Assessment On The Reasonableness of Bid Price Thresholds: A Comparison of Project Performance based on Timely Delivery and Cost Overruns in Complex Construction Works in Indonesia
A comparison of project performance based on timely delivery and cost overruns in complex construction works in Indonesia (102 pages), (8 tables), (9 figures), (9.appendices).
The acceptability of a construction works contract is measured and valued for payment if it is delivered within the targeted period and at the agreed price. To that extent, the price offered by the contractors at the pre-construction stage can potentially mark such acceptability. However, is it always the case that an unrealistically low bid price potentially suspends timely delivery of the works and most probably overrun on cost compared with a realistically bid price? This research aims to study the reasonableness of the accepted bid price based on the percentage range against the owner’s cost estimate. This research employed 108 selected samples of complex construction works awarded by the Government of Indonesia from 2012 to 2015. These samples were assessed to find whether there are any significant differences in performance of the accepted works by comparing the timely delivery and cost overruns of each selected samples. Using non-parametric inferential statistical tests, the common findings shows that performance of the projects carried out by the contractors which previously quoted unrealistically low bid price and realistically bid price are not significantly different. In the case of unrealistic bid price, most of these contractors did not suspend timely delivery of the works and do not have a tendency to create cost overruns. The President Regulations for procurement prevents award of contract which corrected bid price is higher than the Construction Authority’s Cost Estimate and at the same time allow increase of contract price up to 10% of the original contract price. Moreover, the Minister of Public Works and Housing Regulations also sets the thresholds for a realistic bid price, which should be at least 80% of the Construction Authority’s Cost Estimate. Under these circumstances, regardless of bid price, the final contract amount tends to increase to meet the owner’s cost estimate.
Keyword: (reasonableness of bid price, unrealistic bid price, realistic bid price, timely delivery, cost overruns)
Bibliography: (23) (2000 - 2017)
The acceptability of a construction works contract is measured and valued for payment if it is delivered within the targeted period and at the agreed price. To that extent, the price offered by the contractors at the pre-construction stage can potentially mark such acceptability. However, is it always the case that an unrealistically low bid price potentially suspends timely delivery of the works and most probably overrun on cost compared with a realistically bid price? This research aims to study the reasonableness of the accepted bid price based on the percentage range against the owner’s cost estimate. This research employed 108 selected samples of complex construction works awarded by the Government of Indonesia from 2012 to 2015. These samples were assessed to find whether there are any significant differences in performance of the accepted works by comparing the timely delivery and cost overruns of each selected samples. Using non-parametric inferential statistical tests, the common findings shows that performance of the projects carried out by the contractors which previously quoted unrealistically low bid price and realistically bid price are not significantly different. In the case of unrealistic bid price, most of these contractors did not suspend timely delivery of the works and do not have a tendency to create cost overruns. The President Regulations for procurement prevents award of contract which corrected bid price is higher than the Construction Authority’s Cost Estimate and at the same time allow increase of contract price up to 10% of the original contract price. Moreover, the Minister of Public Works and Housing Regulations also sets the thresholds for a realistic bid price, which should be at least 80% of the Construction Authority’s Cost Estimate. Under these circumstances, regardless of bid price, the final contract amount tends to increase to meet the owner’s cost estimate.
Keyword: (reasonableness of bid price, unrealistic bid price, realistic bid price, timely delivery, cost overruns)
Bibliography: (23) (2000 - 2017)
Achmad Zacky Wasaraka - Personal Name
214112001 - Achmad Zacky Wasareka
TESIS PGSB
Tesis PMM
Inggris
Universitas Paramadina
2018
Jakarta
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