Jarkas, A M (2013) Primary factors influencing bid mark-up size decisions of general contractors in Kuwait. Journal of Financial Management of Property and Construction, 18(1), pp. 53-75. ISSN 1366-4387
Abstract
Since the construction industry in the State of Kuwait is further governed by a competitive environment, which is driven by the lowest cost mentality, the aim of this study is to identify and rank the relative importance of factors perceived to influence bid mark-up size decisions among local general contractors bidding on construction projects. The effects of 40 identified factors, which were shortlisted based on previous relevant investigations and the input of local industry experts, were surveyed by a statistically representative sample of contractors. Using the “relative importance index” technique, the influence ranks of the factors explored were established. The results reveal the following as the primary factors affecting general contractors' bid mark-up size decisions: employer type and identity; project size; clarity of technical specifications; previous experience with employer; number and identity of competitors; previous experience in similar projects; design complexity level; current work load; design quality level; and tendering duration. Although the outputs contribute to the overall body of knowledge related to bidding in the construction industry, it is further recommended to determine the relationship between the factors explored, especially those perceived as most significant, and their tangible effects on contractors' mark-up decisions. The outcomes: demonstrate the importance of the “constructability” concept to construction costs; and assert that the conception of exerting pressure on designers to cut down design durations and fees, and further shortening tenders' durations to speed up the projects' development process, is “false economy”. The findings fill a gap in knowledge of the factors affecting contractors' bid mark-up decisions, which can be used to provide academics, employers, industry practitioners, and policy makers, direction for focusing, acting upon and controlling the primary factors perceived to impact the competitiveness level of the State's construction industry.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bidding; construction projects; general contractors; Kuwait; mark-up; profit margins; tendering |
| Index terms: | identity, competitiveness, investigation, construction industry, duration, constructability, designer, lowest cost, construction cost, practitioner, Kuwait, construction project, complexity, bidding, body of knowledge, specification, design quality, mark-up, relative importance, profit, general contractor, relative importance index |
| Subjects: | industry analysis, price determination, systems engineering, market analysis, project controls, sociology, contractual condition, Geography, production management, construction integration, knowledge management, bidding, professional practice, economic analysis, financial and cost management, practitioner, profession, risk assessment, data collection methods |
| Topics: | Design Practice, Time Control, Contract Administration, Engineering Principles, Information Management, Geographical Context, Project Management, Research Practice, Business Strategy, Cost Management, Procurement, Roles and Professions, Risk Management |
| Descriptive scope: | 4 PCTA |
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