Gates’ Bidding Model
Publication: Journal of Construction Engineering and Management
Volume 133, Issue 11
Abstract
In evaluating closed-bid competitive procurement auctions, the most crucial issue is to determine the probability of placing a winning bid for a given markup level. There has long been disagreement on how this should be done due to the absence of a mathematical derivation of one of the main evaluation techniques—Gates’ method. Gates’ method is shown in this paper to be valid if, and only if, bids can be described using the proportional hazards family of statistical distributions. When markup values are included in Gates’ method, it is seen that the underlying statistical distribution required for the method to work is closely related to the Weibull distribution. Likelihood based methods are suggested for parameter estimation and an illustrative example is provided by analysis of Shaffer and Micheau's 1971 construction contract bidding data.
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Acknowledgments
R. McVinish was supported by ARC Centre for Complex Dynamic Systems and Control Grant No. UNSPECIFIEDCEO348165.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 133 • Issue 11 • November 2007
Pages: 855 - 863
Copyright
© 2007 ASCE.
History
Received: May 18, 2006
Accepted: Mar 14, 2007
Published online: Nov 1, 2007
Published in print: Nov 2007
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