The effect of contract type and size on competitiveness in construction contract bidding

Drew, DS

Abstract

Flanagan and Norman (1982b) examined the bidding performances of three
contractors. In developing this study, the aim of this research is to demonstrate
through statistical modelling that, in terms of competitiveness, competing
contractors are influenced, to varying degrees, by contract type and size and that
a competitiveness relationship exists between contractor size and contract size.
Bidding behaviour between construction firms is regarded as the outcome of
strategic management decisions undertaken in an economic setting. Contractors are
seen to compete for construction work in a competitive environment made up of
a series of market sectors, each containing an amalgam of contract types and sizes,
while clients are viewed as initiators of the whole contracting process. Contractors
are shown to respond to client demands by deciding on a strategic domain within
which to operate, which contracts to bid for and, if opting to bid, the appropriate
bid level.
Two approaches to modelling competitiveness are offered. The first approach
examines the relationship between competitiveness and variability in bidding and
a four-way classification system of bidder behaviour is developed. The main goal
of this work, however, is contained in the second approach, which uses multiple
regression to construct a competitiveness model - a prediction equation relating
bidder competitiveness (the dependent variable) to the independent variables of
bidder (analysed individually and also grouped according to size), contract type
and contract size. The regression model shows that differences in competitiveness
are greater for different contract sizes than different contract types. The most
competitive contractors appear to be those with a preferred contract size range.
The results are inconclusive in providing evidence that large bidders are more
competitive on larger contracts and vice versa.

Citation

Drew, D. The effect of contract type and size on competitiveness in construction contract bidding. (Thesis). University of Salford

• Thesis Type: Thesis
• Deposit Date: Sep 23, 2011
• Publicly Available Date: Sep 23, 2011
• Award Date: Jan 1, 1994