Arditi, D and Chotibhongs, R (2009) Detection and prevention of unbalanced bids. Construction Management and Economics, 27(8), pp. 721-732. ISSN 1466433X
Abstract
Unbalanced bidding is a serious problem for the construction owner because it may increase the cost of construction The most common way to mathematically unbalance a bid is frontloading where a bidder overstates the unit price of line items scheduled to be performed early in the project and understates the unit price of line items performed later. A bidder can also overstate the unit price of a line item whose quantity was somehow underrated by the engineer. If the owner proves that a mathematically unbalanced bid costs more to perform, the bid is said to be materially unbalanced, in which case the owner can reject the bid. A model is presented that formalizes and automates the process of detecting mathematically and materially unbalanced bids by comparing line item prices with the engineer's estimates and the average prices offered by the bidders. This model allows owners to detect and reject unbalanced bids, and deters bidders from unbalancing their bid.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bids; construction costs; financial management; mathematical models; optimization |
| Index terms: | financial management, construction cost, owner, engineer, bidder, estimate, prevention, mathematical model, unbalance, unbalanced bidding |
| Subjects: | profession, mathematical modelling, bidding, economic analysis, financial and cost management, analytical methods, financial risk, sociology |
| Topics: | Research Practice, Engineering Principles, Business Strategy, Cost Management, Procurement, Roles and Professions, Stakeholder Management |
| Descriptive scope: | 3 PCA |
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