An Owner’s Overview of Contractor’s Models for Unbalanced Bidding: Easing the Controversy over This Practice

Abstract

Contractors bidding on unit price contracts frequently utilize unbalanced bidding, particularly for public construction projects. Contractors’ use of unbalanced bids takes various forms and occurs at differing degrees to accomplish a multitude of goals. This paper adopts a qualitative research methodology and presents an overview of the models developed by construction scholars to assist contractors in unbalancing their bids. This paper includes the author’s evaluation of the types of unbalanced bidding studied, the tools utilized to optimize unbalanced bidding, and the justifications provided by the authors of such studies supporting the legitimacy of the practice of unbalanced bidding by contractors. The overview also examines whether the authors of those studies addressed the morality of unbalanced bidding and how such a practice impacts the owners of such projects. The paper ends with a discussion of the acceptability of the contractor’s motives for unbalanced bidding from the owner’s perspective. The analysis in this paper should be beneficial to both bidding officials and contractors. Contractors may select from the available tools and strategies presented in the available literature reviewed to educate themselves about the risks and limitations associated with unbalanced bidding. Bidding officials will achieve a better understanding of the bidding strategies employed by contractors and the factors motivating contractor’s actions so they may enhance and improve their existing procurement and bid evaluation practices and procedures. The author anticipates that this paper will assist construction industry participants in proactively addressing and resolving issues with the practice of unbalanced bidding.