Bidding Strategy in Construction Public Procurement: A Contractor’s Perspective

Tomáš Hanák,Ivan Marović,Adriana Drozdová

doi:10.3390/buildings11020047

Tomáš Hanák, Ivan Marović + Show 1 more

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https://doi.org/10.3390/buildings11020047

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Journal: Buildings	Publication Date: Jan 30, 2021
Citations: 9	License type: CC BY 4.0

Affiliation: Brno University of Technology, University of Rijeka

Abstract

A contractor’s ability to prepare a competitive bid for a construction tender is crucial for its survival on the market. The bid price estimation strategy should promote the probability of winning a sufficient amount of tenders but, at the same time, ensure the economic stability and development of the company. This paper aims to address this issue in the area of Czech public construction procurement. The opinions, experiences and practices of contractors were collected through a questionnaire survey, and the data were evaluated with the support of statistical methods. This revealed that Czech contractors mostly base their multicriteria bidding strategy on cost-oriented pricing while considering various aspects such as the risks and attractiveness of the tender. The Czech construction market is generally perceived as oriented toward low costs, and with a relatively common occurrence of abnormally low bids. The findings presented in this paper may help contractors improve their current bidding strategies in public construction procurement.

Highlights

IntroductionThe contracting authority (CA) aims to award the contract to a capable contractor based on the evaluation of submitted bids
Construction Public Procurement: AIn construction public procurement, the contracting authority (CA) aims to award the contract to a capable contractor based on the evaluation of submitted bids
According to Hackett and Statham [2], cost represents how efficiently the resources are spent by contractor, price expresses the amount for which the contractor sells the output, and value corresponds to the worth to the investor, who—in public procurement—is referred to as the CA

Summary

Introduction

The contracting authority (CA) aims to award the contract to a capable contractor based on the evaluation of submitted bids. It is important to clearly understand the distinction between cost, price and value. From the perspective of being competitive, the costs have to be below the price, and the value has to be higher than the bid price. It can pose a significant challenge for contractors to ensure their competitiveness in a tender, since the construction sector is mostly characterized as a competitive business environment driven by the low-cost approach [3]

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