Sturts, C S (2001) Value-bidding: An integrative approach utilizing conjoint analysis and classical bidding theory. PhD thesis, Columbia University, USA.
Abstract
This dissertation is a unique treatment of competitive bidding theory. The methodology presented here utilizes an established marketing research methodology, Conjoint analysis, to establish the probability of winning based on multiple factors. This hybrid model, Value-Bidding, refocuses the competitive bidding model from fee-based selection criteria to value-based selection criteria. The resulting analytical model enables engineers to analyze market conditions, evaluate owner's priorities, systematically track competitors, and optimize job proposals, while maximizing the probability of winning, maximizing profit and optimizing price. Traditionally, competitive bidding theory models the lowest-bidder-wins scenario, and the probability of winning is based on the probability that the bidder's price is lower than the competitors. (Friedman, 1956; Gates, 1967) Though this is a reasonable model for construction services, the fee-based competitive bidding models are not applicable for engineering design services. The selection criteria for engineer services often involves several factors, such as quality, availability, reputation, resume and references, and may or may not include price. From preliminary interviews, the author concluded that there is a need for a systematic method of evaluating potential engineering job opportunities and determining fair market prices. The goal of this dissertation is to inject science into the art of pricing engineering services. Value-Bidding is broad in scope and can address the process of selling multi-faceted services or products in a competitive environment. Value-Bidding supports the: (1) Definition of services; (2) Evaluation of potential competitors; (3) Evaluation of the probability of winning. The result of this research can support broad business decisions or service, product and price development for individual job proposals. In addition, the Value-Bidding methodology helps engineers optimize their technical and price proposals to meet business objectives, such as profit maximization or market expansion.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Thesis advisor: | Griffis, F H |
| Uncontrolled Keywords: | competitive bidding; market; market conditions; profit maximization; bidding; marketing; pricing; selection criteria; probability; market condition; owner; bidding model; interview |
| Index terms: | analytical model, bidding, methodology, science, market condition, profit, maximization, interview, proposal, competitive bidding, dissertation, selection criteria, bidder, engineering design, research methodology, marketing, owner, engineer, pricing |
| Subjects: | project planning, bidding, economic analysis, specialized education, economic and policy analysis, profession, research dissemination and communication, data collection methods, research design and methodology, business, sociology, design process, theoretical framing, tendering, research methods, algorithms |
| Topics: | Project Management, Procurement, Education, Business Strategy, Research Practice, Roles and Professions, Stakeholder Management, Digital Applications |
| 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