Acknowledgement
The authors would like to express our gratitude to National Science Council in Taiwan, research project NSC91-2211-E-327-010, for the financial support to this research.
International conference on construction engineering and project management (국제학술발표논문집)
- 2005.10a
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- Pages.417-423
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- 2005
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- 2508-9048(eISSN)
CRITICAL DRIVING FORCE FOR CONTRACTOR'S OPPORTUNISTIC BIDDING BEHAVIOR IN PUBLIC WORKS
- Min-Ren Yan (Institute of Engineering Science and Technology, National Kaohsiung First University of Science and Technology) ;
- Wei Lo (Department of Construction Engineering, National Kaohsiung First University of Science and Technology) ;
- Chien-Liang Lin (Department of Construction Engineering, National Kaohsiung First University of Science and Technology)
- Published : 2005.10.16
Abstract
Contractor's opportunistic bidding behavior refers to contractor's deliberate low-bid, which cannot accord with the cost, and expectation for beyond-contractual reward (BCR), the compensation earned through cutting corners or claims after undertaking the construction project. This research applies System Dynamics to develop a model of contractor's pricing with consideration for dimensions of "cost", "market competition", and "BCR". Iterative computer simulations were performed to analyze the effects of contractor's pricing on the market price. The results were then examined by statistical analysis on data collected from 44 highway projects in Taiwan. It is found that the critical force driving the contractors to bid opportunistically is their excessive expectations in BCR under the current environment. Within the price competition mechanism, if the problem of BCR exists, even if the bidding system is further improved, contractors would still prefer opportunistic bidding behavior, and eventually make the whole construction industry operate ineffectively. Therefore, it is crucial to remedy the aforementioned BCR problem by more effective management policy.