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Analysing a consultant's competitiveness in two-envelope fee tendering

Author

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  • Derek Drew
  • Liwina Ho
  • Martin Skitmore

Abstract

A method for analysing the competitiveness of a consultant's two-envelope fee tendering history is proposed and illustrated in an application to one of Hong Kong's larger quantity surveying practices. Separate measures for determining consultants' fee, quality score and overall competitiveness are considered to accommodate the special nature of the Hong Kong system, which makes cross-auction comparisons impossible. Maximum fee competitiveness is assumed to be the lowest submitted tender fee, while maximum quality score competitiveness is taken to be the highest quality score attained by a competing consultant. Fees and quality score are then expressed as separate competitiveness ratios relative to these maximums and aggregated for determining overall competitiveness. In analysing bidding performance it was found that this consultant's fee, quality score and overall competitiveness are all above the competitor average. These competitiveness measures reveal large differences in variability between quality score and fees, with quality score variability being considerably lower. Such a large imbalance in competitiveness variability effectively discounts quality and promotes the influence of the fee, since competitiveness ratio differences between fees are much larger than the competitiveness ratio differences between quality scores.

Suggested Citation

  • Derek Drew & Liwina Ho & Martin Skitmore, 2001. "Analysing a consultant's competitiveness in two-envelope fee tendering," Construction Management and Economics, Taylor & Francis Journals, vol. 19(5), pages 503-510.
    • Handle: RePEc:taf:conmgt:v:19:y:2001:i:5:p:503-510
    DOI: 10.1080/01446193.2001.9709626
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