Heterogeneous Approach to Modeling Contractors' Decision-to-Bid Strategies
Publication: Journal of Construction Engineering and Management
Volume 134, Issue 10
Abstract
This research is based on the premise that there is heterogeneity in the population of contractors, i.e., that individual contractors exhibit different bidding behavior when confronted with a given set of bidding variables. Random-coefficients logistic model is used to explicitly measure the heterogeneity across contractors in terms of their (1) intrinsic bid/no-bid preferences and (2) responses to four bidding variables, i.e., number of bidders, market conditions, project type, and size. The binary bid/no-bid decisions were assumed to arise from a logistic model, but with the model parameters that varied between contractors. Data were gathered using a bidding experiment involving Hong Kong and Singapore contractors. The results show that there is significant heterogeneity across the contractors in which Hong Kong contractors can be clustered into four groups of identical (statistical) behavior in response to the four bidding variables, whereas in Singapore, there are only three groups as determined by the underlying heterogeneity distribution. This probabilistic classification of contractors has implications for contractors’ competitive strategies by targeting different groups of competitors toward maximum competitiveness.
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Acknowledgments
This research is supported by the Research Grant Council, University Grants Committee of Hong Kong, through Grant No. CityU 1129/02E. The writers are indebted to anonymous respondents in the bidding experiment for their invaluable responses that formed the basis for empirical analysis in this study. Thanks also go to the National University Singapore for provision of study facilities to carry out data collection in Singapore.
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Information
Published In
Journal of Construction Engineering and Management
Volume 134 • Issue 10 • October 2008
Pages: 766 - 775
Copyright
© 2008 ASCE.
History
Received: May 15, 2007
Accepted: Mar 6, 2008
Published online: Oct 1, 2008
Published in print: Oct 2008
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