The construction industry in Nepal faces significant challenges, particularly in the execution of health infrastructure projects under the Lowest Substantially Responsive Bidder selection system. This system, designed to promote cost-efficiency, often leads to adverse outcomes such as project delays, cost overruns, and compromised quality due to excessively low bids. Contractors are frequently forced to cut corners on materials, labor, and safety in order to meet the financial constraints imposed by their low bids, leading to deteriorating project performance. This study aims to explore the impact of the low-bid system on the performance of health building construction projects implemented by DUDBC in Bagmati Province, focusing on project duration and cost. Additionally, the study seeks to identify the challenges posed by this procurement system and offer solutions to improve contract administration practices. Through a mixed-methods approach, incorporating both quantitative and qualitative data collection from questionnaires, interviews, and secondary sources, the research provides a comprehensive analysis of the current bid selection system The study identifies: Increase in intended Project Completion duration, Disputes and claims between contracting parties and Cost overruns of the project as the top three significant Impacts and No site visit before bidding may lead to underestimation of project, Lack of understanding of drawings, detail specification increases the risk of contractual disputes, and Contracts awarded to low bidders require more monitoring and supervision are the top three challenges. Similarly, from studies 28 health infrastructure construction project implemented by DUDBC in Bagmati Province that were awarded through low bid system suffers cost and time over run peaking up to 56.19% and 864.87% respectively. Key findings suggest that while the low-bid system initially lowers project costs, it often results in increased expenses due to rework, delays, and poor-quality construction. Contractors struggle to balance cost-efficiency with quality control, and employers face challenges managing contract variations or addressing abnormally low bids. The study recommends several measures, including setting a minimum bid threshold, revising the Public Procurement Act (PPA) and Public Procurement Regulations (PPR), setting of viii performance database of contractors, improving contractor performance monitoring, and adopting alternative contracting models such as Engineering Procurement Contracts (EPC) and Design-Build methods in Health Building Projects. These solutions aim to ensure a more balanced, sustainable approach to procurement while maintaining project quality and safety.

Keywords

Health infrastructure, Low bid system, Procurement, Public Procurement Act (PPA), Public Procurement Regulations (PPR)

Back to list