Carr, R I (1987) Competitive bidding and opportunity costs. Journal of Construction Engineering and Management, 113(1), pp. 151-165. ISSN 0733-9364
Abstract
Methods of analyzing competitive bidding have treated construction projects as isolated elements to be optimized without regard to availability of work or other opportunity costs. This paper shows how resource restraints and opportunities can be easily included in these competitive bid analyses, so that a contractor’s decisions concerning the overall firm or its individual projects reflect a broad view of the firm’s market position. It is shown how markup decisions and predictions of corresponding expected values can take into consideration other possible projects and uses for the firm’s limited resources, and also it can take into consideration estimated project costs that differ from the historical base. Consideration of opportunity costs and resource restrictions integrates data and decisions for greater understanding of a firm’s competitive position and better business decisions in general. An example demonstrates the methods.
| Item Type: | Article |
|---|---|
| Index terms: | competitive bidding, construction project, project cost, expected value |
| Subjects: | bidding, production management, economics, statistical analysis |
| Topics: | Project Management, Research Practice, Cost Management, Procurement |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here