Detection and prevention of unbalanced bids

David Arditi and Ranon Chotibhongs

Construction Management and Economics, 2009, vol. 27, issue 8, 721-732

Abstract: Unbalanced bidding is a serious problem for the construction owner because it may increase the cost of construction The most common way to mathematically unbalance a bid is frontloading where a bidder overstates the unit price of line items scheduled to be performed early in the project and understates the unit price of line items performed later. A bidder can also overstate the unit price of a line item whose quantity was somehow underrated by the engineer. If the owner proves that a mathematically unbalanced bid costs more to perform, the bid is said to be materially unbalanced, in which case the owner can reject the bid. A model is presented that formalizes and automates the process of detecting mathematically and materially unbalanced bids by comparing line item prices with the engineer's estimates and the average prices offered by the bidders. This model allows owners to detect and reject unbalanced bids, and deters bidders from unbalancing their bid.

Keywords: Bids; mathematical models; financial management; construction costs; optimization (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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DOI: 10.1080/01446190903117785

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