Construction industry participants have started recognizing that accepting the least bid price does not guarantee maximum value. Continuous problems of inferior quality of constructing facilities, high incidence of claims and litigation, frequentcost overruns and use of poor quality of materials have become the main features of Ethiopian’s public construction work contracts.This research was undertaken to evaluate the performance of public owned construction projects awarded on a lowest bid awarding system, to determine the effect of advance payment on the contractor’s performance, compare lowest and average bid systems,and check the quality of local construction materials use by lowest price won contracts. A literature review was carried out to identifydifferent practices and floated questionnaire survey and laboratory test was conducted for selected and expected materials. Twoalternative bid evaluation methods were discussed and suggested the better one from performance point of view. The questionnairewas distributed to contractors, clients, consultants and other related professional. Additionally, interviews were conducted with them.A total of 88 questionnaires were distributed, including laboratory test results for selected and expected materials found in JimmaTown. The data were collected and 80 valid questionnaires were analyzed by using SPSS-20, Excel, and laboratory test resultsrequirement. The study identified that the causes of poor performance of contractors were won projects with lowest price; thereforemore of the respondents do not like the lowest bidding method. Advance payment is the main solution to support financial problemof contractors, but instead of paying in cash, purchasing the necessary construction materials is seen as an alternative to protectcontractors from using the money to other uses. Obviously known that in the current bid awarding method of Ethiopia, most of thetime, in order to be the winner of the bid price should be lesser. This leads the bidder not to get adequate profit, this pushes them touse poor quality of local construction materials. Finally, this work provides valuable information to the Ethiopian government, clients,consultants and contractors and other stakeholders who desire to improve bidding methods; usage of advance payment; ways toimprove performance of contractors and to protect the project from contractors using poor quality of construction materials. Index Terms— Advance payment, Bid Award System, Contractor’s performance, Government Building Projects, Jimma town, Least bid price, Quality of construction materials.