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Abdelgawad, M and Fayek, A R (2011) Fuzzy Reliability Analyzer: Quantitative Assessment of Risk Events in the Construction Industry Using Fuzzy Fault-Tree Analysis. Journal of Construction Engineering and Management, 137(04), 294–302.

Barraza, G A (2011) Probabilistic Estimation and Allocation of Project Time Contingency. Journal of Construction Engineering and Management, 137(04), 259–65.

Chua, D K H and Yeoh, K W (2011) PDM++: Planning Framework from a Construction Requirements Perspective. Journal of Construction Engineering and Management, 137(04), 266–74.

Kim, H and Reinschmidt, K F (2011) Effects of Contractors’ Risk Attitude on Competition in Construction. Journal of Construction Engineering and Management, 137(04), 275–83.

Laryea, S and Hughes, W (2011) Risk and Price in the Bidding Process of Contractors. Journal of Construction Engineering and Management, 137(04), 248–58.

  • Type: Journal Article
  • Keywords: Bids; Contractors; Risk management; United Kingdom; Pricing; Construction industry; Bidding; Contractors; Participant observation; Risk apportionment; United Kingdom;
  • ISBN/ISSN: 0733-9364
  • URL: https://doi.org/10.1061/(ASCE)CO.1943-7862.0000293
  • Abstract:
    Formal and analytical risk models prescribe how risk should be incorporated into construction bids. However, the actual process of how contractors and their clients negotiate and agree to price is complex and not clearly articulated in the literature. With participant observation, the entire tender process was shadowed in two leading U.K. construction firms. This was compared with propositions in analytical models, and significant differences were found. A total of 670 h of work observed in both firms revealed three stages of the bidding process. Bidding activities were categorized and their extent estimated as deskwork (32%), calculations (19%), meetings (14%), documents (13%), off-days (11%), conversations (7%), correspondence (3%), and travel (1%). Risk allowances of 1–2% were priced in some bids, and three tiers of risk apportionment in bids were identified. However, priced risks may be excluded from the final bid to enhance competitiveness. Although risk apportionment affects a contractor’s pricing strategy, other complex microeconomic factors also affect price. Instead of including pricing contingencies, risk was priced primarily through contractual rather than price mechanisms to reflect commercial imperatives. These findings explain why some assumptions underpinning analytical models may not be sustainable in practice and why what actually happens in practice is important for those who seek to model the pricing of construction bids.

Rivas, R A, Borcherding, J D, González, V and Alarcón, L F (2011) Analysis of factors influencing productivity using craftsmen questionnaires: Case study in a Chilean construction company. Journal of Construction Engineering and Management, 137(04), 312–20.

Taylor, J E, Dossick, C S and Garvin, M (2011) Meeting the Burden of Proof with Case-Study Research. Journal of Construction Engineering and Management, 137(04), 303–11.

Unsal, H I and Taylor, J E (2011) Modeling Interfirm Dependency: Game Theoretic Simulation to Examine the Holdup Problem in Project Networks. Journal of Construction Engineering and Management, 137(04), 284–93.