IDEAS home Printed from https://ideas.repec.org/a/ibn/ijbmjn/v11y2016i3p1.html
   My bibliography  Save this article

Empirical Analysis of Cost Estimation Accuracy in Procurement Auctions

Author

Listed:
  • Timothy Fry
  • Robert Leitch
  • Patrick Philipoom
  • Yu Tian

Abstract

This paper explores the impact of better cost estimation accuracy for a firm that bids on projects. Specifically, we investigate the effect of cost estimation accuracy on firms’ ability to submit lower bids amounts and their likelihood of winning in a bidding environment. We analyze highway construction bidding data between year 2001 and 2009 from a state department of transportation. Our results suggest that firms with more accurate cost estimation are more likely to lower their bids amounts and thus are more likely to win more bids than firms that have less cost estimation accuracy. The findings help us better understand the process and effect of cost estimation accuracy in the bidding environment and provide practical implications.

Suggested Citation

  • Timothy Fry & Robert Leitch & Patrick Philipoom & Yu Tian, 2016. "Empirical Analysis of Cost Estimation Accuracy in Procurement Auctions," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(3), pages 1-1, February.
    • Handle: RePEc:ibn:ijbmjn:v:11:y:2016:i:3:p:1
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ijbm/article/download/55800/30830
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ijbm/article/view/55800
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. De Silva, Dakshina G. & Dunne, Timothy & Kankanamge, Anuruddha & Kosmopoulou, Georgia, 2008. "The impact of public information on bidding in highway procurement auctions," European Economic Review, Elsevier, vol. 52(1), pages 150-181, January.
    2. Carolyn M. Callahan & E. Ann Gabriel, 1998. "The Differential Impact of Accurate Product Cost Information in Imperfectly Competitive Markets: A Theoretical and Empirical Investigation," Contemporary Accounting Research, John Wiley & Sons, vol. 15(4), pages 419-455, December.
    3. Douglas D. Davis & Charles A. Holt, 1992. "Introduction to Experimental Economics," Introductory Chapters, in: Experimental Economics, Princeton University Press.
    4. Mahendra Gupta & Ronald R. King, 1997. "An Experimental Investigation of the Effect of Cost Information and Feedback on Product Cost Decisions," Contemporary Accounting Research, John Wiley & Sons, vol. 14(1), pages 99-127, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luft, Joan & Shields, Michael D., 2003. "Mapping management accounting: graphics and guidelines for theory-consistent empirical research," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 169-249.
    2. Eddy Cardinaels & Filip Roodhooft & Luk Warlop & Gustaaf Van Herck, 2008. "Competitive Pricing in Markets with Different Overhead Costs: Concealment or Leakage of Cost Information?," Journal of Accounting Research, Wiley Blackwell, vol. 46(4), pages 761-784, September.
    3. Römer, Ulf & Weber, Ron & Mußhoff, Oliver & Turvey, Calcum G., 2017. "Truth and consequences: Bogus pipeline experiment in informal small business lending," DARE Discussion Papers 1702, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    4. Fazekas,Mihály & Blum,Jurgen Rene, 2021. "Improving Public Procurement Outcomes : Review of Tools and the State of the Evidence Base," Policy Research Working Paper Series 9690, The World Bank.
    5. Dakshina G. De Silva & Timothy Dunne & Georgia Kosmopoulou & Carlos Lamarche, 2015. "Project modifications and bidding in highway procurement auctions," FRB Atlanta Working Paper 2015-14, Federal Reserve Bank of Atlanta.
    6. Chiara D’Alpaos & Michele Moretto & Paola Valbonesi & Sergio Vergalli, 2013. "Time overruns as opportunistic behavior in public procurement," Journal of Economics, Springer, vol. 110(1), pages 25-43, September.
    7. Hojin Jung, 2016. "Renegotiation on incomplete procurement contracts," Applied Economics, Taylor & Francis Journals, vol. 48(23), pages 2125-2138, May.
    8. Hatsumi, Kentaro & Ishii, Rieko, 2022. "The effect of price on the quality of public construction in Japan," Japan and the World Economy, Elsevier, vol. 62(C).
    9. Maria Claudia Lopez & James J. Murphy & John M. Spraggon & John K. Stranlund, 2012. "Comparing The Effectiveness Of Regulation And Pro‐Social Emotions To Enhance Cooperation: Experimental Evidence From Fishing Communities In Colombia," Economic Inquiry, Western Economic Association International, vol. 50(1), pages 131-142, January.
    10. Birgit M Beisswingert & Keshun Zhang & Thomas Goetz & Urs Fischbacher, 2016. "Spillover Effects of Loss of Control on Risky Decision-Making," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-19, March.
    11. Krishnamurthy, Sandeep & Tripathi, Arvind K., 2009. "Monetary donations to an open source software platform," Research Policy, Elsevier, vol. 38(2), pages 404-414, March.
    12. Wagner, Alexander F. & Gibson Brandon, Rajna & Sohn, Matthias & Tanner, Carmen, 2018. "Earnings Management and Managerial Honesty: The Investors’ Perspectives," CEPR Discussion Papers 13207, C.E.P.R. Discussion Papers.
    13. Doyon, Maurice & Novakovic, Andrew M., 1997. "An Application of Experimental Economics to Agricultural Policies: The Case of U.S. Dairy Deregulation on Farm-Level Markets," Research Bulletins 122807, Cornell University, Department of Applied Economics and Management.
    14. Stéphanie Boulenger & Marcelin Joanis, 2015. "Analyse économique des marchés publics dans l’industrie de la construction au Québec," CIRANO Project Reports 2015rp-23, CIRANO.
    15. Adriaan R. Soetevent & Te Bao & Anouk L. Schippers, 2016. "A Commercial Gift for Charity," Tinbergen Institute Discussion Papers 16-009/VII, Tinbergen Institute.
    16. Carolyn M. Callahan & E. Ann Gabriel, 1998. "The Differential Impact of Accurate Product Cost Information in Imperfectly Competitive Markets: A Theoretical and Empirical Investigation," Contemporary Accounting Research, John Wiley & Sons, vol. 15(4), pages 419-455, December.
    17. Sprinkle, Geoffrey B., 2003. "Perspectives on experimental research in managerial accounting," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 287-318.
    18. Casella, Alessandra & Palfrey, Thomas & Turban, Sébastien, 2014. "Vote trading with and without party leaders," Journal of Public Economics, Elsevier, vol. 112(C), pages 115-128.
    19. Joel O. Wooten & Joan M. Donohue & Timothy D. Fry & Kathleen M. Whitcomb, 2020. "To Thine Own Self Be True: Asymmetric Information in Procurement Auctions," Production and Operations Management, Production and Operations Management Society, vol. 29(7), pages 1679-1701, July.
    20. Hiroshi Ohashi, 2009. "Effects of Transparency in Procurement Practices on Government Expenditure: A Case Study of Municipal Public Works," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(3), pages 267-285, May.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijbmjn:v:11:y:2016:i:3:p:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.