Singh, A and Shoura, M M (1996) Optimizing bidding success and profitability in airport runway construction in French Polynesia. Construction Management and Economics, 14(6), pp. 507-530.
Abstract
Winning a bid and making a profit deeply influence the bidding philosophy and behaviour of a construction market. Estimators commonly calculate direct costs and add overheads and profit in what is a simple arithmetic exercise. This paper studies a database of bids submitted on airport construction in French Polynesia. By analysing the distribution of bid prices placed on elemental cost items, an optimal bid is determined for overall success and profitability through using statistical techniques such as operating characteristic curves and overrun profiles. It is seen that successful and profitable contractors have overall profitability indexes in the range of 0.205–0.341 in the French Polynesian construction market. Similar analyses can be conducted for other construction markets, which can give a contractor a better grasp over their estimating technique. This process assists owners in determining whether contractors are bidding within reasonable limits and whether the contractor is a safe or unsafe risk.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | probability of underrun overrun; operating characteristic curve; Monte Carlo; competitiveness; bidding strategy; hypothesis testing |
| Index terms: | overrun, airport construction, profit, owner, strategy, philosophy, overheads, estimating, French Polynesia, competitiveness, exercise, testing, bidding, profitability, estimator, construction market, database, direct cost |
| Subjects: | profession, Geography, health behaviours and lifestyles, project controls, economic analysis, financial analysis, bidding, data management, financial and cost management, philosophical studies, sociology, professional practice, management, market analysis, economics, infrastructure engineering |
| Topics: | Business Strategy, Cost Management, Digital Applications, Health and Safety, Procurement, Engineering Principles, Time Control, Stakeholder Management, Geographical Context, Roles and Professions, Research Practice |
| Descriptive scope: | 3 PCT |
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