Evaluation of Unit Rates Bids of Common Building Items

Abstract It is important to assess firms’ financial health in the harsh construction market of developing countries. This study seeks to achieve this by assessing locally owned construction firms’ (LOCOFs) financial performance through evaluating firms’ bill of quantities (BOQ) contract sums and bid unit rates of common building items. Accessible 60 BOQ of the 79 BOQ of building projects awarded to various LOCOFs from 2007 to 2015 by federal universities and federal universities teaching hospitals in Southwest Nigeria were obtained from the institutional archives. Regression analysis of the contract sums and bid unit rates of common building construction items of works such as concrete, sandcrete block, iron, mortar and floor tiles were carried out. LOCOFs’ bid unit rates were compared with published unit rates and Nigeria consumer price index (CPI) within the study period and inferences bothering on firms’ pricing pattern and financial viability of firms based on items of work unit rates were highlighted and discussed. The results showed that 119 out of a total 461 unit rates values representing 25.81% of the LOCOFs bided unit rates were higher than the published unit rates. LOCOFs unit rates trend decreased within 3 to 4 consecutive years while the Nigeria CPI trend increased all through the years considered in the study. This implies that LOCOFs common items of work bids unit rates were not always influenced by the prevailing prices of goods and services in Nigeria. A possible reason for this is the lowest tender selection criteria which influences LOCOFs’ bided unit rates thereby leading to the acclaimed compromise in the quality of construction output and stunted financial performance.