This thesis proposal examines multi-criteria bid evaluation systems for construction projects in Nepal. It discusses how the Department of Urban Development and Building Construction currently awards contracts primarily to the lowest bidder, which can lead to delays, cost overruns and quality issues. The proposal aims to identify qualification criteria beyond price to evaluate contractors. It will recommend a suitable multi-criteria evaluation model for selecting contractors through a literature review and surveys of engineers, consultants and contractors regarding their perceptions. The findings could influence procurement policies and help improve the success of public construction projects in Nepal.

1. A Thesis Proposal
on
Multi-Criteria Bid Evaluation System For The Department
of Urban Development and Building Construction Projects
in Nepal
Presented By: Bidur Khadka
Roll No: Fall 011-1004
Program: Construction Management
Date: 2013/12/18

2. Background
 DUDBC is one of the oldest department carrying out public
works such as public buildings and urban development
infrastructure.
Public procurement accounts for about 8 to 9 percentage
of Gross Domestic Product in Nepal and therefore plays
important role in national development (National Planning
Commission, 2012/2013).
Nepalese Construction Industry uses around 35 percentage
of government budget (FCAN, 2010).

3. Background (Continued)
 Public construction procurement, the process by which
contractors are chosen for public construction projects, has
traditionally been based on selecting the lowest bidder.
contractors desperately quote low prices by reducing their
quality of work, and hope to be compensated by submitting
'claims'. They might also cause time and cost overruns of the
projects.
Many researchers state that 'reliance on bid prices alone as a
discriminating factor between bidders is, however, somewhat
risky .

4. Statement of the Problem
 Extensive delays in the planned schedule, cost overruns and
failure to meet desired level of quality are very common
problems faced by most construction projects in Nepal
(Agrawal, 2005).
In competitive bidding process in Nepal, the contract is
generally awarded to the lowest bidder (FCAN, 2010). It is
often problematic in the long run.
Failure of project implementation is quite often attributed
to the inappropriate selection method of contractors.
(Skitmore et al, 1997).

5. Statement of the Problem (Continued….)
 There has been a steady increase in the variety of
methods used for the procurement of construction work.
However, there has been no proportionate improvement in
the success rate of construction projects (Huang, 2010).
 It is important to adopt an approach that will include
necessary qualification-criteria for the selection of
appropriate contractors in executing the public construction
projects.

6. Research Questions
What are the existing methods of contractor selection that
are recently being applied?
What are the qualification criteria that are being
considered so far for the selection of contractors?
 To what extent do these criteria apply to the public
procurement system in DUDBC? Is there any necessity for
the improvement in the current multi-criteria bid evaluation
method adopted by DUDBC?

7. Research Questions (Continued….)
 Is modification in the existing public procurement act and
rule necessary to incorporate qualification criteria in the bid
document for the selection of contractors?
What sort of multi-criteria contractor selection model is
suitable for DUDBC?

8. Research Objectives
To review a range of prevailing methods of contractor
selection and contract awarding systems.
To identify from the literature the variables which have
been determined to be used for the selection of contractors.
 To identify the suitable contractor selection criteria in
DUDBC based on the perceptions of engineers, consultants
and contractors.

9. Research Objectives (Continued….)
To recommend the factors to be considered in the selection
of contractors and propose a suitable multi-criteria bid
evaluation system for the selection of contractors in
DUDBC.

10. Significance of the Study
the volume of economic transactions conducted by public
competitive bidding through multi-criteria selection method of
contractor gives importance to its study as a part of basic
research in management science.
 It is therefore necessary to examine different qualification
criteria adopted by DUDBC in selecting contractors in Nepal
in order to find out the most suitable criteria that DUDBC
should focus on when awarding construction contracts.

11. Significance of the Study (Contd……..)
The results of this study will provide some insight and
information on whether present qualification criteria used by
DUDBC for the selection of contractors are sufficient and
appropriate
 The results recommends an appropriate multi-criteria
contractor selection model.
 It will provide the guideline to lawmakers and policymakers
of Government of Nepal to adopt suitable multi-criteria
contractor selection method or review and amend provisions of
existing competitive bidding system of Public Procurement Act
(2007).

12. Scope & Limitation of the Study
Scope of the study: It will mainly focus on the
development bid price and non-price selection criteria to be
used in bid evaluation and contract award for the construction
projects under study.
 Limitation of the Study : Given the constraints of time and
resources, the spatial coverage of the research is limited to a
part of DUDBC.

13. Literature Review
9.2
9
8.8
8.6
8.4
8.2
8
7.8
7.6
GDP Contribution of Construction Industry in Nepal
2005/062006/072007/082008/092009/102010/112011/122012/13
GDP Contributio in percentage
Year
GDP contribution of
Construction Industry in
Percentage
Linear (GDP contribution of
Construction Industry in
Percentage)

14. GDP Contribution of Construction Industry in Nepal
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
3000000
2500000
2000000
1500000
1000000
500000
0
GDP in Millions
Construction industry GDP 83147 91746 111639 131278 158728 182614 199349 222704
Total GDP 1013977 1126300 1264601 1508850 1772694 2052228 2306738 2564782
Year
Construction industry GDP Total GDP
Linear (Construction industry GDP) Linear (Total GDP)

15. competitive
bidding
74%
User's
committee
11%
Direct
purchase
Sealed
quotation
9%
6%
Share of procurement methods for
DUDBC Budget

16. Literature Review (Selection Criteria:)
Criteria Structure of
Contractor Selection
Tender Price Financial Capability
1. Financial
Statement
2. Financial
References
Past Performance
1. Failure to complete
the contract
2. Cost Overrun
3. Delay
4. Actual Quality
Achieved
Past Experience
1. Scale of Projects
Completed
2. Types of Projects
Completed
3. Experiences in
Local Area
Resources
1. Physical
Resources.
2. Human Resources
Current work load
Environmental and
Safety Performance
Past Client/Contractor
Relationship

17. Methodology

18. Methodology (Contd……..)
The piloting process will be conducted through the
suggestions of the concerned specialist in preparing
questionnaire (Trial run of the questionnaire). Validity and
Reliability test will be conducted.
 Relative Important Index: Σ (w* ni) / N
Where: w is the weight given by n number of respondent
N = the total number of respondents = Σ ni
w

AN

19. Methodology (Contd……..)
Determining Sample Size
n = n1 / (1 + n1 /N), (Kish, 1965)
Where n = sample size
n1 = S2/V2
N = total population
V = standard error of sampling distribution (0.05)
V2 = (0.05) (0.05) = 0.0025
S = maximum standard deviation of the population elements
S2 = P (1-P) = 0.5 (1- 0.5) = 0.25
P = proportion of the population elements that belong to the
defined
w

AN

20. Research Plan
Activities Nov Dec Jan Feb Mar Apr
Thesis Proposal
Preparation
Proposal Presentation
Literature Review
Data Collection
Data Analysis
Draft Report
Mid Term
Presentation
Incorporation of
comments and
suggestions
Thesis Presentation
Final Report

21. Budget Plan
Activities Amount (Rs.) Remarks
Field visit (travel & other logistics) for 5
days
Rs. 18,000.00
Data collection (fees, photocopy, travel cost
& etc)
Rs. 9,000.00
Stationary & Communications Rs. 7,000.00
Report Preparation Rs. 19,000.00
Other Miscellaneous Expenditures Rs.4,000.00
Total Estimated Budget Rs. 57,000.00

22. Thank You