Correlating Bid Price with the Number of Bidders and Final Construction Cost of Public Street Projects (original) (raw)
2010, Transportation Research Record …
The vast majority of highway and street projects in the United States are procured by state or local governments through a competitive bidding process. In a competitively bid public project, awarding the contract to the lowest bidder is a predominant practice. A few studies measured the effect of awarding the contract to the lowest bidder on construction cost growth. This paper analyzes a sample of 463 bid data of 113 Clark County public street projects of Nevada to determine a correlation between a lowest bid price and construction cost growth. The sample included the projects completed in between 1991 to 2008 and over $554 million in construction value. The study also determines a correlation between a number of bidders and a deviation of the bid cost from the engineers estimate. The study showed that there is no correlation between the lowest bid price and the construction cost growth. It showed that public owners will receive a lowest construction bid price if more bidders are involved in the bidding process. The study found that there is a strong correlation between the lowest bid price and the final construction cost. Therefore, a regression model was developed to predict the final construction cost of a street project using the lowest bid price. A validation of the model shows that on average the predicted cost of the project was within 3.51% of the actual construction cost. Other findings, including recommendations for future study will be provided as well.
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