A project may be regarded as successful if the construction is delivered at the right time, at the appropriate price, quality standards, and providing the client with a reasonably high level of satisfaction. Construction projects in Ethiopia are dominantly completed within a period longer than what is agreed upon by the contracting parties and with cost deviating highly from the contract amount. This is attributed to frequent claims, variations and change orders occurring in those projects. One of the important factors influencing project performances is the type of bidding system implemented. With this background, this study attempted to identify the effects of low cost responsive bid awarding system on the performance of water supply construction projects in Amhara Region, Ethiopia and propose an alternative bid awarding system for the construction sector. Literatures on related topic were reviewed to address the effects of lowest cost responsive bidding system on the performance of construction projects. In addition, professionals' opinion and experience on the effects of lowest cost responsive bidding system on the performance of water supply construction projects in Amhara Region, Ethiopia were identified through focus group discussions. In the focus group discussions, three groups with four to six members of each having experiences of six to fifteen years participated. Additionally, document review and case studies were done on selected water supply construction projects in the Region. Accordingly, the study concludes; time overrun, cost overrun, quality compromising, claims and disputes among the contracting parties are the effects of low cost responsive bidding system on performance of water supply construction projects in Amhara Region, Ethiopia. Based on the discussion and analysis of the study, multi-parameter bid awarding system is proposed as an alternative bidding system for water supply construction projects in the Region.