Factors affecting contractors’ bid or no-bid and mark-up decisions: a case of the Jilin province, China

Abstract

PurposeContractors of different scales, operating in different construction industries of varying institutional and economic settings, have different considerations when making bid or no-bid and mark-up decisions. Focusing on the large and medium-sized contractors in the Jilin province, China, the purpose of this study is to examine important factors affecting their decision to bid (d2b) and mark-up decisions and investigate differences between large and medium-sized contractors in evaluating the importance of the various factors affecting their d2b and mark-up decisions.Design/methodology/approachThis study used a survey design for timely data collection from a large population. Contractors’ bidding attitudes was collected using an online survey questionnaire with a list of 40 key factors. Statistical analytical methods were applied for comparing the two groups of contractors.FindingsThe results of this study indicate that factors related to client conditions are most critical for both large and medium-sized contractors in their d2b and mark-up decisions. The results also show statistically significant differences between the two groups of contractors on a subset of factors affecting their d2b and mark-up decisions. The large contractors have placed more emphasis on projects' potential financial and strategic benefits. Another notable finding is that both groups of contractors have placed great emphasise on “government legislations” in their d2b and mark-up decisions.Research limitations/implicationsThese findings should be interpreted in consideration of several limitations. Firstly, the sample size is relatively small, and the focus was on a single province in the China construction industry. Next, this study only explores differences between large and medium-sized contractors in evaluating the importance of the various factors affecting their d2b and mark-up decisions.Practical implicationsContractors could refer list of critical factors in competing for jobs in Jilin province or other provinces of similar institutional and economic settings. Construction clients, on the other hand, should consider the list of critical factors in the formulation of their competitive tendering procedures, thus enhancing the efficiency in their procurement of construction services.Originality/valueResearch on contractors’ bidding decision-making in the context of Chinese construction industry remains scarce; the research findings have implications for the industry stakeholders.