Contracting business in public sector within various counties has a transaction cost to incur. This paper reviews transaction costs magnitude of developed and developing countries using standard sampling and procedure by analyzing data from four (4) developed countries; United States of America, United Kingdom, Newzealand, and Czech Republic and two (2) developing countries in Africa; Ghana and Nigeria. According to thefindings Newzealand have the highest TCs magnitude among all countries compared of about 16.5% averagely and with Czech Republic with 0.13% minimum that are incurred by stakeholders when bidding public sector construction projects. This is an important comparison and strengthens the assumption that there is a significant link between transaction costs incurred in bidding and public sector procurement, and that reducing such costs must be important for the contracting firms of various countries. Keywords: Construction, Comparison, Magnitude, Procurement, Transaction Cost.
The costs incurred by various stakeholders participating in the tendering process and their magnitude has attributed incongruity between government and contractors, economic drain and less competition in public sector projects. The aim of the study is to develop model that predict the transaction cost of bidding construction projects based on Public Procurement Act 2007 (PPA 2007). To achieve this, quantitative survey design based on structured questionnaire was used. The data collected from 143 sampled contractors selected using stratified sampling techniques from the NorthWest states of Nigeria were analyzed using Partial Least Squares-Structural Equation Modeling software. The results from the analysis revealed three (3) major sources of transaction costs identified from the field as; eligibility documents, contract administration costs, and securing related documents methods. In addition, the three identified transaction costs sources were found to be significant determinants of transaction costs for contractors bidding for construction projects of various types. Moreover, bidding costs model was found to exhibit good forecasting power that can be used to predict the magnitude of costs incurred by contractors in bidding projects in Nigeria. The study concludes that the transaction costs of contractors in bidding construction projects on average is 8.21% of contract sum after validating the model with real life data, and it will benefit incoming firms into the industry as a bidder by knowing their entry probable costs indicators for public projects. The study recommends that further studies should be explore to identify some potential factors such as Equipments, financial capability and professional staff strength which could provide new insights into bidding transaction costs incurred for construction projects.
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