IDEAS home Printed from https://ideas.repec.org/a/taf/conmgt/v20y2002i6p473-482.html
   My bibliography  Save this article

A theoretical framework for determining the minimum number of bidders in construction bidding competitions

Author

Listed:
  • Stephen Ngai
  • Derek Drew
  • H. P. Lo
  • Martin Skitmore

Abstract

A theoretical framework is proposed for determining the minimum number of bidders in competition for projects in the construction industry. This is based on the neo-classical micro-economic theory for price determination in construction and the assumption of random contractor-selection. Empirical analysis of the Hong Kong data set not only illustrates the applicability of the framework, but also supports the relevance of the microeconomic model for construction price determination. The main implication for clients is that, in order to obtain the most competitive bids for projects in the most cost-efficient way, they should vary the minimum number of bidders in competition according to market conditions.

Suggested Citation

  • Stephen Ngai & Derek Drew & H. P. Lo & Martin Skitmore, 2002. "A theoretical framework for determining the minimum number of bidders in construction bidding competitions," Construction Management and Economics, Taylor & Francis Journals, vol. 20(6), pages 473-482.
    • Handle: RePEc:taf:conmgt:v:20:y:2002:i:6:p:473-482
    DOI: 10.1080/01446190210151041
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/01446190210151041
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01446190210151041?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Patricia M. Hillebrandt, 1974. "Economic Theory and the Construction Industry," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01927-4, December.
    2. Perman, Roger & Scouller, John, 1999. "Business Economics," OUP Catalogue, Oxford University Press, number 9780198775249.
    3. Martin Skitmore, 2002. "Raftery curve construction for tender price forecasts," Construction Management and Economics, Taylor & Francis Journals, vol. 20(1), pages 83-89.
    4. Samuelson, William F., 1985. "Competitive bidding with entry costs," Economics Letters, Elsevier, vol. 17(1-2), pages 53-57.
    5. Remer, Donald S. & Buchanan, Harry R., 2000. "Estimating the cost for doing a cost estimate," International Journal of Production Economics, Elsevier, vol. 66(2), pages 101-104, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kunhui Ye & Weiyan Jiang & Liyin Shen, 2008. "Project competition intensity (PCI) in the construction market: a case study in China," Construction Management and Economics, Taylor & Francis Journals, vol. 26(5), pages 463-470.
    2. Bidabadi Zahra Toroghi & Hosseinalipour Mujtaba & Hamidizadeh Mohammad Reza & Mohebifar Amirhossein, 2016. "Supply chain collaboration within the Iranian construction industry," Organization, Technology and Management in Construction, Sciendo, vol. 8(1), pages 1437-1445, December.
    3. Qiao, Yu & Labi, Samuel & Fricker, Jon D., 2021. "Does highway project bundling policy affect bidding competition? Insights from a mixed ordinal logistic model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 145(C), pages 228-242.

    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. Igor Peško & Vladimir Mučenski & Miloš Šešlija & Nebojša Radović & Aleksandra Vujkov & Dragana Bibić & Milena Krklješ, 2017. "Estimation of Costs and Durations of Construction of Urban Roads Using ANN and SVM," Complexity, Hindawi, vol. 2017, pages 1-13, December.
    2. Pierre Bernhard & Marc Deschamps, 2017. "On Dynamic Games with Randomly Arriving Players," Dynamic Games and Applications, Springer, vol. 7(3), pages 360-385, September.
    3. Matthew Gentry & Tong Li & Jingfeng Lu, 2015. "Identification and estimation in first-price auctions with risk-averse bidders and selective entry," CeMMAP working papers CWP16/15, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    4. Fan, Cuihong & Wolfstetter, Elmar, 2008. "Procurement with costly bidding, optimal shortlisting, and rebates," Economics Letters, Elsevier, vol. 98(3), pages 327-334, March.
    5. Andrés Fioriti & Allan Hernandez-Chanto, 2022. "Leveling the Playing Field for Risk-Averse Agents in Security-Bid Auctions," Management Science, INFORMS, vol. 68(7), pages 5441-5463, July.
    6. Jehiel, Philippe & Lamy, Laurent, 2014. "On discrimination in procurement auctions," CEPR Discussion Papers 9790, C.E.P.R. Discussion Papers.
    7. Azacis, Helmuts & Burguet, Roberto, 2008. "Incumbency and entry in license auctions: The Anglo-Dutch auction meets another simple alternative," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 730-745, May.
    8. David H. Reiley, 2006. "Field experiments on the effects of reserve prices in auctions: more Magic on the Internet," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 195-211, March.
    9. Pierre Bernhard & Marc Deschamps, 2016. "Dynamic equilibrium in games with randomly arriving players," Working Papers 2016-10, CRESE.
    10. Ronald M. Harstad, 2007. "Does a Seller Really Want Another Bidder?," Working Papers 0711, Department of Economics, University of Missouri.
    11. Drake, Samielle & Xu, Fei, 2023. "Regulation and Competition in Public Procurement," Umeå Economic Studies 1013, Umeå University, Department of Economics.
    12. James W. Roberts & Andrew Sweeting, 2013. "When Should Sellers Use Auctions?," American Economic Review, American Economic Association, vol. 103(5), pages 1830-1861, August.
    13. Bernhardt, Dan & Liu, Tingjun & Sogo, Takeharu, 2020. "Costly auction entry, royalty payments, and the optimality of asymmetric designs," Journal of Economic Theory, Elsevier, vol. 188(C).
    14. Andres Gonzalez-Lira & Michael S. Walker & Rodrigo Carril, 2022. "Competition under Incomplete Contracts and the Design of Procurement Policies," Working Papers 1327, Barcelona School of Economics.
    15. Flavio Menezes & Paulo Klinger Monteiro, 1996. "A Note on Auctions with Endogenous Participation," Microeconomics 9610003, University Library of Munich, Germany, revised 31 Oct 1996.
    16. Celik, Gorkem & Yilankaya, Okan, 2017. "Resale in second-price auctions with costly participation," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 148-174.
    17. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.
    18. Todd Kaplan & Aner Sela, 2022. "Second-Price Auctions with Private Entry Costs," Games, MDPI, vol. 13(5), pages 1-14, September.
    19. Hsueh, Shao-Chieh & Tian, Guoqiang, 2009. "Nonratifiability of the Cartel Mechanism in First-Price Sealed-Bid Auction with Participation Costs," MPRA Paper 41202, University Library of Munich, Germany, revised Oct 2010.
    20. Che, XiaoGang & Lee, Peter & Yang, Yibai, 2013. "The impact of resale on entry in second price auctions," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 163-168.

    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:taf:conmgt:v:20:y:2002:i:6:p:473-482. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RCME20 .

    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.