Using Contractors’ Behavior Patterns to Develop Bidding Strategy in Road Construction Projects

Abstract

One of the most common problems associated with decision-making every contractor must face is determining bid prices, especially when there is only one chance to submit the best and final offer in government construction projects. Apart from accurate estimating, learning competitors’ behaviors from historical records helps develop strategy that increase chances of winning the bid. So, this study aims to identify competitors’ behavior patterns and analyze the factors affecting them in 119 road construction projects in Nakhon Ratchasima Province. The results showed that each contractor has a particular way of bidding. Some have disproportionate low bids or high bids and some bid randomly. In conclusion, the higher number of bidders entered, the wider range of bid price it will be. Also, contractors chose to enter the competition based on the type of road they have expertise in, the location of the site, with a specific range of mark-up determined. Lastly, Average Mean Standardized Bid helps predict contractors’ success ratio as inverse correlations exists between them. Moreover, the results were tested on a 745,200 THB reinforced concrete road construction project of a local government organization whose data were collected in this study. As the outcome, it helped winning the competition with a Mark-Up of -3.47%.