A logistic regression approach to modelling the contractor’s decision to bid (original) (raw)
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Factors affecting the bid/no bid decision in the Saudi Arabian construction contractors
Construction Management and Economics, 2009
The bid/no bid decision requires an understanding of a company's assessment in relation to factors affecting the decision. Different companies might have different assessment values. The aim is to investigate how bid/no bid decisions are influenced by different characteristics of contractors. Various factors are identified and then analysed in order to investigate their influence and relative significance. A questionnaire survey was used to identify and rank the factors affecting the bidding decision and then analysing them in terms of differences between the returned responses with respect to the differing respondent characteristics. The findings have established the ranking order of the factors affecting the bid/no bid decision and identified their weights of importance. In addition, the influence of these characteristics upon the different weights of importance given by the survey respondents is found to be statistically significant. The most influential characteristics that affected their assessment of the weight of importance are contractor size, classification status of the contractor and the main client type. Different contractors' characteristics should be reflected in the way that the bid/no bid decisions are modelled.
Buildings, 2024
While contractors may experience financial failure if they bid on an inappropriate project, bidding on the right project may allow them to profit substantially. Therefore, understanding the various factors that influence the bid/no-bid decision is crucial for construction companies in determining whether to pursue a project. The present study aims to identify the critical factors influencing contractors’ bid/no-bid decisions. A total of 112 responses were collected from a questionnaire survey to rate the relative importance of 22 factors, and these factors were then analyzed based on the type of project and the contractor’s years of experience. The results indicate that the client’s ability to pay, clarity of the scope of work, project cash flow, the need for work, and availability of qualified labor are the most critical factors influencing contractors when making bid/no-bid decisions. The factor “previous experience in similar projects” was statistically significant among building and infrastructure projects, while “project location” was statistically significant among contractors with different years of experience. Finally, factor analysis identifies the six major underlying groups: client-related factors, bidding-related factors, contractor-related factors, market-related factors, economy-related factors, and project-related factors. The study’s findings can help contractors better understand the factors influencing their bidding-related decisions.
Examining the use of bid information in predicting the contractor's performance
Journal of Financial Management of Property and Construction, 2008
PurposeThe purpose of this paper is to examine the use of bid information, including both price and non‐price factors in predicting the bidder's performance.Design/methodology/approachThe practice of the industry was first reviewed. Data on bid evaluation and performance records of the successful bids were then obtained from the Hong Kong Housing Department, the largest housing provider in Hong Kong. This was followed by the development of a radial basis function (RBF) neural network based performance prediction model.FindingsIt is found that public clients are more conscientious and include non‐price factors in their bid evaluation equations. With the input variables used the information is available at the time of the bid and the output variable is the project performance score recorded during work in progress achieved by the successful bidder. It was found that past project performance score is the most sensitive input variable in predicting future performance.Research limita...
Bid decisions either leads to procuring good opportunities or incurring large loss due to selection of inappropriate projects. The decisions to bid or not, made on experience and instincts have lower success rate compared to decisions made on real time facts governing the entire process. Smart contractors tend to be more factual rather being more heuristic while bidding for a project. To improve the bidding process and the competitiveness over a global market, the contractors need to identify and analyze the key factors influencing the bid process, which in turn boosts the economy of the country. This paper reports the factors influencing the bid decisions obtained through the response from the survey questioning various contractors from different construction projects in India. This study also ranks the factors obtained based on their importance weightages and the top ranked factors being studied using a statistical tool.
Critical factors influencing the bid/no bid decision in Pakistan construction industry
CITC-11 : Proceedings of the 11th International Conference on Construction in the 21st Century, 2019
In construction industry, adequate and effective decision-making can mean the difference between success and failure. Bidding is the most important element of construction business since it is a mean by which contractors obtain work. This is probably the only option for any contractor firm to sustain in the market and achieve its objective of earning the profits by winning tenders. The capability to select most appropriate ventures not only defines the success and wellbeing of a contractor firm, but even its survival and sustainability in the industry. This research has been opted considering the local construction industry of Pakistan in order to examine the critical success factors from contractors' perspective while making bidding decisions, listing and evaluating critical factors in order of their importance. Literature review and questionnaire are used for identification and quantification of factors affecting bid/no bid decision-making. Statistical methods of ranking analysis were used for analysis. It is found that profitability, need for work and financial health of client are the most decisive factors in bid/no bid decision-making while project size, project type, fulfilling the tender conditions imposed by the client and relationship, identity & reputation of client are least impact factors in bid/no bid decision-making.
Revista de la construcción
Construction contracting firms (CCFs) are functioning in a highly volatile and competitive industrial environment making it imperative to bid for the projects that can produce the most return and market share. The decision making process to bid or not is based on various factors that vary from project to project and firm to firm. The aim of this work is to analyze the impact of firm size and experience on extrinsic factors influencing the bid/no-bid decision for construction projects. The questionnaire was pilot tested and designed in three parts. The final questionnaire was sent to 300 CCFs registered with Pakistan Engineering Council (PEC) and respondents were asked to rate the factors on a Likert scale. Out of 300 questionnaires, 167 completed responses are returned representing a response rate of 56%. The collected data are then analyzed using Mann-Whitney U test through Statistical Package for Social Sciences (SPSS). Findings show the various degrees of differences between small and large, and young and mature CCFs with regard to factors influencing the bid/no-bid decision. Small firms need to overcome increasing market value and number of competitors in the market. They need to develop relationship with government officials in order to secure their bids. Mature firms need to review the payment practices of clients, politician pressure and business level of the client before entering into the bid. Availability of required material and skilled labor are of prime importance for the mature firms' success.
Intrinsic Factors Influencing the Bid/No-Bid Decision of Pakistani Contractors
ICCREM 2020
Construction industry is playing the role of an important pillar in today's economy. With the growing market and increasing complexity in construction projects, firms are vulnerable to swelling risks more than ever. A firm's decision to bid or not for a perspective project impacts both the project's success as well as generation of profit for the company. This study focuses to inspect the strategic intrinsic factors influencing the bid/no-bid decision of Pakistani contractors. A questionnaire survey sent to 300 contractors listed with Pakistan Engineering Council was used to collect data. "Financial position of firm" and "ability to fulfill the need of bid" in firm related factors, "management staff must know the conditions of the site" and "the project should increase the experience of the management staff" in management and carrying related factors, "method of bid evaluation of client" and "politician's pressure on the client" in client related factors were recognized to be the most critical intrinsic factors impacting the bid/no-bid decision of firms. Furthermore, the study identified that the bidding decision is highly dictated by the client and firm's internal environment. A better evaluation of these can result in better bidding decisions eventually leading to a higher project success rate in the industry. Maqsoom, A., Shaheen, I., Asshraf, H., Zahoor, H., and Khan, S.Y. (2020). Intrinsic factors influencing the bid/no-bid decision of Pakistani contractors. In ASCE's Conference (ICCREM 2020 - Intelligent Construction and Sustainable Buildings), August 24-25 (pp. 602–610), Stockholm, Sweden.
Lowest bid has often been favoured for award of construction contracts in most competitive bidding due to its perceived advantage to the client. However, thispractice has also been found to eclipse with anomalies. For example, some bid figures are unrealistically low because desperate contractors cut down the figure to enhance the chances of winning contracts with the hope to recover the losses during project implementation. As a result, researchers recommends lowest bid that is responsive in place of just any lowest bid for the award. Bid evaluation has been used to identify the most responsive lowest bid where clients go through all bid documents in a process called bid evaluation. This process of bid evaluation could be very tedious if bidders are many. This research develops a model that can identify the lowest responsive bid very early among competitors without the need to go through tedious bid analysis.It is a further research consideration after Carr (2005)"s model. A set of 36engineering projects of diverse magnitude that went through competitive bidding process in Nigeria were obtained and reports on bid analyses collated. Extracted from the reports are the Consultant's Estimate, The Bid Prices, Error Analysis and the Number of Bidders. Literature documents that these fourfactors influence significantly the lowest responsive bid in competitive bidding. Using the four factors as independent variables and the lowest responsive bid as dependent variable,four simple and three multiple regression models were generated and compared along Carr (2005)'s model. Findingsshow that the number of bidders and consultant's estimateare best variables to predict the lowest bid if combined in a regression model. Apart from eliminating unrealistically low bids, the model abstracts the need for tedious bid analysis andreduce the time taken in bidding process.Furthermore, error was found not dependent on the magnitude of a project. Bidders should stick to ethics of estimating to reduce error in bids. Researchers should consider combining three and the fourvariables in future models to determine comparatively, the one that offers the best predictive power.
Revista de la Construcción. Journal of Construction, 2019
Construction in developing countries is often encountered with multifarious challenges including contractor's performance due to lack of qualification and resources. The lowest bid criterion is binding in public procurements. However, contractors exploit the loopholes in the bid process management system. This paper scrutinizes the prevalent rules for the bid evaluation and investigates the criterion used by both clients and consultants in selecting the contractors during the bids evaluation phase of construction projects in Pakistan. The current research uses the relative importance index and severity index approach to analyze the data. It was discovered that proper planning, credit worthiness, transition plans, plant and equipment holding, financial stability, past performance, and quality, are the most imperative factors, influencing the contractor's selection procedures used by clients and consultants. Likewise, a high probability of success is presaged if the contractors are selected using the multi-criteria method. The study contributes to the body of knowledge by revealing the significant factors impacting the contractor's selection and bid evaluation process, especially in a developing country. Its results and methodology can also be generalized with caution in other developing countries having similar work environment.
Engineering, Construction and Architectural Management, 2021
PurposeBid/no-bid decision is a significant and strategic decision, which must be finalized at an early stage of the bidding process. Such decision-making may have significant impact on the performance of the contractors. Using Chi-square Automatic Interaction Detector (CHAID) and Classification and Regression (CRT) decision tree algorithms, this paper aims to develop bid/no-bid models for design-bid-build projects for contractors.Design/methodology/approachThe models in this study have been developed using CHAID and CRT algorithms. Thirty-four bid/no-bid key factors were collected via extensive research. The bid/no-bid factors were listed based on their importance index as a result of a questionnaire distributed among the construction professionals. These factors were divided into five main risk categories – owner, project, bidding situation, contract and contractor – which were taken as inputs for the models. Split-sample validation was applied for testing and measuring the accura...