Estimating Damages of Bid-Rigging in Design-Build Contracts Based on Simulation Model

Abstract

Bid-riggings have persisted as an issue in the construction industry with its estimated damages being the most troublesome element. This study identifies the current limitations in estimating these damages and proposes an alternative approach to estimate the damages from bid-rigging in design-build (DB) construction projects. This study investigated a hypothetical competitive scenario that reflected the pricing model in DB contracts aimed at both winning the project and making profits. The alternative approach utilized a simulation model based on each bidder’s historical bidding data that could reproduce competitive bidding in DB-delivery. The feasibility of the proposed model was demonstrated with a case study conducted on a real railway construction project. This proposed model can also be used in determining an optimal bid price for DB construction projects.