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TENDERING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION

ABSTRACT

Tendering has for a long time stood as an effective method of purchasing essential materials both in the public and private sectors. These procedures tend to protect the interest of the bidder and the purchaser and further tries to reinforce the concept of openness and impartiality when the parties involved are satisfied. Chapter one of this research work focuses on situation that pave way for the use of tendency , advertisement and bid list, method of tendering, open and selective tendering, disadvantage of tendering and his historical background of the company under review, statement of problems, research question, significance of the study, research hypothesis etc. In chapter two, the researcher reviews some facts drawn from the authors that relates to this project work. The general procedures of tendering pre-qualification of contractors, general principles of receiving opening and awarding contracts in the private sector and award of contract.
Chapter three, welcomes research methodology which comprises the research design, the questionnaire design sampling the section procedures of respondents, data source, data analysis. While chapter contains the researchers presentation analysis and listing of hypothesis and his further observation from the company under review. Finally, chapter five, the researcher summarizes, concludes and recommends areas of improvement. It also contains bibliography. 

CHAPTER ONE

TENDERING AS AN EFFECTIVE TOOL FOR VENDOR SELECTION

1.0 INTRODUCTION

Tendering is widely discussed by the purchasing text books as an act by which submission of a quotation is made by a tender when so desired by a client, which may be an individual, a group of people, a company, government or any of it’s parastatals. According to Oyeku and Nwanneka (2001) tendering which is a widely acclaimed from purchasing is monthly used in local, state and federal government purchasing. It represents one of the three methods through which buyers can determine the price to be paid for goods a and services he purchases. Tendering also help the purchaser to obtain the best and supplier that can meet the requirement and it is usually required when the monetary value of the purpose purchases exceeds statutory naira limitation. Tendering is used sometimes in the private sector to obtain a fair and reasonable price especially in respect of contraction and service contract.

Procedures associated with tendering are designed to protect the interest of both the tender and the purchaser and to reinforce concepts or openers and impartiality. These situations that pave way for the use of tendering, they are as follows:

i. Where the monetary value of the contract is huge and high.

ii. Where the sellers are technically qualified.

iii. Where there many suppliers who are willing to bid.

iv. Where the terms of delivery is very important.

v. Where the specification of items or services must be discussed.

1.1 BACKGROUND HISTORY OF THE FIRM

This research work may not be complete if the company is not disclosed. Memories are an invaluable treasure. They are the building blocks of history and they constitute the crystal ball which illuminate our past, which light up our product and whose path the way forwarding the confused network which leads into the unseen future. When we look the right turn these cannot be future without a past and present. No wonder Kobi fola and module disclosed “at eighties” ministry of work and finance Imo state Owerri has joined the ranks of elders in the Nigeria business community.

1.2 STATEMENT OF THE PROBLEM

Tendering is effective tool for vendor selection. It has contributed greatly to the organization profit, there are so many advantages of tendering but problems associated with it. Tendering usually end with the lowest price tender getting the award of the purchasing firms gains a reputation for negotiating with the lowest tender after bids are opened. This will make future tenders not to offer their price initially believing that they do better in way subsequent negotiation. They will adopt a system of submitting offer low enough to allow them to be included in any negotiation. But initial offer will not be as low as when it is anticipated that the award will be made to the lowest tender without further negotiation.

Tendering tend to great pressure on suppliers to reduce their cost to be able to bid as low as but profitable price this cost pressure may result in sacrifices in product quality development efforts and other vital services. The real use of tendering appears to be widely understood, this system of pricing is frequently abused by both government and private establishment. It is because tendering has been stressed as the method of pricing and allowing able constituents their qualification. In reality, planning preliminaries correctly for tendering takes purchasing judgment 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 judgment and analytical planning should normally be exercised before tendering are request not after the bids are in.

1.3 OBJECTIVE OF THE STUDY

In most government and private organization there is wide misunderstanding of tendering as an effective tool for vendor selection. The objective of the study include the following:

1. Find out the reason why there is misunderstanding of tendering.

2. Determine the need for proper tendering as a tool.

3. Find out criteria for obtaining tendering.

4. Through the review of the contribution of different authors on the subject, exposes people idea on the importance of vendor selection.

5. Determine weather or not there is need for an independent unit to be treated with trained and qualified professionals to handle vendor selection.

1.4 SIGNIFICANCE OF THE STUDY

In advanced countries of the world the significance value of understanding the various types of tendering as an a effective tool for vendor selection has been acknowledged for a long time. In developing countries like Nigeria, tendering is not carried out properly, simply because it is not the best method for vendor selection. This does not mean that no previous study has been carried out on tendering as an effective tool for vendor selection to private establishment understand the criteria of selecting the best source.

1.5 RESEARCH QUESTIONS

One major aspect of a research of this nature is to prove the subject matter of the study. This is done to direct the readers, other researchers and plans so as to understand vividly what the research is all about. It therefore formulates some research questions on which the conclusion would be based. The study sought answers to the following questions.

1. What type of tendering does your organization adopt.?

2. What qualifies a tender to be invited to bid?

3 If opened what medium do you use to invite interested tenders?

4. What is usually the basis of selecting a supplier?

5. In the Nigerian context, what is usually the inhibitory function for achieving the goal of a good tendering price?

6. What is usually the basis of selecting a supplier?

7. Has there been instances where the lowest tender is not offered the job?

HYPOTHESIS 1

Based on the research questions formulations the following hypothesis:

HO: Tendering is effective tool for selection.

HI: Tendering is not effective tool for vendor selection.

HYPOTHESIS II

HO: There is no effective method the company adopt other than tendering.

HO: There is another effective method the company adopt other tendering.

1.6 SCOPE OF THE STUDY 

The ministry of work and finance in Imo state Owerri was the choice of this work because of its significant contribution in the economic growth of Nigerian nation and the need to find out some of the secrets of its success. However, the researcher did not find it easy to collect all the required facts as some of the workers declined some questions put before them with the excuse that they were not authorized to deluge certain information. Also, the identification members of the management who supposed to attend to me were not easily reached and efforts to be cost as a huge sum of money in terms of transportation and other products expenditure.

1.7 LIMITATION OF THE STUDY

In the course of executing the research work, the researcher was confronted with so many problems such as constraints posed by inadequate funds for this project. I engaged myself in traveling from Owerri to Aba one of this involved higher expenditures of money judging the fact that the research work was carried out during the period of Economic meltdown. In order to meet up the disturbances from lectures and examination preparation most of the data required were not disclosed because they regarded them “confidential data”. All these made impossible for me as a researcher to visit other places.

1.8 DEFINITION OF THE TERMS

1. Purchasing: According to Uzor (2004:4), purchasing is the function of management responsibility for obtaining by purchase lease or other legal means, equipment, materials & services required by an undertaken for use in production.

2. Tendering: According to Uzor, is the act by which submission of a quotation is made by a tender when so desired by a client, which may be an individual, a group of people, a company, or any parastatals.

3. Quotation: This is a document assured by a supplier in response to an enquiry offering goods and services for a given delivery or time, uzor (2004).

4. Right supplier : is that supplier who supplies materials as and when required with respect to quality, quantity delivery, price e.t.c to the buyers plant.

5. Efficient sourcing: is the identification and selection of suitable source of supply, systematic investigation and continuous relationship with no right of time and money.

6. sourcing: is the process by which a buyer seeks, surveys and ultimately evaluate supplier in order to determine policies which relates to those who can ,most suitable meet the requirements of undertaken ”obuseh Raphaeln and Egbuta (2007:204).

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