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A simplified unbalanced bidding model

Author

Listed:
  • David William Cattell
  • Paul Anthony Bowen
  • Ammar Kaka

Abstract

Much research effort to date has focused on the development and use of bidding models in optimizing contractors' bid prices in competitive tendering environments. Unbalanced bidding models, in particular, have the objective of maximizing a project's prospective profits by using techniques of applying differentiated mark-ups to all of a project's items of work. It is shown here that these unbalanced bidding models have been unnecessarily complicated by incorporating consideration of a project's item costs. Bidding models can be significantly simplified by having the objective of maximizing a project's top-line revenue rather than maximizing bottom-line profit. A new model, incorporating all three standard effects of item price loading: namely, front-end loading, individual-rate loading, and back-end loading, is proposed that gives effect to determining the optimum pricing for a project's component items.

Suggested Citation

  • David William Cattell & Paul Anthony Bowen & Ammar Kaka, 2008. "A simplified unbalanced bidding model," Construction Management and Economics, Taylor & Francis Journals, vol. 26(12), pages 1283-1290.
    • Handle: RePEc:taf:conmgt:v:26:y:2008:i:12:p:1283-1290
    DOI: 10.1080/01446190802570506
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    Citations

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    Cited by:

    1. Svante Mandell & Johan Nyström, 2013. "Too Much Balance in Unbalanced Bidding," Studies in Microeconomics, , vol. 1(1), pages 23-35, June.
    2. Nyström, Johan & Wikström, Daniel, 2019. "Empirical analysis of unbalanced bidding on Swedish roads," Working Papers 2019:4, Swedish National Road & Transport Research Institute (VTI).
    3. Polat Gul & Turkoglu Harun & Damci Atilla & Akin Firat Dogu, 2020. "Detecting unbalanced bids via an improved grading-based model," Organization, Technology and Management in Construction, Sciendo, vol. 12(1), pages 2072-2082, January.
    4. Mandell, Svante & Nyström, Johan, 2011. "Why are bids not more unbalanced?," Working papers in Transport Economics 2011:13, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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