Assessment of Contractor Practices and Challenges in Vendor Selection for Public Building Projects in Kathmandu Valley

Abstract

The construction projects in Nepal experiences time and budget overruns and client dissatisfaction. These challenges are exacerbated by inadequate vendor selection processes that prioritize cost over essential factors such as quality, reliability, and operational flexibility. This study aims to assess the current practices and challenges faced by contractors during vendor selection processes for public building projects within Kathmandu Valley. The research specifically focuses on investigating the criteria employed, challenges encountered during the selection and determining solutions to mitigate these challenges. The study was carried out on seven major public building projects having 8 respondents valued above NPR 1 billion within Kathmandu Valley. A mixed-methods research approach was employed by combining quantitative techniques including Analytic Hierarchy Process (AHP) analysis and Relative Importance Index (RII) with qualitative methods encompassing semi-structured interviews with project managers and procurement experts and Key Informant Interviews (KII) with industry specialists across three iterative rounds. The study highlighted Quality of Material Delivered as predominant criterion in vendor selection decisions, while geographical proximity consistently received low prioritization. The consensus among the experts through the multiple rounds of KII reveals that clear hierarchy of intervention is needed with financial reliability through prompt payments serving as the foundational requirement upon which other improvements can be built. The study proposes an integrated approach for vendor selection improvement with standardized quality assessment protocols to ensure consistent evaluation criteria, payment system reforms to address financial reliability concerns and centralized governance structures for institutional strengthening.