Development of a Bid Decision Making Model for Road Construction Projects in Bangladesh

Abstract

Two critical decisions faced by bidders in competitive bidding include, firstly, whether or not to submit a bid, and secondly (if the answer to the first is ‘yes’) what markup value should be used on the submitted bid. In the construction industry, government agencies and private sector clients typically adopt competitive bidding to determine contract awards. There are many variables that affect contractor decisions regarding whether to bid and the markup scale, which complicate the bidding decision process. Not bidding for a project could result in losing a good opportunity to make substantial profit, improve the contractor’s strength in the industry, gain relationship with the client, and more. However, bidding for inappropriate projects may result in large losses or the consumption of time and resources that could be invested in more profitable projects, ultimately even financial failure of the contractor. This dilemma expresses the importance of the bid / no bid decision. The high complex process is a major characteristic of the bidding decision, which involves a large quantity of objectives and reflection of several internal and external factors. Smart contractors realize the importance of doing initial research and project evaluation before committing themselves to a construction project. In Bangladesh, recently government has identified construction sector as an industry. Here is an attempt is being made to identify the construction industry of Bangladesh through different parameters. Proper identification of problems and information about the industry will enrich the contributions to the national economy. This paper reports on-going research aims to develop a framework that can be used as a decision aid for project evaluations at the initial project selection decision phase. The results from a review of the literature concerning the bid / no bid decision are presented, and a conceptual model is developed.