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Department of Civil Engineering, Cyprus International University, Haspolat, Mersin 10, Turkey
Department of Civil Engineering, Eastern Mediterranean University, Gazimagusa, Mersin 10, Turkey
Abstract
In an effort to uncover the main factors that characterize the two distinct but sequential stages of bidding decisions, namely bid/no bid
and mark-up size decisions, this study identies the key determining factors and their importance weights by presenting survey ndings of
80 contracting organizations from Northern Cyprus and Turkish construction markets regarding this issue. The framework presented in
this study will serve as a basis for a knowledge-based system model which will guide the contracting organizations in reaching
strategically correct bid/no bid and mark-up size decisions. The proposed framework used a reasoning model, which went deeply into
the heart of the decision-making process and helped to clarify the complex picture regarding the two sequential decisions. The results
revealed that there is a distinct and signicant difference in the importance assigned to the same key factors for the two separate decision
processes. Furthermore, the study conrmed the fact that the factors related to strategic considerations have a signicant role in both of
these decision processes. One of the most striking ndings of this research was the distinct difference in approach of varying sizes of
contractors to the overall issue. Hence, these results suggest that any model regarding bidding and mark-up size decisions should
denitely differentiate among different sizes of contractors to reect the approaches of the related contractors in a better manner.
Furthermore, it was interesting to nd out that the correlation between different sizes of contractors approaches was higher in the markup decision process compared to the bidding decision process. In spite of the fact that this study was based on input provided by certain
types of contractors in Northern Cyprus and Turkish construction markets only, we believe that the overall approach, reasoning and
ndings of the proposed framework are of good value to contracting organizations in different construction markets throughout the
world as well.
r 2005 Elsevier Ltd. All rights reserved.
Keywords: Bid/no bid decision; Mark-up; Contractors; Strategic decision; Contractor size; Developing country
1. Introduction
The only possible way for a contractor rm to survive
and acquire its aims are winning tenders and making prot.
Although in some cases, the contractors undertake projects
and make prot without having to win a tender, this is not
the usual application. Contract bidding, like all other
forms of pricing, is essentially about contractors making
strategic decisions in respect of which contracts to bid and
the bid levels necessary to secure them [1].
Corresponding author. Tel.: +90 392 630 10 51;
fax: +90 392 630 28 69.
E-mail address: mehmedali.egemen@emu.edu.tr (M. Egemen).
0360-1323/$ - see front matter r 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.buildenv.2005.11.016
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2.PROJECT
related factors
1.FIRM
related factors
3.1 Competition
considering the
current market
conditions only
1.2 Strength of
Firm
2.1 Project
Conditions
Contributing to
Profitability
2.2.1.1 Job
Uncertainty
2.2.1.2 Job
Complexity
2.2.1.3 Risk
Creating Job
Conditions
3.2.2 Client
3.2.3 Project
2.2.2.1 Economic
Conditions &
Instability
3.3.Clients(&their
representatives)
expectations
2.3 Competition
considering the
current project
3.2.1 Foreseeable
Future Market Cond.
& Firm's Financial
Situation
2.2.1 Job Related
Risk
3.2 Strategic
Considerations
2.2.2.2 Availability
of Resources
Within the Country
Fig. 1. Subgoals and hierarchical structure in reaching nal bid/no bid and mark-up size decisions.
3.2.4 Consultant
Firm
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M. Egemen, A.N. Mohamed / Building and Environment 42 (2007) 13731385
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Table 1
List of factors and their importance weights considered for bid/no bid and mark-up size decisions by the contracting organizations
Bid/no bid
Mark-up
Overall
Small
Medium
Overall Small
Medium
Factors description
1.1. Need for work
1. The current workload of projects, relative to the capacity of your rm * +
2. Availability (number and size) of other projects within the market * +
3. The current nancial situation of the company *
4. The need for continuity in employment of key personnel and workforce * +
5. The current workload in bid preparation *
6. The major plants and equipment owned. which are not in use
0.904
0.867
0.669
0.544
0.427
0.142
0.851
0.855
0.680
0.430
0.298
0.048
0.952
0.877
0.659
0.647
0.544
0.226
0.700
0.656
0.194
0.408
0.000
0.142
0.658
0.640
0.171
0.307
0.000
0.048
0.738
0.671
0.214
0.500
0.000
0.226
0.915
0.892
0.779
0.694
0.667
0.594
0.458
0.440
0.271
0.133
0.050
0.899
0.930
0.838
0.772
0.746
0.759
0.395
0.377
0.338
0.180
0.044
0.929
0.857
0.726
0.623
0.595
0.444
0.516
0.496
0.210
0.091
0.056
0.135
0.054
0.696
0.463
0.469
0.077
0.023
0.538
0.479
0.269
0.010
0.149
0.057
0.763
0.399
0.404
0.096
0.026
0.557
0.504
0.294
0.009
0.123
0.052
0.635
0.520
0.528
0.060
0.020
0.520
0.456
0.246
0.012
0.944
0.944
0.415
0.327
0.208
0.102
0.934
0.947
0.408
0.360
0.289
0.118
0.952
0.940
0.421
0.298
0.135
0.087
0.765
0.569
0.452
0.110
0.142
0.150
0.789
0.557
0.469
0.101
0.149
0.140
0.742
0.579
0.437
0.119
0.135
0.159
0.394
0.385
0.158
0.156
0.060
0.019
0.404
0.386
0.127
0.232
0.044
0.022
0.385
0.385
0.187
0.087
0.075
0.016
0.690
0.469
0.538
0.406
0.156
0.185
0.689
0.482
0.553
0.469
0.184
0.171
0.690
0.456
0.524
0.349
0.131
0.198
0.685
0.510
0.227
0.104
0.728
0.575
0.184
0.123
0.647
0.452
0.266
0.087
0.581
0.600
0.381
0.440
0.671
0.667
0.430
0.496
0.500
0.540
0.337
0.389
0.479
0.460
0.429
0.427
0.340
0.192
0.123
0.110
0.027
0.566
0.491
0.447
0.482
0.289
0.149
0.127
0.110
0.018
0.401
0.433
0.413
0.377
0.385
0.230
0.119
0.111
0.036
0.583
0.515
0.665
0.819
0.006
0.558
0.071
0.315
0.123
0.658
0.544
0.746
0.877
0.000
0.531
0.092
0.404
0.114
0.516
0.488
0.591
0.766
0.012
0.583
0.052
0.234
0.131
0.902
0.725
0.294
0.088
0.952
0.746
0.355
0.083
0.857
0.706
0.238
0.091
0.538
0.438
0.144
0.052
0.632
0.509
0.145
0.044
0.452
0.373
0.143
0.060
0.165
0.058
0.211
0.057
0.123
0.060
0.848
0.408
0.882
0.443
0.817
0.377
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Table 1 (continued )
Bid/no bid
Mark-up
Overall
Small
Medium
Overall Small
Medium
0.044
0.038
0.048
0.039
0.040
0.036
0.154
0.056
0.189
0.057
0.123
0.056
0.304
0.292
0.292
0.320
0.298
0.303
0.290
0.286
0.282
0.069
0.067
0.067
0.066
0.066
0.066
0.071
0.067
0.067
0.135
0.119
0.075
0.071
0.052
0.040
0.175
0.149
0.101
0.092
0.061
0.035
0.099
0.091
0.052
0.052
0.044
0.044
0.135
0.223
0.260
0.200
0.081
0.040
0.175
0.232
0.211
0.193
0.092
0.035
0.099
0.214
0.306
0.206
0.071
0.044
0.429
0.375
0.478
0.434
0.385
0.321
0.969
0.819
0.965
0.807
0.972
0.829
0.148
0.104
0.075
0.044
0.154
0.096
0.079
0.048
0.143
0.111
0.071
0.040
0.781
0.646
0.244
0.044
0.741
0.715
0.232
0.048
0.817
0.583
0.254
0.040
0.508
0.446
0.346
0.288
0.465
0.373
0.289
0.215
0.548
0.512
0.397
0.353
0.146
0.375
0.040
0.127
0.154
0.294
0.031
0.127
0.139
0.448
0.048
0.127
0.773
0.281
0.100
0.820
0.272
0.066
0.730
0.290
0.131
0.742
0.415
0.117
0.684
0.329
0.079
0.794
0.492
0.151
0.742
0.598
0.425
0.417
0.415
0.360
0.338
0.256
0.050
0.706
0.553
0.390
0.390
0.382
0.443
0.250
0.189
0.009
0.774
0.639
0.456
0.440
0.444
0.286
0.417
0.317
0.087
0.798
0.619
0.463
0.256
0.281
0.085
0.417
0.033
0.025
0.803
0.575
0.417
0.224
0.149
0.101
0.382
0.000
0.009
0.794
0.659
0.504
0.286
0.401
0.071
0.448
0.063
0.040
0.425
0.144
0.526
0.158
0.333
0.131
0.119
0.058
0.118
0.026
0.119
0.087
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Table 2
Perceived level of importance for clients and consultants combined needs
and expectations from contracting organizations (aggregated response)
Factor description
Importance
weight
0.952
0.910
0.782
0.772
0.736
0.724
0.663
0.651
0.638
0.618
0.616
0.564
0.537
0.521
0.516
0.478
0.428
0.653
Table 3
Descriptive statistics about the characteristics of the respondents
Variable
Category 1
Category 2
Category 3
Category 4
1625 (%43.75)
26+ (%18.75)
Building (% 93.75)
Northern Cyprus (% 51.25)
Other (% 6.25)
Turkey (% 48.75)
0.456
0
0.336
0.546
0.413
0.526
0.402
0
0.397
0.527
0.444
0.425
0.353
0
0.453
0.510
0.472
0.333
0.286
0.307
0.736
0.600
0.653
0.385
0.550
0.402
0.600
0.623
0.673
0.662
0.395
0.652
0.455
0.684
0.296
0.682
0.634
0.658
0.390
0.598
0.427
0.640
0.103
0.021
0.117
0.036
0.059
0.193
0.113
0.073
0.010
0.010
0.102
0.053
0.084
0.211
0.886
0.728
0.294
0.507
0.425
a
0.260
0.894
0.714
0.375
0.579
0.472
0.535
0.487
0.605
0.548
0.566
0.627
0.571
0.663
0.588
0.486
0.595
0.526
0.501
0.576
0.488
0.628
There are no important factors under the specic subgoal for the specied decision.
1.1
1.2
2.1
2.2.1.1
2.2.1.2
2.2.1.3
2.2.1.4
2.2.2.1
2.2.2.2
2.2.2.3
2.3
3.1
3.2.1
3.2.2
3.2.3
3.2.4
a
0.306
0.901
0.700
0.448
0.643
0.515
0.636
0.484
0.586
0.505
0.442
0.530
0.413
0.597
Overall
contrac.
Difference
between small
& medium
Overall
contrac.
Mark-up decision
0.095
0.015
0.028
0.154
0.137
0.090
0.101
0.003
0.019
0.043
0.125
0.097
0.158
0.066
Difference
between small
& medium
0.094
0.148
0.063
0.136
0.097
0.149
0.152
0.628
0.296
0.260
0.492
0.714
0.022
0.052
0.028
0.425
Overall
contrac.
0.088
0.186
0.057
0.153
0.085
0.172
0.114
0.663
0.307
0.211
0.430
0.728
0.042
0.040
0.012
0.526
0.099
0.115
0.067
0.120
0.108
0.128
0.188
0.597
0.286
0.306
0.548
0.700
0.005
0.133
0.044
0.333
1380
Subgoal
Table 4
Average importance scores for different subgoals
ARTICLE IN PRESS
Medium rank
3
2
5
7
1
4
6
8
9
15
12.5
10
14
16
12.5
19
11
28
17
24
18
21
31
37
36
25
23
43.5
22
32.5
20
32.5
29
35
30
34
27
26
45.5
45.5
48
38
41
39
43.5
42
49
47
40
50
0.952
0.940
0.929
0.952
0.857
0.857
0.877
0.726
0.730
0.774
0.706
0.623
0.647
0.659
0.595
0.639
0.444
0.647
0.452
0.548
0.401
0.433
0.516
0.512
0.496
0.413
0.385
0.544
0.377
0.456
0.333
0.44
0.421
0.444
0.385
0.385
0.321
0.286
0.397
0.385
0.417
0.298
0.29
0.238
0.286
0.282
0.353
0.29
0.21
0.317
0.517
1.5
3
4
1.5
6.5
6.5
5
10
9
8
11
16
13.5
12
17
15
25.5
13.5
24
18
32
28
20
21
22
31
35.5
19
38
23
40
27
29
25.5
35.5
35.5
41
46.5
33
35.5
30
43
44.5
49
46.5
48
39
44.5
50
42
2.3.1
2.2.2.1.1
2.2.1.3.4
2.3.2
3.2.3.1
3.1.1
2.1.1
3.2.2.1
1.1.1
1.2.3
2.2.1.1.1
2.2.1.3.3
1.1.2
3.1.2
3.2.3.2
2.2.1.2.2
2.2.1.3.1
2.2.1.2.1
2.1.2
2.2.1.3.6
1.2.8
2.2.1.1.3
2.2.1.4.1
2.2.1.3.2
1.2.9
1.2.5
2.2.1.1.2
1.2.4
3.2.3.3
2.1.3
2.2.1.2.4
2.2.1.4.2
3.2.3.7
3.2.2.2
1.1.4
2.2.2.1.2
2.2.1.1.4
2.2.1.2.3
3.2.1.2
2.2.1.3.8
3.2.3.5
1.2.10
2.2.2.3.3
3.2.3.4
0.548
0.969
0.848
0.819
0.819
0.798
0.781
0.765
0.742
0.700
0.696
0.69
0.665
0.656
0.646
0.619
0.6
0.583
0.581
0.569
0.558
0.538
0.538
0.538
0.515
0.479
0.469
0.469
0.463
0.463
0.452
0.44
0.438
0.417
0.415
0.408
0.408
0.406
0.381
0.375
0.315
0.281
0.269
0.26
0.256
1
2
3.5
3.5
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
22
22
22
24
25
26.5
26.5
28.5
28.5
30
31
32
33
34
35.5
35.5
37
38
39
40
41
42
43
44
0.553
0.965
0.882
0.877
0.807
0.803
0.741
0.789
0.684
0.658
0.763
0.689
0.746
0.64
0.715
0.575
0.667
0.658
0.671
0.557
0.531
0.557
0.553
0.632
0.544
0.504
0.404
0.482
0.399
0.417
0.469
0.496
0.509
0.382
0.329
0.307
0.443
0.469
0.43
0.294
0.404
0.149
0.294
0.211
0.224
Small score
1
2
3
4
5
9
6
12
15.5
7
11
8
17
10
19
14
15.5
13
20.5
24
20.5
22
18
23
26
34.5
28
36
33
29.5
27
25
37
38
39
31
29.5
32
40.5
34.5
44
40.5
43
42
Small rank
0.545
0.972
0.817
0.766
0.829
0.794
0.817
0.742
0.794
0.738
0.635
0.769
0.591
0.671
0.583
0.659
0.54
0.516
0.5
0.579
0.583
0.52
0.524
0.452
0.488
0.456
0.528
0.456
0.52
0.504
0.437
0.389
0.373
0.448
0.492
0.5
0.377
0.349
0.337
0.448
0.234
0.431
0.246
0.306
0.286
Medium score
1
3.5
7
2
5.5
3.5
8
5.5
9
13
10
14
11
15.5
12
18
23
25.5
17
15.5
21.5
20
31
28
29.5
19
29.5
21.5
24
34
36
38
32.5
27
25.5
37
39
40
32.5
44
35
43
41
42
Medium rank
Spearman rank correlation coefcient (rs ) between small rank and medium rank for bid/no bid decision 0.766; for mark-up decision 0.831; correlation is signicant at 1% level for both.
0.934
0.947
0.899
0.851
0.952
0.930
0.855
0.838
0.820
0.706
0.746
0.772
0.728
0.680
0.746
0.553
0.759
0.430
0.575
0.465
0.566
0.491
0.395
0.373
0.377
0.447
0.478
0.298
0.482
0.390
0.526
0.390
0.408
0.382
0.404
0.386
0.434
0.443
0.289
0.289
0.250
0.360
0.320
0.355
0.298
0.303
0.215
0.272
0.338
0.189
0.527
Overall rank
1.5
1.5
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26.5
26.5
28.5
28.5
30.5
30.5
32
33.5
33.5
35
36
37
38
39
40
41
42
43
44
45.5
45.5
47
48
49
50
Overall score
0.944
0.944
0.915
0.904
0.902
0.892
0.867
0.779
0.773
0.742
0.725
0.694
0.685
0.669
0.667
0.598
0.594
0.544
0.510
0.508
0.479
0.460
0.458
0.446
0.440
0.429
0.429
0.427
0.427
0.425
0.425
0.417
0.415
0.415
0.394
0.385
0.375
0.360
0.346
0.340
0.338
0.327
0.304
0.294
0.292
0.292
0.288
0.281
0.271
0.256
0.522
Medium score
2.1.1
2.1.2
1.2.1
1.1.1
2.2.1.4.1
1.2.2
1.1.2
1.2.3
3.2.2.1
3.2.3.1
2.2.1.4.2
1.2.4
2.2.1.2.1
1.1.3
1.2.5
3.2.3.2
1.2.6
1.1.4
2.2.1.2.2
3.2.1.1
2.2.1.3.1
2.2.1.3.2
1.2.7
3.2.1.2
1.2.8
2.2.1.3.3
2.3.1
1.1.5
2.2.1.3.4
3.2.3.3
3.2.4.1
3.2.3.4
2.1.3
3.2.3.5
2.2.1.1.1
2.2.1.1.2
2.3.2
3.2.3.6
3.2.1.3
2.2.1.3.5
3.2.3.7
2.1.4
2.2.2.2.1
2.2.1.4.3
2.2.2.2.2
2.2.2.2.3
3.2.1.4
3.2.2.2
1.2.9
3.2.3.8
Average
Small rank
Factor
Small score
Overall score
Factor
Overall rank
Mark-up decision
Table 5
Importance ratings and ranks for bid/no bid and mark-up decision processa
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Because of the unavailability of large-sized or international contractors in Northern Cyprus construction market, this study focused only on small- and medium-sized
regional contractors, which are mostly involved in private
building construction works. In spite of the fact that this
study was based on input provided by certain types of
contractors in Northern Cyprus and Turkish construction
markets only, we believe that the approach, reasoning,
ndings and the overall framework proposed are of good
value to contracting organizations in different markets
throughout the world.
The ndings of this study will serve as a detailed and
complete framework for the proposed knowledge-based
system model, which is currently under research and will be
published in a companion paper. This study could be
extended to include large international contractors or
contractors involved mostly in public projects to observe
the possible differences in their approaches to the issue.
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