Thesis Open Access

THE IMPACT OF PROCUREMENT METHODS IN AWARDING ROAD PROJECTS ON DOMESTIC CONTRACTORS

GETACHEW G/TSADIK

Thesis supervisor(s)

Wubishet Jekale Mengesha (PhD)

The participation of domestic contractors in the road construction industry has many impacts
on the industry as well as in the economic development of the country. However, most of the
projects are awarded for foreign contractors and the participation of domestic contractors in
the road sector has much less than the foreigners. There are problems that contributing to this
low participation of domestic contractors.As indicated by different writers, the problems emerge
those related with the procurement process. Accordingly, this research attempts to assess the
construction works procurement practices in federal road project and to investigate problems,
impacts of construction works procurement practices toward the domestic contractors and
finally to show directions in improving domestic contractors’ participation in federal road
projects construction work. To achieve this objective, the research work had been developed
through the literature review of different organizational report, questionnaire survey and case
study. The outcome of these research shows that the procurement process has impact on the
participation of domestic contractors in road projects. The impacts were identified and high
Annual turnover requirement and performance requirement has been the main problem for low
level participation of domestic contractors on tenders as it has the first rank among all with RII
= 0.92 and 0.9 respectively. Also Past projects experience (RII=0.87) and cash flow requirement
(RII=0.86) are identified as the most demanding problems to local contractors that impede their
participation in road projects. Due to this problem, the domestic contractors are not capable to
qualify technically due to Annual turnover requirement, past projects experience, cash flow
requirement and performance requirement. Since they are not qualified for technical
requirement they will not be able to participate financial requirement, this affects the
contractors not to succeed on the tender. Simply stated, contractors go out of business because
they run out of money. Finally, the study recommends for enhancing the development of
Domestic contractors: by building Capacity of local contractors: Technology transfer through
joint ventures. Also the Public Procurement and Property Administration Agency should be open
to see and study the different alternative procurement methods applicable in the world which
will be suitable for domestic contractors and reforming the contract documents of Government
financed projects as required

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