Bid/No-bid decisions in the international construction industry : A comparison between theoretical and practical perspectives

University essay from Umeå universitet/Handelshögskolan vid Umeå universitet

Abstract:

Bid/no-bid decisions in international construction markets are considered difficult, being characterized by its uncertainties and complexities, especially in today’s highly competitive market. Additionally, it is claimed by some authors that many companies still utilize tools and methods that are fragmented, incomplete and rudimentary based on “personal intuition” or “previous-experience-based” (Han and Diekmann 2001a; Han and Diekmann 2001b). On the other hand, other authors emphasize that most of the bid/no-bid models found in the literature ‘remained in academic circles and did not find their way into the practical world’ (Wanous et al, 2000, pp.457). Thus, the focus of this work is to make a contribution towards the reduction of the actual gap between theoretical and practical bidding decision models and contribute to the development of a consistent model that could satisfactorily support the bid/no-bid decision for international construction projects. This way, an investigation of the practical bid/no-bid decision models is performed combined with an evaluation of the degree of applicability of theoretical models in practice. The research is based on a multiple case study analysis. The results suggest that although bidding decisions are still based on subjective judgments, the process applied by companies is formal and highly structured. It is a defined routine with a clear sequence of steps to be followed in which relevant information is analyzed by experienced staff. Additionally, it is designed to be followed by all bids in the companies, including formal presentations for the top management of the companies, who are actively involved in the decision. However, the results also reinforce that although some features of theoretical models can be observed in practice, none of them is being fully employed. Thus, it is possible to affirm that, although the current theoretical models bring some important highlights to bidding situations, they are still not fully suitable for the international construction environment. An important contribution can be done not only to the academic field but also to managerial one if future research focuses on the improvement of the practical models.

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