Magnitude of transaction costs on contractors for eligibility documents, contract administration and bidding

Abstract

The research assessed the magnitude of transaction costs incurred by contractors with respect to eligibility papers, contract administration and process costs of bidding expenditures. Multi-stage stratified random sampling method was used to select participants from building companies from two hundred and thirty (230) contractors in chosen North-West states registered in the contractors ' database of the Bureau of Public Procurement, who are deemed to engage in any federal tendering process as participants. Different participants submitted two hundred (200) questionnaires. Modelling of structural equations has been used to evaluate the information from the participants. Results show an important connection existed between the eligibility documents, the process of bidding expenditures, contract administration costs, and the models of procurement guides (PPA 2007). This shows that, when bidding projects, the Transaction Costs (TCs) incurred by contracting companies are between 5-10% of the contract amount. The study proposes that the federal government procurement regulatory body should amend the present PPA 2007 Act in Nigeria. MDAs that are in line with the PPA rules should ask for minimum requirements or criteria.

Keywords: Procurement Act 2007, Eligibility document, Contract, Infrastructure, and Transaction costs theory