Socio-Political and Macro-Economic Impact of Tender Price Inflation in Zambian Public Construction Projects

Abstract

A well-managed tender price allows governments to improve sustainable construction. Currently, there is no tender price management model to regulate tender price inflation in public projects in Zambia. The paper aims to develop a model that proposes a practical solution to critical challenges related to tender price inflation in public projects in Zambia. The study utilized mixed methods, in which purposive snowball sampling was used to identify 14 participants for interviews to investigate socio-political factors, and a questionnaire survey was administered to 170 project management practitioners to investigate economic factors that influence tender price inflation in the Zambian construction industry. Equations were derived from ordinary least squares (OLS) method to determine an optimum domain-specific tender price, while the qualitative data provide the basis for socio-political strategies. Findings show that the model has unlimited prediction capabilities while accounting for various correlations between volatilities. Further, combining the quantitative and qualitative platforms of the model facilitates a low variable tender-price output that is critical to the predictability and certainty in determining the ability of the project to meet interest and fund redemption. Key practical benefits of providing a construction model with low inflation in tender price include improved cost predictability. The study concludes that a model that reduces inflation in tender prices enables more accurate budgeting, helping stakeholders plan projects with a higher degree of certainty. This reduces the risk of cost overruns and allows for better resource allocation. The value of this study lies in its originality, as it presents the first comprehensive tender price management model specifically tailored to public construction projects in Zambia, offering an innovative solution to the persistent challenge of tender price inflation, and contributing significantly to the improvement of sustainable infrastructure development.

Keywords: construction, infrastructure development, management model, public sector, tender price.