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Risk perception and propensity in bid/no-bid decision-making of construction projects

Yong Qiang Chen (Department of Construction Management, Tianjin University, Tianjin, China.)
Su Juan Zhang (Department of Construction Management, Tianjin University, Tianjin, China)
Li Sha Liu (Department of Management Science and Engineering, Tianjin University, Tianjin, China.)
Jia Hu (Philips Research North America, Briarcliff Manor, New York, USA)

Engineering, Construction and Architectural Management

ISSN: 0969-9988

Article publication date: 19 January 2015

Abstract

Purpose

Making the right bid/no-bid decision is critical to the success and development of construction contracting enterprises. Decision makers’ personal characteristics, such as risk perception and propensity, have great impact on bid/no-bid decisions, which is the major concern of this research. The purpose of this paper is to explore the relationship among decision makers’ risk perception, risk propensity, and their bid/no-bid decision making of construction projects, as well as the factors influencing the risk perception and propensity.

Design/methodology/approach

In total, four hypotheses were proposed based on an extensive literature review. Experimental questionnaires were distributed to employees working in Chinese construction contracting enterprises with knowledge of construction bidding, and 134 valid questionnaires were obtained. Multivariate statistical analysis through SPSS 19.0 was used to analyze the acquired data.

Findings

Data analysis shows that in the context of international construction contracting: risk perception has a negative influence on bid/no-bid decision making; while risk propensity produces a positive influence and the probability and magnitude of potential gain or loss both have significant impacts on risk perception, and the probability plays a more important role.

Originality/value

This research studied the bid/no-bid decision making of construction projects from the new perspectives of risk perception and risk propensity of the decision makers.

Keywords

Acknowledgements

The authors would like to acknowledge the support from the National Natural Science Foundation of China funded projects (Project No. 71072156 and 71231006) and all the respondents in the experimental questionnaire survey.

Citation

Chen, Y.Q., Zhang, S.J., Liu, L.S. and Hu, J. (2015), "Risk perception and propensity in bid/no-bid decision-making of construction projects", Engineering, Construction and Architectural Management, Vol. 22 No. 1, pp. 2-20. https://doi.org/10.1108/ECAM-01-2013-0011

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited