IDEAS home Printed from https://ideas.repec.org/a/taf/conmgt/v28y2010i4p333-344.html
   My bibliography  Save this article

The risks of unbalanced bidding

Author

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

Abstract

Unbalanced bidding models have largely ignored the risk aspect of item pricing. Many researchers have acknowledged that there are considerable risks associated with unbalancing a bid but little has been done to describe these risks, let alone model them. A new framework is proposed by which all of these risks can be assessed. It identifies that these risks comprise the risk of rejection, the risk of reaction, and the risk of being wrong. It is further proposed that the value-at-risk ('VaR') method of measuring risk is a convenient way by which to combine all of these risks into one composite assessment. This quantified assessment serves to describe the extent of risk generated by each level of each item's price. Previous related research has proposed an unbalanced bidding model that has likewise provided a measurement of the expected reward generated by each level of each item's price. By doing a summation of these, keeping in mind that the prices applied to all of a project's component items must add up to the overall bid price, the contractor is able to assess both the risks as well as the rewards of all possible item price combinations.

Suggested Citation

  • David William Cattell & Paul Anthony Bowen & Ammar Kaka, 2010. "The risks of unbalanced bidding," Construction Management and Economics, Taylor & Francis Journals, vol. 28(4), pages 333-344.
    • Handle: RePEc:taf:conmgt:v:28:y:2010:i:4:p:333-344
    DOI: 10.1080/01446191003663264
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/01446191003663264
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01446191003663264?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.

    Citations

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


    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).

    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:28:y:2010:i:4:p:333-344. 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.

    We have no bibliographic references for this item. You can help adding them by using 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.