IJIMT 2017 Vol.8(1): 54-59 ISSN: 2010-0248
doi: 10.18178/ijimt.2017.8.1.702

Contractors' Bidding Behavior in First-Price Sealed Auctions for Construction Projects

Khaled Hyari
Abstract— Procurement of public construction projects generally adopts first-price sealed auctions to promote competition between bidders and reduce owner's cost. This paper presents an analysis for bidding behavior of contractors in public construction markets. The analysis utilizes real data representing the bid results of 1396 projects submitted for public construction projects in Jordan. Bidding data were classified depending on the type of project into: building construction, transportation, infrastructure, water, and electro-mechanical projects. The data includes also engineering design and/or engineering supervision projects. The analyzed behavior attributes are: 1) competition between bidders measured by number of bidders and the bid spread between the lowest two bidders; and 2) bidding variability measured by the coefficient of variation. The analysis revealed that number of bidders and bid spread depend on type of project advertised and market conditions. The variability of bidding results also is correlated with type of project. The performed analysis provide owners with an assessment of the efficiency of the competitive bidding process and can be used to identify weaknesses that need to be addressed in bidding regulations. Contractors can utilize the results to develop their bidding strategies to win profitable jobs.

Index Terms— Bidding strategies, construction projects, contractors, first price auctions, sealed bids.

Khaled Hyari is with the Hashemite University, Zaqa 13115, Jordan (e-mail: hyari@hu.edu.jo).

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Cite: Khaled Hyari, " Contractors' Bidding Behavior in First-Price Sealed Auctions for Construction Projects," International Journal of Innovation, Management and Technology vol. 8, no. 1, pp. 54-59, 2017.

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