Search results
1 – 10 of over 7000Khaled Hesham Hyari and Mujahed Thneibat
Skewed pricing is a typical tactic used by tenderers in unit price projects to gain additional advantages at the expense of the owner or other competing tenderers. This paper aims…
Abstract
Purpose
Skewed pricing is a typical tactic used by tenderers in unit price projects to gain additional advantages at the expense of the owner or other competing tenderers. This paper aims to describe the development of a model for detecting skewed pricing in competitive tendering for unit price contracts.
Design/methodology/approach
The model evaluates how much the offered unit rates for work items deviate from the reasonable rate identified from the item’s submitted unit rates. Item rate deviations are integrated into a total deviation score for each submitted tender based on the relative weight of the work item to the total project amount. The model allows for assigning higher weights to work items that are more prone to skewed pricing, such as those that are performed early and those that are expected to experience quantity fluctuations.
Findings
The paper presents a detection model that uses only the submitted prices of the competing tenderers to perform the needed calculations, which reduces subjectivity in identifying skewed tenders. Two examples are given to demonstrate how the model may be used to detect skewed tenders.
Originality/value
The model supports tendering officials in the challenging task of identifying skewed tenders, which is required by rules and regulations governing public procurement. The model’s ease of use is expected to make it more widely used as a decision-support tool during the tender evaluation stage of real-world projects.
Details
Keywords
Ernest Kissi, Theophilus Adjei-Kumi, Edward Badu and Emmanuel Bannor Boateng
Tender price remains an imperative parameter for clients in deciding whether to invest in a construction project, and it serves as a basis for tender price index (TPI…
Abstract
Purpose
Tender price remains an imperative parameter for clients in deciding whether to invest in a construction project, and it serves as a basis for tender price index (TPI) manipulations. This paper aims to examine the factors affecting tender price in the construction industry.
Design/methodology/approach
Based on the literature review, nine independent constructs and one dependent construct relating to tender pricing were identified. A structured questionnaire survey was conducted among quantity surveyors in Ghana. Partial least squares structural equation modelling (PLS-SEM) examined the influences of various constructs on tender price development (TPD) and the relationships among TPD and TPI.
Findings
Results showed that cultural attributes, client attributes, contractor attributes; contract procedures and procurement methods; consultant and design team; external factors and market conditions; project attributes; sustainable and technological attributes; and TPI have a positive influence on tender price, whereas fraudulent attributes exert a negative influence.
Practical implications
The findings offer construction professionals broader understanding of factors that affect tender pricing. The results may be used in professional decision-making in the pricing of construction projects, as they offer clearer causal relations between how each construct will influence pricing.
Originality/value
This study adds to the body of construction pricing knowledge by establishing the relationships and degree of influences of various factors on tender price. These findings provide a valuable reference for practitioners.
Details
Keywords
Award systems play the central role in public procurement, since they determine what is considered by the contracting authority as ‘the most economically advantageous tender.’…
Abstract
Award systems play the central role in public procurement, since they determine what is considered by the contracting authority as ‘the most economically advantageous tender.’ Many award systems that are used in practice have serious shortcomings, which are caused by the use of relative scores. In this article, the consequences of those shortcomings are demonstrated, using examples from real procurement procedures and case law. The examples are analyzed with methods from econometrics, social choice theory and game theory.
Philipp Kiiver and Jakub Kodym
This article presents a simple and objective formula to determine a tender's price-quality ratio, for the purpose of value-for-money awards, which is literally quality divided by…
Abstract
This article presents a simple and objective formula to determine a tender's price-quality ratio, for the purpose of value-for-money awards, which is literally quality divided by price (Q/P). Most formulas used in public procurement today first translate prices into points, in a process which has several flaws, and in the end they do not produce any actual ratios, a fact which makes them less objective. To adjust the proposed Q/P formula to the relative weight of the price criterion from the buyer's point of view, all tenders start out with a fixed quality score to compress or expand quality differences between them. Tenders then compete for the remaining range of quality points up to the maximum, and in the end have their quality score divided by the price that they offer.
Steven B. Caudill, Carl D. Hudson, Beverly B. Marshall and Anastasia Roumantzi
This paper aims to extend the work by Vafeas and Lie and Lie by developing an empirical model of choice among four alternative mechanisms for distributing cash from corporations…
Abstract
Purpose
This paper aims to extend the work by Vafeas and Lie and Lie by developing an empirical model of choice among four alternative mechanisms for distributing cash from corporations to shareholders: a fixed‐price self‐tender offer, a Dutch auction self‐tender offer, an open market share repurchase, and a special dividend.
Design/methodology/approach
A multinomial logit (MNL) model adapted for choice‐based sampling is used to examine the factors that influence a firm's choice among the four methods.
Findings
Firms with a high degree of heterogeneity in shareholder valuations tend to select an open market repurchase, while firms with low levels of heterogeneity choose a special dividend. Firms already paying high dividends are more likely to issue a special dividend than institute an open market repurchase. A firm with poor stock performance prior to the announcement is more likely to choose a fixed‐price self‐tender offer or open market share repurchase. On the other hand, firms are more likely to follow strong performance with a special dividend. Contrary to Persons' model, it is found that firms facing a takeover threat are more likely to choose a fixed‐price tender offer than a Dutch auction.
Practical implications
It is shown that the ownership structure, current payout level; the size of the distribution, and the degree of stock undervaluation are among the most important determinants of a firm's choice among alternative payout methods.
Originality/value
This study adds to the existing literature by developing the first empirical model of choice among all four one‐time (or infrequent) corporate cash disbursement methods. It is also the first to adjust the MNL estimates for the choice‐based sampling method used to collect the data.
Details
Keywords
Olalekan Shamsideen Oshodi and Ka Chi Lam
Fluctuations in the tender price index have an adverse effect on the construction sector and the economy at large. This is largely due to the positive relationship that exists…
Abstract
Fluctuations in the tender price index have an adverse effect on the construction sector and the economy at large. This is largely due to the positive relationship that exists between the construction industry and economic growth. The consequences of these variations include cost overruns and schedule delays, among others. An accurate forecast of the tender price index is good for controlling the uncertainty associated with its variation. In the present study, the efficacy of using an adaptive neuro-fuzzy inference system (ANFIS) for tender price forecasting is investigated. In addition, the Box–Jenkins model, which is considered a benchmark technique, was used to evaluate the performance of the ANFIS model. The results demonstrate that the ANFIS model is superior to the Box–Jenkins model in terms of the accuracy and reliability of the forecast. The ANFIS could provide an accurate and reliable forecast of the tender price index in the medium term (i.e. over a three-year period). This chapter provides evidence of the advantages of applying nonlinear modelling techniques (such as the ANFIS) to tender price index forecasting. Although the proposed ANFIS model is applied to the tender price index in this study, it can also be applied to a wider range of problems in the field of construction engineering and management.
Details
Keywords
Abdullah M.Y. Sirajuddin and Farhan K. Al‐Bulaihed
The evaluation of maintenance tenders is a task that involves not only consideration of the prices offered, but the financial and technical expertise of the tenderers as well. The…
Abstract
The evaluation of maintenance tenders is a task that involves not only consideration of the prices offered, but the financial and technical expertise of the tenderers as well. The evaluations can be highly complicated and lengthy when dealing with large projects and numerous tenderers. Presents an evaluation methodology in the form of a tabular procedure to be used by the evaluators of maintenance contracts. Develops seven tables to provide quantitative values for the submitted tenders. The first five tables are designed to evaluate the technical efficiency of the tenderers, while the sixth table is designed for the final evaluation including prices. In the first table, the tender compliance as per the requirement of the tender document is evaluated. Uses the second table to evaluate the support and maintenance plan. The third table presents an evaluation of the experience and the financial status of the tenderer. The fourth and fifth tables are used to evaluate the tenderer’s staffing proposal and how it is related to the requirements of the project. The sixth table summarizes the evaluation of the previous four tables for each evaluator. The seventh table illustrates the final evaluation of each tenderer, and hence a decision could be made. By adding the average technical score of each tenderer to his price score, the evaluator can easily rate each tenderer’s ability to carry out the work rather than depending only on price, which might not always mean a good choice.
Details
Keywords
The purpose of this paper is to propose a chi‐square‐based heuristic statistical procedure that considers the most recent bid prices of self and competitors in proposing an…
Abstract
Purpose
The purpose of this paper is to propose a chi‐square‐based heuristic statistical procedure that considers the most recent bid prices of self and competitors in proposing an optimum winning bid price. The use of simple regression method to predict the adjusted optimum bid price is also considered.
Design/methodology/approach
In order to achieve this objective, the proposed approach uses past bid prices of the case company and its competitors. A heuristic chi‐square statistical procedure is then developed to obtain the expected bid prices. The absolute difference between the prices is obtained and the same is adjusted to get the optimal bid price for the forthcoming bid.
Findings
It is demonstrated that the proposed heuristic chi‐square‐based approach is superior to that of the regression method, which is otherwise in practice in the case company, since the latter still gets support from the former. Further, the paper throws light on how a familiar statistical method could be conveniently but effectively applied as a tactic of marketing management.
Research limitations/implications
The method is developed based on the experience of the case company in bid participation. Therefore, the study on the performance of the application of the proposed method from the perspective of different types of companies can be taken up as a future work. Also, if appropriate, the time and other factors may be considered as other independent factors along with the tender quantity in predicting the tender price.
Practical implications
The proposed heuristic chi‐square procedure is simple to implement as the required data on bid prices are usually available once the bids are open. The case study reveals how the method can be successfully implemented to win bids in a competitive market place. Also, the procedure is more generic so that it can be adapted as it is or with slight modification as desired by companies of any nature participating in bids.
Originality/value
The proposed approach would have a high value among manufacturing firms and marketing managers who participate in tenders with an aim to increase sales turnover which in turn will increase profit. The paper is unique of its kind and will help researchers to think of either extending or proposing such new approaches as they need.
Details
Keywords
Przemyslaw S. Stilger, Jan Siderius and Erik M. Van Raaij
Choosing the best bid is a central step in any tendering process. If the award criterion is the economically most advantageous tender (EMAT), this involves scoring bids on price…
Abstract
Choosing the best bid is a central step in any tendering process. If the award criterion is the economically most advantageous tender (EMAT), this involves scoring bids on price and quality and ranking them. Scores are calculated using a bid evaluation formula that takes as inputs price and quality, and their respective weights. The choice of formula critically affects which bid wins. We study 38 such formulas and discuss several of their aspects, such as how much the outcome of a tender depends on which formula is being used, relative versus absolute scoring, ranking paradox, iso-utility curves, protection against a winner with an extremely high price, and how a formula reflects the weights of price and quality. Based on these analyses, we summarize the (dis)advantages and risks of certain formulas and provide associated warnings when applying certain formulas in practice.
Lim Yoke Mui, Yahaya Ahmad and Faezeh Nabavi
– The purpose of this paper is to identify the reasons for the variance among tenders for conservation projects in Malaysia.
Abstract
Purpose
The purpose of this paper is to identify the reasons for the variance among tenders for conservation projects in Malaysia.
Design/methodology/approach
Semi-structured interview approach was adopted because this method allows for effective probing of issues. The interviews are conducted with experienced conservation contractors. The interviews are transcribed and the data are analysed using thematic analysis. Coefficient of variation (CV) measure was also used to determine the level of variance that occurs in tenders for conservation projects.
Findings
The study found that contractors faced difficulty in pricing competitively due to the following four factors, namely, uncertain information on the actual work on site, inexperience in conservation construction works, information in the bill of quantities is incomplete and uncertain labour and material cost. The study of 22 tenders also ascertains that there is a high variance among the tenderers for building conservation projects. This is determined by the CV analysis where conservation works has a mean CV of 25.5 per cent as compared to 6.5 per cent for new build works.
Research limitations/implications
While the interviews managed to draw out insights into the reasons for the high variance among the tender amounts, a definitive conclusion cannot be drawn on the level of variance in tendering for conservation projects due to the limited data that is available for analysis.
Originality/value
The paper offers an insight into the reasons why tenders for conservation projects usually have a higher variance than the norm.
Details