Competitive Bidding Strategy Model and Software System for Bid Preparation

Abstract

This paper presents a competitive bidding strategy model for use in setting a margin (markup) for civil engineering and building construction projects. The goal of this model is to help a company to achieve its objectives in bidding. The model provides more than 90 factors that may influence the choice of margin size, and it enables the decision-maker to assess the impact of those that are relevant to his or her bid situation. The use of fuzzy set theory allows assessments to be made in qualitative and approximate terms, which suit the subjective nature of the margin-size decision. The model has been implemented in the form of a prototype software system named PRESTTO, which is described. One conclusion of this paper is that fuzzy set theory can be applied successfully to model the margin-size decision. A second conclusion is that use of this competitive bidding strategy model can improve the quality of the decision-making process used in setting a margin and can help contractors to gain a competitive edge in bidding. The competitive bidding strategy model has been validated with actual project bids collected from a survey of the Australian construction industry; validation will be described in a companion paper.