DIFFERENCES IN CONSTRUCTION COMPANIES’ PREFERENCES IN MAKING BID/NO BID DECISIONS

Abstract

In today’s competitive business environment, bid/no bid decision is crucial for a construction company, as poorly made bidding decisions can have bad consequences. Given the fact that longevity of construction companies partly depends on how they make bidding decisions, determining the key factors for bid/no bid decisions has been the topic of research since mid-1950s. However, there is not much literature on how much value/weight different construction companies put on those factors, and more specifically if there are differences between different companies’ valuation of those factors. The purpose of this study is to investigate how differently the construction companies in the United States (US) value the key factors that are commonly utilized to make bid/no bid decisions. For this purpose, first, 14 key factors were determined based on the literature. Then, a survey instrument was sent to the US construction companies with different demographics such as size, revenue, sector, etc. to gather data to determine the values/weights they assign to those factors. For this, Analytic Hierarchy Process (AHP) was used. AHP enabled pairwise comparisons to be made between the key factors that affect bidding decisions to deal with the complex relationships among those key factors. As a result of the AHP process, the weights for the key factors for bid/no bid decisions were determined for each company. The AHP results were combined with the demographic data of the construction companies and Kruskal-Wallis test was conducted to identify whether there is a statistically significant difference between the weight of importance of the key factors based on the contractor type, contractor sector and contractor size. The preliminary results showed that there is a statistically significant difference between the general contractors and subcontractors for weighing the importance of the owner identity key factor. Another significant difference was found within the contractor sector in the determination of the weight of importance of the project type key factor.