Skitmore, R M; Pettitt, A N and McVinish, R (2007) Gates' bidding model. Journal of Construction Engineering and Management, 133(11), pp. 855-863. ISSN 0733-9364
Abstract
In evaluating closed-bid competitive procurement auctions, the most crucial issue is to determine the probability of placing a winning bid for a given markup level. There has long been disagreement on how this should be done due to the absence of a mathematical derivation of one of the main evaluation techniques-Gates' method. Gates' method is shown in this paper to be valid if, and only if, bids can be described using the proportional hazards family of statistical distributions. When markup values are included in Gates' method, it is seen that the underlying statistical distribution required for the method to work is closely related to the Weibull distribution. Likelihood based methods are suggested for parameter estimation and an illustrative example is provided by analysis of Shaffer and Micheau's 1971 construction contract bidding data.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bids; contracts; estimation; probabilistic models; probability distribution; procurement; statistical models |
| Index terms: | statistical model, placing, construction contract, probability distribution, estimation, parameter-estimation, bidding, evaluation technique |
| Subjects: | concrete and cementitious materials, statistical analysis, contract type, evaluation and assessment methods, financial and cost management, data science, bidding |
| Topics: | Cost Management, Research Practice, Construction Materials, Procurement |
| Descriptive scope: | 3 PCA |
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