Cultivating Procurement Strategies to Manage the Tender Price Level for Public Infrastructure:

A Case Study of IRCP (World Bank) Projects in Zambia

Abstract

Public infrastructure-based clients implement extant procurement strategies without carefully evaluating particular requirements to select and adapt the most appropriate practices that cultivate the best and most practical benefits of a chosen procurement strategy. The study explored procurement strategies for managing and optimizing construction tender-price levels. The study is an exploratory case study utilizing a desktop review of numerous publications, public domain reports, and person-to-person interviews. The choice of methodology corresponds to the specific nature of the research environment and phenomena characterization of the lack of detailed primary research. The research involves a robust examination of documents and trend analysis of public procurement. It results from extensive extant literature, nine case study packages of improved rural connectivity projects (IRCP), and 21 expert interviews. Improved rural connectivity project (IRCP) is a World Bank-funded project for improving Zambia’s rural road accessibility and strengthening institutional capacity. Eight fundamental characteristics related to a successful procurement strategy identified are cash flow assurance, guaranteed payments, and completeness of designs. Other characteristics include level and type of competition, contractor’s breakeven point, adopted procurement process (work packaging), nature of government support, and protecting market share. The study further identifies central areas for developing a successful and responsive procurement strategy: procurement planning, preferential procurement policy (protectionism), and establishing differential procurement laws. These findings form an appropriate basis for developing relevant procurement practices that improve a procurement strategy for managing construction bid prices. The study indicates the possibility of further exploiting the potential of current procurement strategies for managing construction prices by suggesting a link between poor tender-price management and a high occurrence of procurement-related lapses. The findings highlight gaps only identifiable in tender-price management studies when taking a client perspective and considering the procurement context. This study assists to develop procurement strategies that enhance the chance of deriving value for money while maintain reasonable price levels.

Keywords: construction, construction tender price, procurement strategy, public projects