Cattell, D W; Bowen, P A and Kaka, A R (2008) A simplified unbalanced bidding model. Construction Management and Economics, 26(12), pp. 1283-1290. ISSN 1466433X
Abstract
Much research effort to date has focused on the development and use of bidding models in optimizing contractors' bid prices in competitive tendering environments. Unbalanced bidding models, in particular, have the objective of maximizing a project's prospective profits by using techniques of applying differentiated mark-ups to all of a project's items of work. It is shown here that these unbalanced bidding models have been unnecessarily complicated by incorporating consideration of a project's item costs. Bidding models can be significantly simplified by having the objective of maximizing a project's top-line revenue rather than maximizing bottom-line profit. A new model, incorporating all three standard effects of item price loading: namely, front-end loading, individual-rate loading, and back-end loading, is proposed that gives effect to determining the optimum pricing for a project's component items.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bidding; competitive advantage; cost modelling; mark-up; revenue |
| Index terms: | competitive advantage, revenue, pricing, competitive tendering, modelling, mark-up, profit, unbalanced bidding, loading, bidding |
| Subjects: | market analysis, analytical methods, economic analysis, construction operations, price determination, tendering, bidding |
| Topics: | Research Practice, Business Strategy, Engineering Principles, Site Management, Procurement |
| Descriptive scope: | 2 PC |
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