Renewed calls for quality-based evaluation of public construction tenders

Declining levels of performance in the construction industry have prompted the Construction Industry Development Board’s (CIDB’s) renewed call for increased use of 'functionality' when evaluating construction tenders in the public sector, with a recent study by the organisation indicating that 18% of the work carried out by contractors in 2014 was considered by clients to be unsatisfactory, with the levels of unacceptable defects recorded in 13% of these projects.

Announcing its latest yearly instalment of the Construction Industry Indicators (CII) report, the CIDB said it had observed steady growth in the level of client dissatisfaction with the performance of contractors on construction projects over the last three-year period.

Recent figures indicated a steady increase in the level of client dissatisfaction, from 13% in 2012 to 16% in 2013 and 18% in 2014.

Although the declining levels of contractor performance were not attributable to a single observable factor, the CIDB pointed to a mismatch of projects with contractors as a significant contributing factor.

“Too often, contractors are appointed that are not suited for a particular construction contract. In this regard, we continue to advocate strongly for contractors to be appointed based on functionality, taking into account a risk assessment conducted by clients when procuring services for the construction of projects.

“Functionality empowers the client to carefully weigh the capabilities and record of the contractor during the tender evaluation process, enabling the client to manage risks early on in the appointment of a contractor,” the board said in a statement.

While the CII report identified increased client dissatisfaction with contractors over the past few years, in contrast, contractors were reflecting increasing satisfaction with clients.

Notably, contractor satisfaction with the overall performance of clients had increased between 2012 and 2015.

Contractors rated the quality of tender documents and specifications of clients as satisfactory on 83% of the projects surveyed in 2015, which was a notable improvement over satisfaction on only 75% of the projects surveyed in 2012.

Of concern, however, was that contractors were paid within the contractual 30 days after invoicing in only 40% of the projects, marking a deterioration in prompt payment practices between 2012 and 2015.

“Delayed payments are one of the biggest challenges facing the contracting sector and, in particular, the small- and medium-sized contractors – which often results in the bankruptcy of a contractor,” the CIDB held.

Additional highlights of the report included indications that quality and functionality were not taken into account in the adjudication on around 12% of tenders evaluated.

Further, the recommendations of the tender committee were overruled in the award of around 9% of public sector projects – with the overruling of tender recommendations highest in the North West and the Eastern Cape.