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El-Tayeh, A and Gil, N (2007) Using Digital Socialization to Support Geographically Dispersed AEC Project Teams. Journal of Construction Engineering and Management, 133(06), 462–73.

Gransberg, D D, Lopez del Puerto, C and Humphrey, D (2007)  Relating Cost Growth from the Initial Estimate to Design Fee for Transportation Projects. Journal of Construction Engineering and Management, 133(06), 404–8.

Han, S H, Kim, D Y and Kim, H (2007) Predicting Profit Performance for Selecting Candidate International Construction Projects. Journal of Construction Engineering and Management, 133(06), 425–36.

Hastak, M, Gokhale, S, Goyani, K, Hong, T and Safi, B (2007) Project Manager’s Decision Aid for a Radical Project Cycle Reduction. Journal of Construction Engineering and Management, 133(06), 437–46.

Ipsilandis, P G (2007) Multiobjective Linear Programming Model for Scheduling Linear Repetitive Projects. Journal of Construction Engineering and Management, 133(06), 417–24.

Kang, J H, Anderson, S D and Clayton, M J (2007) Empirical Study on the Merit of Web-Based 4D Visualization in Collaborative Construction Planning and Scheduling. Journal of Construction Engineering and Management, 133(06), 447–61.

Lo, W, Lin, C L and Yan, M R (2007) Contractor’s Opportunistic Bidding Behavior and Equilibrium Price Level in the Construction Market. Journal of Construction Engineering and Management, 133(06), 409–16.

  • Type: Journal Article
  • Keywords: Construction industry; Bids; Pricing; Simulation models;
  • ISBN/ISSN: 0733-9364
  • URL: https://doi.org/10.1061/(ASCE)0733-9364(2007)133:6(409)
  • Abstract:
    The competitive bidding system has been to blame for abnormally low bids, which are considered as one of the main causes of poor project quality. Previous studies have regarded the pricing of bidders as an optimum decision based on contractor’s cost and market competition level. However, the sell to produce characteristic of construction projects may induce contractors to offer a low bid and then make up the amount initially sacrificed from beyond-contractual reward (BCR) gained through cutting corners and claims. System dynamics was adopted in this study to develop a contractor’s pricing model with consideration of the dimensions of cost, market competition, and BCR. The model was then examined by statistical analysis of data collected from 44 highway projects in Taiwan. It was found that the equilibrium market price is significantly associated with BCR, which is assumed to be determined by the strictness of the owner’s construction management, including both soundness of contract and tightness in construction supervision. Research results suggest that contractors divide the market into different segments according to the owner’s strictness of construction management and the equilibrium price level of each market segment varies. The price level for projects with a strict owner is remarkably higher than for those with relatively less strict owners. Improvement in the construction management system of projects is crucial to lower the possibility that contractors gain BCR and do opportunistic bidding, and to further enhance project quality.

Wong, P S P, On Cheung, S and Hardcastle, C (2007) Embodying Learning Effect in Performance Prediction. Journal of Construction Engineering and Management, 133(06), 474–82.