Bidding Strategy Using Friedman Model for Building Construction Project in Banjarbaru Indonesia

Abstract

Determining a good price in competitive bidding is a common problem for the construction company. An offer price could be too high for contractors hoping to get a big profit with no risk to get the project, or too low in the hope of getting a lot of projects but at the risk of losing opportunity to get benefits and risks of failure in carrying out the work.Friedman model was selected for bidding strategy purpose. The model was applied to a number of data offering price of contractors bidding for the construction of buildings in the city Banjarbaru starting in 2012-2015, which has Owners’s estimate with a range between IDR 248 million to IDR 4.8 billion. Then the test data results with the data that has been set aside for testing the model.Friedman bidding strategy models produced Mark-Up valued at -9% for multi normal distributions and -5% for a single normal distribution. Mark-Up is validated on the winning bidder of IDR 478,590.00. The tests produced the offering price of IDR 478,560,210.00 (with Mark Up -8.84%) and IDR 498,726,250.00 (with Mark Up -5%). So Friedman models with Multi Normal Distribution can beat the lowest bid.