An International Overview of Unbalanced Pricing under Bidding Regulations for Public Construction Projects

Abstract

Unbalanced pricing in competitive bidding is a source of concern for public authorities responsible for managing the tendering stage of public work projects. This paper studies international laws governing public bidding in construction and the practice of unbalanced bidding. Regulations reviewed include those from the United States, Europe, the Middle East, Asia, Africa, and some international funding agencies. The results of our review suggest that, despite the nearly universal practice of unit price contracting, laws regulating unbalanced bidding vary widely, as do the acquaintance of the impacts of unbalanced bidding on project costs and performance issues. Even more, the awareness of many of those who recognize unbalanced pricing in their bidding regulations is limited because they address only one form of unbalanced pricing or provide protection against only one or a few of the consequences of excessive bid unbalancing. The results of our study highlight the need for reform of public bidding regulations in many jurisdictions, including adopting best practices and provisions for the regulation of unbalanced pricing so that project participants may benefit from the accumulated experience in dealing with this practice.