Competitive bidding, contractor pre-qualifying, and their impact on public works construction contracting: An analysis of municipal public works construction contracting in California

Purpose. The study examined the role of the contractor pre-qualifying process in public works construction contracting, its essential elements, as well as its impact on the performance of competitively bid and awarded public works construction contracts, as perceived and experienced by city governments in California. The study also focused on the perceived impact of competitive bidding on the performance of public works construction contracts. Theoretical framework. The theoretical framework for this study is rooted in the principal-agent theory, which identifies certain problems that arise in a contractual relationship between a principal and its agent. The adverse selection and the moral hazard problems comprise the central issue in the principal-agent theory, for which the theory presents processes aimed to provide potential solutions to such problems. Methodology. The research methodology for this study is based on quantitative analysis of primary research data collected from cities in California for the purpose of this research. The data were collected using a research questionnaire, and were analyzed using descriptive and inferential statistical research analyses. Findings. California cities experience cost overage, delays, extra work claims, adversarial city-contractor relations, and work quality problems at varying rates. The majority of California cities perceive competitive bidding to have negative effects on public works construction contracts performance. In addition, California cities that pre-qualify contractors for their competitively bid and awarded public works construction contracts tend to have a more favorable view of contractor pre-qualifying than cities that do not pre-qualify contractors. Finally, California cities that pre-qualify contractors for their competitively bid and awarded construction contracts experience less adversarial city-contractor relations and work quality problems on such contracts, than cities that do not pre-qualify contractors. Conclusions and recommendations. California city governments may find the use of contractor pre-qualifying on competitively bid and awarded public works construction contracts to be beneficial. Especially in the areas of adversarial city contractor relations and work quality problems experienced on public works construction contracts. While contractor pre-qualifying may not be the solution to certain performance problems experienced on competitively bid and awarded public works construction contracts, it appears to be a part of the solution.