A framework for contractors to reach strategically correct bid/no bid and mark-up size decisions

Abstract

In an effort to uncover the main factors that characterize the two distinct but sequential stages of bidding decisions, namely bid/no bid and mark-up size decisions, this study identifies the key determining factors and their importance weights by presenting survey findings of 80 contracting organizations from Northern Cyprus and Turkish construction markets regarding this issue. The framework presented in this study will serve as a basis for a knowledge-based system model which will guide the contracting organizations in reaching ‘strategically correct’ bid/no bid and mark-up size decisions. The proposed framework used a reasoning model, which went deeply into the heart of the decision-making process and helped to clarify the complex picture regarding the two sequential decisions. The results revealed that there is a distinct and significant difference in the importance assigned to the same key factors for the two separate decision processes. Furthermore, the study confirmed the fact that the factors related to ‘strategic considerations’ have a significant role in both of these decision processes. One of the most striking findings of this research was the distinct difference in approach of varying sizes of contractors to the overall issue. Hence, these results suggest that any model regarding bidding and mark-up size decisions should definitely differentiate among different sizes of contractors to reflect the approaches of the related contractors in a better manner. Furthermore, it was interesting to find out that the correlation between different sizes of contractors’ approaches was higher in the mark-up decision process compared to the bidding decision process. In spite of the fact that this study was based on input provided by certain types of contractors in Northern Cyprus and Turkish construction markets only, we believe that the overall approach, reasoning and findings of the proposed framework are of good value to contracting organizations in different construction markets throughout the world as well.