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Since the construction industry in the State of Kuwait is further governed by a competitive environment, which is driven by the lowest cost mentality, the aim of this study is to identify and rank the relative importance of factors perceived to influence bid mark‐up size decisions among local general contractors bidding on construction projects.

The effects of 40 identified factors, which were shortlisted based on previous relevant investigations and the input of local industry experts, were surveyed by a statistically representative sample of contractors. Using the “relative importance index” technique, the influence ranks of the factors explored were established.

The results reveal the following as the primary factors affecting general contractors' bid mark‐up size decisions: employer type and identity; project size; clarity of technical specifications; previous experience with employer; number and identity of competitors; previous experience in similar projects; design complexity level; current work load; design quality level; and tendering duration.

Although the outputs contribute to the overall body of knowledge related to bidding in the construction industry, it is further recommended to determine the relationship between the factors explored, especially those perceived as most significant, and their tangible effects on contractors' mark‐up decisions.

The outcomes: demonstrate the importance of the “constructability” concept to construction costs; and assert that the conception of exerting pressure on designers to cut down design durations and fees, and further shortening tenders' durations to speed up the projects' development process, is “false economy”.

The findings fill a gap in knowledge of the factors affecting contractors' bid mark‐up decisions, which can be used to provide academics, employers, industry practitioners, and policy makers, direction for focusing, acting upon and controlling the primary factors perceived to impact the competitiveness level of the State's construction industry.

In order to compete successfully, international contractors need to have an understanding not only of the make‐up of the different competitive environments within each country, but also of contractors' competitive behaviour within those environments. Contractors' mark‐up decision making in public sector contracting is directly compared in two construction markets – Hong Kong and Singapore.

Regression analysis is used to compare the lowest percentage mark‐up in both markets against four mark‐up decision factors that fall into two groups – market‐environment factors (i.e. number of bidders, market conditions) and project‐specific factors (i.e. type and size of project). Data were gathered using a designed bidding experiment.

In line with de Neufville et al.'s “good year‐bad year” study, the effect of market conditions was found to be independent of the number of bidders in both markets; contractors' mark‐up decreases as the number of bidders increases, with lower mark‐up in recession. In addition, this study provides evidence that contractors' mark‐up behaviour varies in different markets: Hong Kong contractors' mark‐up behaviour is more straightforward, in that only the market‐environment factors are significant. However, Singapore contractors' mark‐up behaviour is affected by project type in addition to the market‐environment factors. Project size was not found to be significant in either market.

The empirical findings provide a valuable insight into contractors' mark‐up behaviour, especially those contractors intending to bid for jobs in these two internationally renowned construction markets.

Contractors of different scales, operating in different construction industries of varying institutional and economic settings, have different considerations when making bid or no-bid and mark-up decisions. Focusing on the large and medium-sized contractors in the Jilin province, China, the purpose of this study is to examine important factors affecting their decision to bid (d2b) and mark-up decisions and investigate differences between large and medium-sized contractors in evaluating the importance of the various factors affecting their d2b and mark-up decisions.

This study used a survey design for timely data collection from a large population. Contractors’ bidding attitudes was collected using an online survey questionnaire with a list of 40 key factors. Statistical analytical methods were applied for comparing the two groups of contractors.

The results of this study indicate that factors related to client conditions are most critical for both large and medium-sized contractors in their d2b and mark-up decisions. The results also show statistically significant differences between the two groups of contractors on a subset of factors affecting their d2b and mark-up decisions. The large contractors have placed more emphasis on projects' potential financial and strategic benefits. Another notable finding is that both groups of contractors have placed great emphasise on “government legislations” in their d2b and mark-up decisions.

These findings should be interpreted in consideration of several limitations. Firstly, the sample size is relatively small, and the focus was on a single province in the China construction industry. Next, this study only explores differences between large and medium-sized contractors in evaluating the importance of the various factors affecting their d2b and mark-up decisions.

Contractors could refer list of critical factors in competing for jobs in Jilin province or other provinces of similar institutional and economic settings. Construction clients, on the other hand, should consider the list of critical factors in the formulation of their competitive tendering procedures, thus enhancing the efficiency in their procurement of construction services.

Research on contractors’ bidding decision-making in the context of Chinese construction industry remains scarce; the research findings have implications for the industry stakeholders.

The purpose of the paper is to perform bid mark‐up optimisation through the use of artificial neural networks (ANN) and a metric of the selected bid mark‐up's derived entropy. The scope is to provide an alternative, entropy‐based method for bid mark‐up optimisation that improves on the analytical models of Friedman and Gates.

The proposed method enables the incorporation of bid parameters through the use of ANN's pattern recognition capabilities and the integration of these parameters with a mark‐up selection process that relies on the entropy produced by possible mark‐up values. The entropy metric used is the product of the probability of winning over the bidder's competitors multiplied by the natural logarithm of the inverse of this probability.

The case study results show that the proposed entropy‐based bidding model compares favourably with the prevailing competitive bidding models of Friedman and Gates, resulting in higher optimisation with regards to the number of jobs won, the monetary value of contracts awarded and the value of “money left on the table”. Furthermore, the method allows for the incorporation of several objective and subjective bid parameters, in contrast to Friedman's and Gates's models, which are based solely on the bid mark‐up history of a bidder's competitors.

While the proposed method is a useful tool for the selection of optimal bid mark‐up values, it requires historical data on the bidding behaviour of key competitors, much like the classic bidding models of Friedman and Gates.

The method is suitable for quantifying objective and subjective competitive bidding parameters and for optimising bid mark‐up values.

With the aim to provide a global view of factors affecting mark-up size on construction projects, this study performs a meta-analytical review of the relevant studies over the past 20 years.

The analytical process involved the identification and evaluation of the importance of critical factors affecting mark-up size on construction projects, and the assessment of the generalisability of findings of the meta-analysis. A random-effects model was adopted in the statistical meta-analysis.

The results show that there are 23 critical factors, and the top five factors are: (1) competitiveness of other bidders; (2) number of bidders; (3) relationship and past experience with client; (4) experience on similar project; and (5) project size. A heterogeneity test further shows that there is no statistically significant heterogeneity across the studies, reinforcing the generalisability of the findings to a global context.

The list of critical factors from a global perspective should form a good basis for future efforts in bidding model development.

The research findings have practical implications to both construction clients and contractors in formulating their contracting practices and strategies.

This is the first meta-analysis of a sizeable collection of replicated studies on factors affecting mark-up size on construction projects in the literature.

This paper investigates the marketing and pricing policies for traditional and organic fruit and vegetable products of large food retailers in four European countries by means of a survey of 47 stores, including all major food retail chains. Data have been analysed to investigate what determines the presence of organic products, the extent to which the price mark‐up between traditional and organic products depends on the inherent quality of organic products rather than on the amount of extra service and information often associated with these products, and the importance of country location within the single European market in determining the characteristics of the retail outlets. The results of the econometric analysis indicate that the size, location and overall quality of the outlet, and the degree of product information and customer service are the variables which best predict the choice to sell organic products. Also, the results indicate that almost half of the price mark‐up between traditional and organic products is explained by store characteristics and the amount of extra service and information provided with these products.

This study aims to examine the influences of shifting the bidding system of Thai public infrastructure projects from e-auction to e-bidding.

A questionnaire survey was conducted with owners or senior managers with direct responsibility in deciding the mark-up of 72 small and medium-sized contractor firms. Five senior professionals were interviewed to provide insights into and to strengthen the discussion of the findings. The Wilcoxon test was applied to analyze the difference in the importance of the factors between e-auction and e-bidding.

The results revealed a shift in the importance of the factors, from those related to the financial aspects in the e-auction to the situational aspects in the e-bidding. The comparison test results also suggested that the majority of factors become significantly less important in the e-bidding system, with “identity of competitors” and “general expense of the bidding process” having the most apparent mean differences. The interview results supported by data on winning prices and estimations strongly indicated that bid collusions likely exist in the e-auction. By shifting to e-bidding, the data also show that the Thai Government can save public money in its infrastructure project development.

The study provides an analysis from the perspectives of contractor firms on how e-auction and e-bidding options influence bid mark-up decisions. Many studies have focused on the issues and advantages provided by the e-procurement mainly from the owner (government)’s perspective but how the change influences the contractor’s attitude has been less explored.

The purpose of this paper is to present an experiment to test the effect of construction demand on the mark-up price level in construction contract auctions.

An experimental approach was adopted for this study. In a controlled laboratory environment, a first-price sealed bid auction was simulated with varying number of projects available over ten rounds to simulate changing construction demand. Two experimental treatments were run in parallel, one exhibiting a “booming” demand over time, and the other group with a “recession” scenario. The experiment involved student (inexperienced) bidders with a construction project management background.

The results show that inexperienced bidders do behave differently when subjected to varying levels of construction demand. Variations in the bid price level are affected by varying levels of construction demand and the general mark-up level for the bidders experiencing a booming scenario was higher on average compared to bidders subjected to the recession scenario.

An identified limitation of this study is the use of student subjects in the experiment, thus the experiment results are limited in generalisation to inexperienced bidders. Further studies may be able to replicate the experiment with experienced industry practitioners to observe the results.

The results allow for industry practitioners to gain a stronger understanding of the effects of varying levels of construction demand and the need to consider construction demand in construction contracting. For construction clients, the level of construction demand may be used as an indicator to assist in the timing to call tenders to achieve a desirable price. For contractors, increased awareness of how demand affects competition and the price level will allow additional optimisations to be achieved in the bid price.

Construction demand has been widely known to be one of the key factors affecting contractors’ bidding decisions. However, there has been little empirical investigation of the changes in bidders’ behaviour due to varying levels of construction demand. This paper attempts to add to the empirical research knowledgebase through an experimental setting.

Compiling bid proposals for construction projects is a process that depends on extensive computation as well as on experience‐based judgement. Despite the proliferation of estimating tools, bid proposals focus primarily on the computational component and leave the more difficult aspects of risk assessment and mark‐up estimation to estimators' judgement. This may lead to unrealistic estimates that do not account for the operational environment of projects. Such estimates often result in either losing bids or inflicting undesirable cost overruns. In an effort to circumvent such drawbacks, this paper presents a structured system for cost estimation and bid preparation. Unlike current tools, the proposed system supports a holistic bid‐preparation process, accounting for a number of quantitative as well as qualitative factors that are used in practice for bid preparation. The system incorporates three principal features: 1 Integrated cost and schedule computation 2 Adequate risk assessment and mark‐up estimation 3 Optimum bid unbalancing and cash flow optimization. The developments made in the integrated system are described along with a PC‐based prototype Estimator, developed to automate the process. An example application is presented to illustrate the capabilities and essential features of the prototype and demonstrate its practicality.

The purpose of this study is to examine how the Islamic banks fix their mark-up for Murabaha contract strategically when traditional banks also co-exist in a country. This study also aims to investigate what role the varying degree of Iman (faith) plays in shaping the preferences of the consumers to choose between the services of Islamic banks and the traditional banks.

This paper constructs a mathematical model like the Bertrand competition in neo-classical economic theory. A religiosity parameter for the consumers has been inserted into their demand functions for their products. A simple optimization technique from mathematics has been used to arrive at the results.

This paper applies game theory to analyze how Islamic banks determine their mark-up when they are facing competition with traditional banks. It considers the demand functions of the consumers for the products of Islamic banks and traditional banks. The demand functions depend on the mark-up, as well as on the interest rate with the difference that they also depend on the religiosity of the consumers. The paper shows that Islamic, as well as the conventional banks charge lower prices for their loans if there is consideration of religiosity aspect of the consumers. Further, it shows that as religiosity increases in a country, the lending rates decrease. The theoretical result is also consistent with the real practices of the banks. Therefore, the dual banking system is welfare enhancing for the customers.

The Islamic banks can leverage the religiosity aspect of the consumers and expand their business competitively by charging them lower mark-up. The adherence of religious customers to the services of Islamic banks creates some kind of loyalty premium for them. This could lead to the reduction of mark-up price triggering competition between both types of banks to attract more customers. Therefore, it is prudent for the government to develop a system for furthering the quality of honesty that is an integral part of Islam.

To the best of author’s knowledge, this is the first paper where it has been analyzed theoretically how the Islamic banks determine their mark-up for Murabaha contract strategically. This approach explains why the rate of return of Islamic banks hinges on the interest rates of traditional banks. One of the novel feature of this paper is that religiosity character of the consumer is good for banks because religiosity prohibits the people to default on their loans.