PhD Final Thesis April 2013.pdf - Anglia Ruskin Research Online

Thesis Keith Gale 2013tender list contained 6 suppliers and this was a typical number for UK publicauthorities. This contrasts with Hong Kong authorities who invited between 10 and17 suppliers (Drew and Skitmore, 1992).Concerns with costs of bidding for projects and a marginal opportunity of winningprovides a considerable body of research literature (De Neufville and King, 1991;Holt et al, 1994; Remer and Buchanan, 2000). In order to reduce wastage withbidding costs, findings have suggested that tender lists of between 4 and 8 suppliersprovide a balance between competition and bidding effort (Wilson and Sharpe, 1988;De Neufville and King, 1991).Following microeconomic theory, the use of framework agreements creates anartificial barrier to a perfect market by restricting supply dictating that tender priceswill increase as profit margins rise. Reduced market competition and an opportunityfor suppliers to raise margins have not escaped practitioners or their clients.Questions about the economic efficiency of tenders received from suppliers withinrestrictive framework agreements have been voiced within construction media(Morgan, 2009). Although practitioners refer to such phenomena as a restriction tocompetitiveness, definitions of the effect are not clear within construction research.Competitiveness is often displayed though multiple layers of dynamic attributes andprocesses (Flanagan et al, 2005) and therefore this research concentrates upon asingle entity of market operation – the tender price.3.18 Market operation and the effect upon quality and the costs of qualityThe costs involved with defects and rework in design and construction has formed asignificant area of research (Abdul-Rahman et al, 1996; Barber et al, 2000: Love andLi, 2000). These studies generally have focussed upon the impact of costs arisingfrom failure by a supplier, rather than the costs involved with contribution ofprevention and appraisals in application of quality systems. According to Besterfield(1994) costs of quality are costs associated with non-achievement of a product to therequired specifications and include prevention measures, appraisal actions, internalfailure and external failure. A Prevention, Appraisal and Failure (PAF) Modeldeveloped by the British Standards Institute proposes an inverse relationship betweenprevention and appraisal effort and the cost of failure. Optimum quality performance71