TENDERING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION

TENDERING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION

ABSTRACT

Tendering has long been recognised as an effective means of obtaining vital goods in both the public and private sectors. These procedures are designed to protect the bidder’s and purchaser’s interests while also reinforcing the concept of openness and impartiality when all parties involved are pleased. The first chapter of this research work focusses on the situation that allows for the use of tendencies, advertisements and bid lists, tendering methods, open and selective tendering, disadvantages of tendering, and the company under review’s historical background, statement of problems, research question, significance of the study, research hypothesis, etc. In Chapter 2, the researcher evaluates various facts gathered from the writers that are relevant to this project task. The general methods for tendering, contractor pre-qualification, general principles of receiving, opening, and awarding contracts in the private sector, and contract award.
Chapter three introduces research methodology, which includes research design, questionnaire design, sampling processes for respondents, data source, and data analysis. The chapter comprises the researcher’s presentation, analysis, and listing of hypotheses, as well as his additional observations from the company under evaluation. Finally, in chapter five, the researcher summarises, concludes, and suggests areas for improvement. It also has a bibliography.

Chapter one

Introduction

Tendering is commonly mentioned in purchasing textbooks as an act in which a tender submits a quotation when requested by a client, who can be an individual, a group of individuals, a firm, the government, or any of its parastatals. According to Oyeku and Nwanneka (2001), tendering, a well-known purchasing method, is employed on a monthly basis in municipal, state, and federal government procurement.

It is one of three methods by which purchasers might calculate the price of goods and services they acquire. Tendering also assists the purchaser in obtaining the best supplier who can match the requirements, and it is typically required when the monetary worth of the purpose purchases exceeds the statutory naira limit.

Tendering is occasionally used in the private sector to acquire a fair and acceptable price, particularly for construction and service contracts.

Tendering procedures are designed to protect both the tenderer’s and the purchaser’s interests while also reinforcing concepts or openers and impartiality. The situations that allow for the use of tendering are as follows:

i. Where the contract’s monetary worth is significant and high.

ii. Where the sellers are technically proficient.

iii. There are several providers prepared to bid.

iv. Where delivery terms are really crucial.

v. Where the specifications of goods or services must be negotiated.

1.1 Background of the Study 

This research may be incomplete if the company is not disclosed. Memories are wonderful treasures. They are the building blocks of history, and they form the crystal ball that illuminates our past, lights up our product, and guides the way forward through the confusing network that leads into the unknown future.

When we look to the right, we cannot see a future without a past and a present. No surprise Kobi Fola and Module revealed “at eighties” ministry of work and finance Imo state Owerri had joined the ranks of Nigeria’s business elders.

1.2 Statement of the Problem

Tendering is an efficient strategy for selecting vendors. It has significantly increased the organization’s profits; there are numerous benefits to tendering, but there are also drawbacks.

Tendering normally ends with the lowest price tender being awarded, and purchasing firms develop a reputation for bargaining with the lowest tender after bids are opened.

This will lead to future tenders not offering their price first, expecting that they would do better in subsequent negotiations. They will implement a method for submitting offers that are low enough to be included in any negotiations.

However, the initial offer will not be as low as it would be if the award were made to the lowest tender without additional negotiation.

Tendering puts a lot of pressure on suppliers to cut costs in order to bid as low as possible while still being profitable. This cost pressure can lead to sacrifices in product quality development efforts and other critical services.

The true purpose of tendering appears to be well recognised; nonetheless, this price method is routinely exploited by both the government and commercial sector.

It is because tendering has been emphasised as a technique of pricing and allowing capable components to qualify. In reality, planning preliminaries correctly for tendering takes purchasing judgement of the highest planning specification, proper selection to tight supplier collect quantities, precise delivery schedules

adequate time for placing bids and general economic analysis is done correctly, selecting the successful tender after the bids are evaluated are generally a routine matter, except in unusual circumstances, the lowest tender should receive the order, purchasing judgement

1.3 PURPOSE OF THE STUDY

Most government and corporate organisations have a general misunderstanding of tendering as an effective mechanism for vendor selection. The objectives of the study include the following:

1. Determine why there is confusion about tendering.

2. Determine the importance of effective tendering as a tool.

3. Determine the criteria for acquiring tenders.

4. A review of the contributions of various authors on the subject exposes people’s perspectives on the relevance of vendor selection.

5. Determine whether or not an autonomous unit needs to be addressed by skilled and experienced specialists to handle vendor selection.

1.4 Significance of the Study

For a long time, sophisticated countries have recognised the need of understanding the various types of tendering as a useful instrument for vendor selection. Tendering is not done properly in poor nations such as Nigeria since it is not the best way for selecting vendors.

This does not imply that no previous research has been conducted on tendering as an efficient instrument for vendor selection to help private establishments comprehend the criteria for selecting the best source.

1.5 RESEARCH QUESTIONS.

One of the most important aspects of this type of research is proving the subject of the investigation. This is done to help readers, other researchers, and planners understand what the research is about.

It thus develops certain research questions on which the conclusion will be based. The study looked for answers to the following questions.

1. What type of tendering does your organisation use?

2. What qualifies a tender for invitation to bid?

3 If you open it, how would you welcome interested tenders?

4. What is typically the foundation for picking a supplier?

5. In the Nigerian context, what is the typical inhibitory function for accomplishing the goal of a competitive tender price?

6. What is typically the foundation for picking a supplier?

7. Have there been any occasions where the lowest bidder was not offered the job?

Hypothesis 1.

Based on the wording of the research questions, the following hypothesis is proposed:

HO: Tendering is a useful tool for selection.

Hello: Tendering is not an efficient strategy for vendor selection.

Hypothesis II.

HO: The company has no viable approach other than tendering.

HO: The corporation can use another successful strategy for tendering.

1.6 SCOPE OF THE STUDY

The ministry of work and finance in Imo state Owerri was chosen for this project because to its major contribution to Nigeria’s economic growth and the need to uncover some of the secrets of its success.

However, the researcher found it difficult to collect all of the necessary details since some of the workers refused to answer some of the questions posed to them, citing the fact that they were not authorised to disclose specific information.

Furthermore, identifying management members who were expected to attend to me was difficult, and efforts to be made cost a large quantity of money in terms of transportation and other product expense.

1.7 Limitations of the Study

During the process of conducting the research, the researcher encountered numerous challenges, including limits created by insufficient funding for this endeavour.

I engaged in travel from Owerri to Aba, which included significant financial expenditures given that the research was conducted during the period of economic catastrophe.

To compensate for the disruptions caused by lectures and examination preparation, the majority of the material requested was not released because it was considered “confidential data”. All of this made it impossible for me, as a researcher, to visit other locations.

1.8 Definition of the Terms

1. Purchasing: According to Uzor (2004:4), purchasing is the function of management responsibility for procuring equipment, materials, and services needed for production through purchase, lease, or other legal means.

2. Tendering: According to Uzor, tendering is the act of submitting a quotation when requested by a client, who might be an individual, a group of people, a firm, or any parastatals.

3. Quotation: A quotation is a document provided by a supplier in response to an inquiry that offers goods and services for a specific delivery or time, according to Uzor (2004).

4. The right supplier is one who offers goods to the buyer’s facility as needed in terms of quality, quantity, delivery, and pricing, among other criteria.

5. Efficient sourcing: involves the identification and selection of an appropriate source of supply, systematic study, and ongoing relationship with no time or money constraints.

6. Sourcing: is the process by which a buyer searches, assesses, and finally evaluates suppliers in order to set policies that pertain to those who are best suited to meet the objectives of the undertaking.