Neufville, R D and Smith, J T (1994) Improving contractors' bids using preference reversal phenomenon. Journal of Construction Engineering and Management, 120(4), pp. 706-719. ISSN 0733-9364
Abstract
Owners of projects have the opportunity to improve the bids obtained from bidders by using a well-known psychological phenomenon called “preference reversal.” This is a systematic tendency of people, to pay more than they should for less attractive choices in specific situations—a phenomenon that has been extensively documented by psychologists. In the present research this effect was demonstrated experimentally for the field of construction in several series of structured interviews with professionals in construction management and real estate development regarding realistic bidding situations. The strength of the effect was found to depend on two factors recently shown to have a strong influence on contractors' behavior: the risk of the project and the contractor’s need-for-work. The pervasiveness of the preference reversal phenomenon in the construction industry has implications for owners of projects to help reduce their costs: owners should structure the design process as a construction management project and then shift to a lump sum contract for the construction phase.
| Item Type: | Article |
|---|---|
| Index terms: | bidder, construction phase, construction industry, owner, real estate development, bidding, preference, design process, interview |
| Subjects: | design methods, data collection methods, project delivery, bidding, decision-making and reasoning, economic development, industry analysis, sociology |
| Topics: | Procurement, Stakeholder Management, Research Practice, Project Management, Design Practice, Urban Studies |
| Descriptive scope: | 4 PCTE |
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