Competitive Bidding Research Articles

Did You Know That Competitive Bidding Has Temporarily Ended?

Kathleen D. Schaum, MS, is President and Founder of Kathleen D. Schaum & Associates, Inc, Lake Worth, Florida. Ms Schaum can be reached for questions and consultations by calling 561-964-2470 or through her e-mail [email protected]. Submit your questions for Payment Strategies by mail to: Kathleen D. Schaum, MS, 6491 Rock Creek Dr, Lake Worth, FL 33467.

How to Increase Profits Through Predictive Analytics When Only Few Competitors’ Bids Are Known

The clear majority of pre-existing work in the published domain of competitive bidding requires large sample sizes for reliable econometric, probabilistic or game-theoretic modelling techniques. Such unrealistic large data requirements have prevented the successful application of bid modelling in managerial practice. This article presents a new predictive analytics method for very small samples of historical bidding data. Requiring as few as nine competitive bid prices for a group of pooled/aggregated competitors over a 30-month period is the standout differentiator of this research from any previously published research. This minimizes the demands on competitive intelligence and, therefore, realistically enables its application in the real world of practice. Maximum likelihood estimations are used to evaluate two new, revolutionary bid strategies against a range of evaluation criteria, taking into account the pricing judgements made by competitors, including a degree of competitive reaction among them. Using off-the-shelf analytics software, a case study of a bidder from the telecommunications infrastructure sector demonstrates how commercial outcomes can be improved substantially: A 400 per cent improvement in win ratio, an 86 per cent increase in contribution margin and 76 per cent revenue growth. In addition, the difference between the submitted bids and the lowest-priced competing bids (which is an opportunity cost, sometimes referred to as the ‘spread’ or ‘money left on the table’), has been reduced to 2 per cent on a total revenue of US$210 million.

On crony capitalism

This paper analyzes the nebulous concept of ‘crony capitalism’ and its association with anticompetitive regulatory practices. It argues that presence of such practices may be necessary for identification of crony capitalism but is not sufficient. In particular, we present a mathematical model where a rational, revenue-maximizing government finds it optimal to allocate a monopoly license on the first-come, first-served basis, rather than by conducting an auction, when monopoly profits are not expected to be high in short term. Thus, mere allocation of property rights without competitive bidding cannot be classified as crony capitalism.

Auctioning Class Action Representation

Class actions feature severe agency problems, resulting from divergence of interests between class members and the class attorney. This paper proposes a novel mechanism for selecting the class attorney and aligning her interests with those of the represented class. The mechanism applies a combined percentage and hourly litigation fee structure, in which lawyers earn a percentage of the class’ common fund, and bear the same percentage over their time investment. To guarantee a maximum expected payoff for the class, we supplement this fee structure with a preliminary auction, in which the role of the lawyer is tendered using competitive bidding. We propose an auction mechanism which elicits bids equal to the net expected value for the class and extracts all rents from lawyers. We then extend the model and apply the proposed mechanism to litigation funding, and to alternative fee-shifting rules.

Strategy for Mark-up Definition in Competitive Tenders for Construction Work

A competitive tender with the lowest price as the only (or the main) criterion of contractor selection is one of the most common approaches to procurement in construction. On the one hand, it is expected to offer the greatest benefits of competition to the client; on the other hand, it forces numerous competitors to engage time and resources for bid preparation with a low chance to win the job. To stay in the market, the contractor needs to foresee the behaviour of the competitors (which implies knowing who they are and what prices are they likely to offer), and apply some strategy to increase his/her probability to win without compromising the profits. A number of mathematical models of competitive bidding process can be found in the literature, from the earliest basing on probability theory, to more recent that apply artificial neural networks or fuzzy set theory. The paper presents a probability-based method of estimating the optimal bid price (which means a price of maximum expected value of the contractor’s profit) in lowest bid tenders that stems from Friedman’s model (1956). The authors discuss the assumptions that make the model applicable to real-life situations of specialized construction contractors. A worked example based on case-study data is presented to illustrate the idea. To be used in practice, the proposed model has to be fed with up-to-date results of tenders (number of competitors, and their bid prices). The proposed strategy thus rests upon careful monitoring of the market and internal condition of the bidder.

Two-Stage Multi-attribute Auction Mechanism for Price Discovery and Winner Determination

This paper proposes a two-stage multi-attribute auction mechanism for market price discovery and to determine the winning bidder. In the first stage, the buyer announces a multi-attribute value function and a set of budget levels. The bidders submit sealed-bids for quality attributes against each budget level announced. The buyer uses the proposed procedure to estimate the cost function of each vendor and to determine the reservation quality for prequalification. Using these estimated cost functions, the buyer derives the optimal scoring function. In the second stage, the buyer announces the scoring function and conducts an open bid ascending auction using the qualified set of vendors from the first stage to determine the winner. The main purpose of the mechanism is to provide detailed information to the buyer about the procurement environment. This helps the buyer to make informed decisions while designing an appropriate scoring function. We showed that the proposed mechanism induces competitive bids from the vendors and there is no incentive for them to deviate from quality values submitted in the first stage.

Evolution stages of aircraft manufacturing firms

AbstractAeronautics is one of the highest value‐adding industrial sectors in an economy, and many regions have sought to develop aeronautics industries for economic diversification. Aircraft production, however, is complex and capital‐intensive, and efforts to establish aircraft manufacturing firms have led to mixed results. Here, we present a study of development of six international aeronautical manufacturing firms, across four continents, using a mixed‐method approach. Using empirical quantitative data and results from 103 semistructured interviews with senior executives and policy makers, we identify a set of discrete stages: inception, base production, competitive growth, inventive development, and maturity that characterize the evolution pathways of aeronautics firms. We find that firms do not necessarily follow a linear development path, and they can jump and skip stages or may regress back to earlier stages under financial or other pressures. We find that aeronautics firms are more likely to reach a self‐sustaining maturity stage once they establish independent contracts with multiple partners and are able to develop their own technologies. The results indicate that firms should establish strategies to acquire independent contracts through competitive bidding and should plan for achieving innovation capabilities early on as this is crucial for their long‐term viability.

Soft budgets and endogenous renegotiations in transport PPPs: An equilibrium analysis

•Most countries keep PPP investments off balance sheet.•Governments renegotiate PPPs and use off-balance sheet finance to elude spending limits.•Future administrations pay a large fraction of the incumbent's additional spending.•Neither ex ante spending limits nor ex post competitive bidding for renegotiated contracts stem the tendency of the incumbent to bring forward infrastructure spending.

Statistical Study on Types, Causes, Effects and Remedies of Corrupt Practices in Construction Industries in Nigeria

The paper examined the issues of corruption in Nigeria by identifying the various corrupt and fraudulent practices that exist in Nigeria Construction Industry. It also examined the different job stages where corruption is common within the industry, involvement of professionals, obstacles to exposing corrupt practices, effects of corrupt practices and solutions to corrupt practices in the construction industry. A total of 1500 questionnaires were administered using a web-survey. Professionals in the industry and construction managers were respondents of the survey. A simple statistical tool such as mean, standard deviation and importance index were used to analyze the result. It was observed from the analysis that the major causes of corrupt practices center around the absence of punishment for corruption, economic recession, competitive bidding and loss of contract money due to change in government. The leading examples of corruption practiced in the construction industry are bribery, extortion and employment of unqualified or quacks. The obstacles faced by employees to reporting corrupt practices are fear of appointment termination imposed by the employer, awareness that the whistleblower is not well secured and lack of assurance in anticorruption agencies. The major effects of corrupt practices are poor quality construction of infrastructure and low economic returns. Remedies according to analysis were good and adequate supervision, use of standard materials, and involvement of professional builders in the construction process, proper soil investigation, and discipline of professionals if proven to be involved.

Talent Analytics for Organizations of 21st Century

Organizations have since long tried to overshadow each other in a competitive bid by being unique and available to stakeholders. Personnel department is one the most significant function yet mostly ignored, recently took notice as one a strategic and effective game changer. It has been entrusted with the most crucial function of acquiring the talent resource pool, training and development, performance appraisal or else, for performing various strategic roles under the ambit of the organizational vision. Advanced technological systems have however added credibility and value to its functions tracing the roadmap for organizational success limiting the chances of failure attached with intuitive judgments. Analytics have brought a significant difference bringing an element of quantifiable outcome and predictability to enhance performance and productivity of work force. Recently it has grabbed the attention of top management in developed countries and gradually taking a front row in developing countries like India with nearly 32% following predictive analytics based people management models to gain useful insights about employees from immense historical or current data for synchronizing and personalizing in the mutual interest of both the employees and employers. The paper highlights the impact of organizations using data analytics and their practices. Moreover it also outlines the opportunities and challenges faced by such organizations in implementation and set up like top management approach and training the employee mind set and skills set equally for achieving the expected outcome.

Gaps in public procurement records management

The study determined gaps in the records management of the competitive bidding process in public works procurement in Ghana. Best practices based on the Public Procurement Act 663 and Act 914 which are in line with ISO 15489-1 standards were adopted as a benchmark and compared with existing practices. A multiple case study strategy was used to compare the results of literature synthesis on procurement records management with the existing situation in three selected public entities to establish a trend. Four main gaps were identified, namely, fragmentation of files; different department keeping the fragmented files; unavailability of certain required records; and difference between process file name and number in comparison with the process name and number in procurement plans. These gaps have reduced process transparency and accountability and have downplayed the integrity of procurement processes fostering corruption.

Dynamic Decision Making in Sequential Business-to-Business Auctions: A Structural Econometric Approach

We develop a dynamic structural model of competitive bidding in multiunit sequential business-to-business auctions. Our model accounts for two notable characteristics of these auctions: (i) bidders have multiple purchase opportunities for the same product, and (ii) winning bidders in each round can acquire multiple units of the same product. We apply the model to bidding data from the world’s largest flower wholesale market at which trades are facilitated through fast-paced, sequential, Dutch auctions. Using a two-step estimation approach, we are able to recover the structural parameters effectively and efficiently. We then conduct policy counterfactuals to evaluate the performance of alternative design choices. The results suggest that the current auction practice still has ample room for improvement. In light of this, we propose an optimization framework that can facilitate auctioneers’ decisions in making the trade-off between revenue maximization and operational efficiency.This paper was accepted by Lorin Hitt, information systems.

Gaps in public procurement records management

The study determined gaps in the records management of the competitive bidding process in public works procurement in Ghana. Best practices based on the Public Procurement Act 663 and Act 914 which are in line with ISO 15489-1 standards were adopted as a benchmark and compared with existing practices. A multiple case study strategy was used to compare the results of literature synthesis on procurement records management with the existing situation in three selected public entities to establish a trend. Four main gaps were identified, namely, fragmentation of files; different department keeping the fragmented files; unavailability of certain required records; and difference between process file name and number in comparison with the process name and number in procurement plans. These gaps have reduced process transparency and accountability and have downplayed the integrity of procurement processes fostering corruption.

Analysis of Impact of E-NAM on the stakeholders of Tikamgarh (M.P.)

The present study attempts to assess the present status of infrastructural facilities, innovative agricultural marketing practices adopted in regulated markets and problems of border markets in Bundelkhand Region of Madhyapradesh. The study is based on both primary and secondary data. Primary data pertaining to the agricultural year 2016-17 were obtained from 120 farmers and 20 traders chosen from the selected markets. Secondary data were collected from the Madhya Pradesh State Agricultural Marketing Board,. Data were processed using descriptive analytical tools and techniques.There was no difference between interior and border regulated markets with respect to facilities like market office, stalls/godown and telephone facilities, but the negative difference was observed in vehicle parking, fire fighting, rest rooms for farmers and conference hall, shed for animals. There was no difference between interior and border markets with respect to services like issuing license, collecting market fee, loading, unloading, weighing and recording of disposal, but the negative difference observed in the case of collection of taxes, computer facility and issuing gate pass service. Major constraint faced by the farmers in using ICT’s was computer illiteracy (74.17%), followed by lack of interest, lack of computer facility, lack of time, costly technology and illiteracy. Maximum number of farmers used Television as the main source of the market information for its accuracy, timeliness and content. Lack of competitive bidding due to poor arrivals was the major problem faced by the farmers followed by poor infrastructure facilities.

Comparative analysis of the value for money factors of PPPs between the UAE and the UK

Public private partnerships (PPP) procurement instruments have been very popular tools for developing projects around the world. This is largely due to their success in bringing quality, efficiency, innovation, funds, experience and most importantly risk sharing to the projects they are involved in. This study aims to pinpoint the value for money (VFM) factors that are needed to implement PPP mechanisms in transitional economies, where the United Arab Emirates (UAE) is taken as a case study, whose findings will be contrasted to that of a UK sample, a developed economy. Relevant data was collected through a questionnaire to establish the VFM factors for each of the two countries. In this study, data was collected from 30 participants in the UAE, and 62 participants residing in the UK. A comparative analysis between the results of both countries revealed a great deal of similarity of the significant impact of the VFM factors on the assessment of PPP. The same four factors were chosen as the most important ones by both samples out of the sixteen factors for delivering VFM outcomes. These factors were optimized risk allocation, competitive bid process, improved services to the community, and clear output specification. This study contributed to practice by highlighting to the sponsors the most important VFM factors and group of factors to consider when assessing the VFM of any potential PPP project. This study also contributed to research in the field of PPPs in the UAE and the UK. The comparative analysis between the two countries highlighted the similarities and differences in the practice and opened areas for future consideration.

Optimizing Home Oxygen Therapy. An Official American Thoracic Society Workshop Report.

More than 1.5 million adults in the United States use supplemental oxygen for a variety of respiratory disorders to improve their quality of life and prolong survival. This document describes recommendations from a multidisciplinary workshop convened at the ATS International Conference in 2017 with the goal of optimizing home oxygen therapy for adults. Ideal supplemental oxygen therapy is patient-specific, provided by a qualified clinician, includes an individualized prescription and therapeutic education program, and offers oxygen systems that are safe, promote mobility, and treat hypoxemia. Recently, patients and clinicians report a growing number of problems with home oxygen in the United States. Oxygen users experience significant functional, mechanical, and financial problems and a lack of education related to their oxygen equipment-problems that impact their quality of life. Health care providers report a lack of readily accessible resources needed to prescribe oxygen systems correctly and efficiently. Patients with certain lung diseases are affected more than others because of physically unmanageable or inadequate portable systems. Analysis is needed to quantify the unintended impact that the Centers for Medicare and Medicaid Services Competitive Bidding Program has had on patients receiving supplemental oxygen from durable medical equipment providers. Studies using effectiveness and implementation research designs are needed to develop and evaluate new models for patient education, identify effective ways for stakeholders to interface, determine the economic benefit of having respiratory therapists perform in-home education and follow-up testing, and collaborate with technology companies to improve portable oxygen devices. Generation of additional evidence of the benefit of supplemental oxygen across the spectrum of advanced lung diseases and the development of clinical practice guidelines should both be prioritized.

Linear programming applications in construction sites

More issues in construction management were found especially for decision making that related to the Arabian construction management office requirements. Operation research especially linear programming models considered one of the most important tool used in optimization applications at many fields of production engineering and mass production, also linear programming applications was developed to construction engineering field. This paper presents a linear programming technique to spotlight decision making application for optimizing competitive bidding strategy to select best tender as shown in real case study. Therefore, project manager or decision maker can use this concept for getting the best project cost. This paper give linear programming concepts that are reviewed to describe recent linear programming component which had large focus on related time-cost and time problems for studied project. Linear programming models are formulated to solve various cost and time problems by using LINDO software. The developed models had many limitations and restrictions for studied project. Construction managers can use it to explore more possible opportunities to predict influence of decision for construction to facilitate preferred different management objectives. Linear programming implementation shows the practice of wide variety for construction problems especially cost with time issues and it is more applicable to generate a shortest computational effort and time with low cost.

Estimating in situ conservation costs of Zambian crop wild relatives under alternative conservation goals

Crop wild relatives (CWR) are a globally threatened group of plants, harbouring valuable genes that are sometimes used to enhance commercial crop varieties and landraces. A lack of recognition in national planning for biodiversity conservation has resulted in inadequate CWR conservation strategies, particularly in situ. There is little information on in situ conservation costs, and this paper uses a payment for agrobiodiversity conservation services (PACS) approach to estimate the in situ costs of conserving CWR in Zambia, where 30 CWR have been prioritised for conservation (of which nine are present in our sample). Competitive tender bid offers were elicited from farmers willing to accept compensation for providing a CWR conservation service. Using data from 26 communities we determined the on-farm cost of conserving CWR, specifically in field margins/borders. Heterogeneity was evident in farmer bid offers, suggesting discriminatory price mechanisms can potentially deliver cost savings over uniform payment rules. Selection of bid offers under four different conservation goals using a binary linear programming (BLP) model reveals conservation costs ranging from US$ 23 to 91/ha per year. An untargeted area goal provided a least-cost procurement of conservation services ($ 2.3 k per year), followed by a targeted area goal ($ 5.9 k per year). The cost of selecting conservation sites increased when other constraints were added to the BLP model, including those concerning social equity ($ 6.4 k per year), and diversity ($ 9.2 k per year) goals. Overall, the findings suggest the use of competitive tenders, coupled with CWR data and BLP modelling, can potentially add much to improve the efficiency of in situ CWR conservation.

Restructuring the Organ Procurement and Transplantation Network contract to achieve policy coherence and infrastructure excellence.

The Organ Procurement and Transplantation Network (OPTN) went up for competitive bid again this year, yet this contract has been held by only 1 entity since its inception. The OPTN's scope has grown steadily, and it now embraces several disparate missions: to operate the computing and coordination infrastructure that maintains waitlists and makes organ offers in priority order, to regulate transplant centers and organ procurement organizations, to follow and protect living donors, and to decide organ allocation policy in concert with the many voices of the transplant community. The contracting process and performance work statement continue to discourage both innovative approaches to the OPTN and competitive bids outside of United Network for Organ Sharing (UNOS), with evaluation criteria that either disqualify or strongly disadvantage new applicants. The performance work statement also emphasizes bureaucratic tasks while obligating the OPTN contractor to the specific committee structure that has impeded decision-making and tended to preserve the status quo in controversial matters. Finally, the UNOS computing infrastructure is antiquated and requires months to years to implement small changes. Restructuring the OPTN contract to separate the information technology requirements from the policy/regulatory responsibilities might allow more nimble and effective specialty contractors to offer their capabilities in service of the national transplant enterprise.

Predicting the outcome of construction incidents

Ensuring the Occupational Health and Safety (OHS) is the utmost essential issue for all construction projects. The problem with the construction industry is that even though there is a significant emphasis on safety requirements, for most of the contractors unless requested by the client or enforced by law, there is a tendency to undermine safety management to save money especially in the case of competitive bidding including incident collection systems. The objective of this study is to develop a model to predict incidents at construction sites and propose an effective mechanism to prevent incidents utilizing data through incident collection systems. This research consists of three steps as collection and categorization of data, development of prediction models, and selection of the most appropriate method for prediction of construction incidents. In the first step, real data about construction incidents were categorized with the help of experts using the Delphi method. In the second step, both conventional and artificial intelligence techniques were used to predict the outcome of construction incidents. The prediction step can predict the 84% of the incident outcome within 90% confidence. In the final step, fuzzy sets were introduced to tackle the vagueness of prediction output, and the process was finalized with improvements in the prediction results. Ultimately, it is argued that if a construction site has a mechanism in place to record the incidents as proposed in this study, problematic areas can be detected, and preventive actions can be taken.