Competitive Bidding Situations Research Articles

Project Costing with Microcomputers

Abstract Landscape design, landscape construction, landscape maintenance, and landscape irrigation projects require an accurate bidding/estimating procedure for effective cost controls and profit generation. Everything entering into the bid price must end up on a spreadsheet to determine the final figures, including an estimate of profit. As one of the last phases of the bidding process, the spreadsheet calculations are a constant source of potential error in figure transposition, miscalculation, or omission, which could lead to profit loss or to the nonawarding of a project in a competitive bidding situation. Powerful electronic spreadsheets are available for use on microcomputers, but few are used in the industry due to their high cost, the generic nature of the spreadsheet programs, and the unavailability of spreadsheets specifically constructed for bidding. Additionally, electronic spreadsheets generally require formatting with appropriate equations before they can be used (1).

Global and local control of choice behavior by cyclically varying outcome probabilities.

Subjects asked to simulate decision makers in a competitive bidding situation chose repeatedly between two alternatives; reward probability varied according to a sine wave function of time for one alternative but was held constant over time for the other. Learning functions for choice probability exhibited the wavelike pattern predicted by a statistical learning model. However, on later transfer trials, when success probability was independent of subjects' choices, their choice behavior continued to follow a wavelike function rather than approaching the constant .5 level predicted by the learning model. A possible basis in memory for the transfer performance was revealed in subjects' sketches of the remembered pattern of variation in reward probabilities. It is concluded that choice performance is controlled by a mixture of local feedback, in a manner described by the learning model, and more global information encoded in an abstract memory representation, with the balance of the influence shifting toward the latter when local feedback becomes uninformative.

A Stochastic Model for Bidding

Competitive bidding situations involve considering a multiplicity of factors. Organizations must be able to weigh the relative probability of potential projects based on resource usage, project duration and competitor actions to decide which of many possible bids to submit. A bidding strategy designed to maximize expected long run return is crucial, since an organization can usually submit only one bid per project.

Gates Bidding Model—A Monte Carlo Experiment

The probability of winning in a closed competitive bidding situation has been vigorously disputed for ten years. In particular, the basic probability model of simultaneously beating more than one competitor, when the probability of beating each competitor alone is known, is in contention. Two fundamental probability models, Friedman’s and Gate’s, have been proposed and yield conflicting results. The supporters of one are generally the detractors of the other. A manual Monte Carlo Simulation was used to test both models. In all, six different experiments were run three times and 48 test results were compared. Friedman’s model failed while Gates’ model passed every test. These results challenge the credibility of other bidding models that are widely published in reference books; usually by the authors of the model.

A decision analysis approach for unique situation competitive bidding

Looks at the competitive bidding situation in a single occasion context. Provides a “thinking algorithm” model based on decision analysis which requires the decision maker to make subjective assessments of uncertain quantities. Uses the case study of a tender of unpounded butter offered to J. Sainbury Ltd to consider aspects of the relevant theory of competitive bidding.

The Industrial Purchasing Decision as a Political Process

Reports on an empirical study of the decision to purchase computers in a single firm. States it is a competitive bidding situation with several suppliers attempting to win a contract that eventually reached £3.5 million pounds. Illustrates how the politics of the firm can influence significant purchase decisions and, in particular, how gatekeepers within the firm's buying centre can structure the outcome of purchase decision in line with their position in the political process. Bases the study on a large organisation in England, in the period 1957–1968, with regard to four computer purchase decisions. Concludes that it is clear that the computer suppliers had differential access to the firm's power structure and it was also evident they had differential knowledge of its operation.

The determinants of choice of supplier: a study of purchase behaviour for capital goods

Examines the field of capital goods purchases, dealing specifically with four types of standard machine tools sold into the UK market. Identifies key factors in the supplied quotation judged by the buyer to be instrumental in discriminating between successful and unsuccessful quotations. Reveals that these were taken from survey date collected by personal interview in 51 companies. Suggests that this will aid machine tool suppliers in securing orders from customers as well as providing a predictor of their prospects in any competitive bidding situation.

A Competitive-Bidding Strategy

A method is presented that determines optimum bids in a competitive-bidding situation where each competitor submits one closed bid. The number of bidders may be large or may be unknown. This method makes use of the previous “bidding patterns” of all possible opposition bidders and in the case where the bidding is on contracts, the estimated probability distribution of the cost of fulfilling the contract. The case where a number of bids are to be submitted simultaneously is also discussed.