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Article
A simplified unbalanced bidding model
Construction management and economics (2008)
  • David William Cattell
  • Paul Anthony Bowen
  • Ammar P. Kaka
Abstract

Much research effort to date has focused on the development and use of bidding models in optimizing contractors' bid prices in competitive tendering environments. Unbalanced bidding models, in particular, have the objective of maximizing a project's prospective profits by using techniques of applying differentiated mark-ups to all of a project's items of work. It is shown here that these unbalanced bidding models have been unnecessarily complicated by incorporating consideration of a project's item costs. Bidding models can be significantly simplified by having the objective of maximizing a project's top-line revenue rather than maximizing bottom-line profit. A new model, incorporating all three standard effects of item price loading: namely, front-end loading, individual-rate loading, and back-end loading, is proposed that gives effect to determining the optimum pricing for a project's component items.

Keywords
  • bidding,
  • competitive advantage,
  • cost modelling,
  • revenue,
  • mark-up
Publication Date
December 1, 2008
Publisher Statement
Submitted Version.

Cattell, D.W., Bowen, P.A. and Kaka, A.P. (2008). A simplified unbalanced bidding model. Construction management and economics, 26(12), 1283-1290.

This is a preprint of an article whose final and definitive form has been published in Construction management and economics, 2008.
© Copyright Taylor & Francis, 2008; Construction management and economics is available online at: Informaworld.
Citation Information
David William Cattell, Paul Anthony Bowen and Ammar P. Kaka. "A simplified unbalanced bidding model" Construction management and economics Vol. 26 Iss. 12 (2008)
Available at: http://works.bepress.com/david_cattell/3/