 46

4.2.3 Consultant Respondent’s View ................................................................................. 88

CHAPTER FIVE ........................................................................................................................... 144

Key Words: Procurement, Procurement Approach, Contract, Planning, Road Construction

1.2 Statement of the problem

According to PMBOK (2013), the Project Procurement Management processes include

1.3 Research Question

1.4 Objective of the research

The main objective of this research is;

1.4.2 Specific objective of the research

 To identify availability of procurement Practices and project delivery in Ethiopian road

2.1 Construction Procurement

2.1.1 Definition of procurement

Different authors define procurement in different terms, some of them are:

2.1.2 Construction Procurement

2. On the other hand, a project's procurement practice tends to present a reflection of

Right Time Procurement Right Cost

Figure 2.1 The Five rights of procurement [6]

Table 2.1 Rights of procurement [6]

The 5 R’s: This means:

Figure 2.2 Characteristics of procurement [6]

Table 2.2 Seven Characteristics of Procurement [6]

Impartiality Equal treatment to all potential tenderers.

Formality Documented and Recorded procurement process.

Neutrality Avoidance of specifying a single product or firms.

Defining concise compliance & requirement

2.1.3 Procurement Methods

Table 2.3 Procurement Classification [26]

Bases Things Bidders' Geographical Procurement Procurement

1. Things to be procured: Goods vs Services vs Works;

Negotiated tendering achieves a contract between a client and a contractor by direct

3. Geographical Coverage: International vs Regional vs National vs Local Tendering

4. Procurement Awareness: General and Specific Procurement Tendering

To enhance proof of competition and increase accessibility, projects are recommended to

5. Procurement Steps: This includes Single vs Two Staged Tendering

Prequalification is an internationally accepted practice in procurement management. It would

2.1.4 Role of procurement in construction industry

An appropriate procurement strategy, which is typically developed during the ‘evaluation’ or

 assess agency and market capabilities and capacity

 challenge assumptions in order to better achieve desired outcomes

 use practical analytical techniques in the decision-making process.