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Modelling contractor’s bidding decision

Author

Listed:
  • Biruk Sławomir

    (Lublin University of Technology, Faculty of Civil Engineering and Architecture, Department of Construction Methods and Management, Poland)

  • Jaśkowski Piotr

    (Lublin University of Technology, Faculty of Civil Engineering and Architecture, Dpt. of Construction Methods and Management, Poland)

  • Czarnigowska Agata

    (Lublin University of Technology, Faculty of Civil Engineering and Architecture, Dpt. of Construction Methods and Management, Poland)

Abstract

The authors aim to provide a set of tools to facilitate the main stages of the competitive bidding process for construction contractors. These involve 1) deciding whether to bid, 2) calculating the total price, and 3) breaking down the total price into the items of the bill of quantities or the schedule of payments to optimise contractor cash flows. To define factors that affect the decision to bid, the authors rely upon literature on the subject and put forward that multi-criteria methods are applied to calculate a single measure of contract attractiveness (utility value). An attractive contract implies that the contractor is likely to offer a lower price to increase chances of winning the competition. The total bid price is thus to be interpolated between the lowest acceptable and the highest justifiable price based on the contract attractiveness. With the total bid price established, the next step is to split it between the items of the schedule of payments. A linear programming model is proposed for this purpose. The application of the models is illustrated with a numerical example.

Suggested Citation

  • Biruk Sławomir & Jaśkowski Piotr & Czarnigowska Agata, 2017. "Modelling contractor’s bidding decision," Engineering Management in Production and Services, Sciendo, vol. 9(1), pages 64-73, March.
    • Handle: RePEc:vrs:ecoman:v:9:y:2017:i:1:p:64-73:n:7
    DOI: 10.1515/emj-2017-0007
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