Prevention and Detection of Unbalanced Pricing in Bidding for Construction Projects: A Review
Publication: Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 16, Issue 4
Abstract
Unbalanced pricing in construction projects involves shifting the markup and sometimes a portion of the costs of certain items to other items in order to attain additional profit for the bidder if he wins the contract and/or increase his chance of being the lowest bidder. Unbalanced pricing is a common practice associated with competitive bidding for public construction projects. Despite the spread of the practice, project owners oppose unbalanced bidding and may reject a submitted bid if they identify an obvious imbalance in the submitted item rates. This paper presents a review of research presented to help owners deal with this practice and control its negative impact on the owner and the entire process of competitive bidding. The reviewed studies include the outcomes of around 20 years of research on unbalanced pricing from the owners’ perspective and include: papers that presented models to reduce the negative impacts of unbalanced pricing on the owner; and papers that presented detection models or procedures to help owners identify imbalances in submitted bids. This should contribute to a better awareness of public procurement entities of the research work that represented the owners’ interests in handling unbalanced pricing and can establish the basis for further research to develop improved models for handling imbalances in prices.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
No data, models, or code were generated or used during the study.
References
Works Cited
Ahmed, M., and I. El-adaway. 2023. “Data-driven analysis of construction bidding stage-related causes of disputes.” J. Manage. Eng. 39 (5): 04023026. https://doi.org/10.1061/JMENEA.MEENG-5426.
Akin, F., A. Damci, G. Polat, and H. Turkoglu. 2020. “A risk-based approach to prevent unbalanced bids.” In Proc., 6th Int. Project and Construction Management Conf. (e-IPCMC2020). Istanbul, Turkey: Istanbul Technical Univ.
Alaska DOT&PF. 2020. Standard specifications for highway construction. Juneau, Alaska: Alaska DOT and Public Facilities.
Alhyari, O., and K. Hyari. 2022. “An international perspective on unbalanced pricing under bidding regulations of public construction projects.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 15 (2): 04522064. https://doi.org/10.1061/JLADAH.LADR-852.
An, X., H. Li, J. Zuo, O. Ojuri, Z. Wang, and J. Ding. 2018. “Identification and prevention of unbalanced bids using the unascertained model.” J. Constr. Eng. Manage. 144 (11): 05018013. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001563.
Arditi, D. 2016. “Preventing unethical and illegal practices in construction.” In Proc., First European and Mediterranean Structural Engineering and Construction Conf. Fargo, ND: International Structural Engineering and Construction Society. https://doi.org/10.14455/ISEC.res.2016.37.
Arditi, D., and R. Chotibhongs. 2009. “Detection and prevention of unbalanced bids.” Construct. Manage. Econ. 27 (8): 721–732. https://doi.org/10.1080/01446190903117785.
Beeston, D. 1999. “One statistician’s view of estimating.” In Cost modelling, edited by M. Skitmore and V. Marston, 381–392. London: Routledge. https://doi.org/10.4324/9780203979679.
Cattell, D., P. Bowen, and A. Kaka. 2007. “Review of unbalanced bidding models in construction.” J. Constr. Eng. Manage. 133 (8): 562–573. https://doi.org/10.1061/(ASCE)0733-9364(2007)133:8(562).
Cattell, D., P. Bowen, and A. Kaka. 2008. “A simplified unbalanced bidding model.” Construct. Manage. Econ. 26 (12): 1283–1290. https://doi.org/10.1080/01446190802570506.
Cattell, D. W., P. A. Bowen, and A. P. Kaka. 2010. “The risks of unbalanced bidding.” Construct. Manage. Econ. 28 (4): 333–344. https://doi.org/10.1080/01446191003663264.
Chotibhongs, R. 2011. “Managing the bidding process for the construction owner—detection and prevention of unbalanced bids and collusive bids.” Ph.D. thesis, Dept. of Civil, Architectural, and Environmental Engineering, Illinois Institute of Technology.
Christodoulou, S. 2008. “A bid-unbalancing method for lowering a contractor’s financial risk.” Construct. Manage. Econ. 26 (12): 1291–1302. https://doi.org/10.1080/01446190802596238.
Gransberg, D., and C. Riemer. 2009. “Impact of inaccurate engineer’s estimated quantities on unit price contracts.” J. Constr. Eng. Manage. 135 (11): 1138–1145. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000084.
Hyari, K. 2015. “Handling unbalanced bidding in construction projects: Prevention rather than detection.” J. Constr. Eng. Manage. 142 (2): 04015060. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001045.
Hyari, K. 2023a. “An owner’s overview of contractor’s models for unbalanced bidding: Easing the controversy over this practice.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 16 (1): 04523037. https://doi.org/10.1061/JLADAH.LADR-1017.
Hyari, K. 2023b. “A procedure for rebalancing unbalanced bidding in unit price contracts.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 15 (2): 04523011. https://doi.org/10.1061/JLADAH.LADR-939.
Hyari, K., Z. Tarawneh, and H. Katkhuda. 2016. “Detection model for unbalanced pricing in construction projects: A risk-based approach.” J. Constr. Eng. Manage. 142 (12): 04016078. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001203.
Hyari, K., and M. Thneibat. 2023. “Detecting skewed pricing in tenders for public-sector projects.” Constr. Innovation: Inf. Process Manage. https://doi.org/10.1108/CI-06-2023-0131.
Kenley, R. 2003. Financing construction: Cash flows and cash farming. 1st ed. London: Taylor & Francis Group.
Li, H., L. Su, L. Lv, and Q. Xia. 2021. “Detecting unbalanced bidding to achieve economic sustainability using fuzzy logic approach.” Constr. Innovation 21 (2): 164–181. https://doi.org/10.1108/CI-11-2019-0136.
Li, H., L. Su, J. Zuo, X. An, G. Dong, L. Wang, and C. Zhang. 2023. “The framework of data-driven and multi-criteria decision-making for detecting unbalanced bidding.” Eng. Constr. Archit. Manage. 30 (2): 598–622. https://doi.org/10.1108/ECAM-08-2020-0603.
Manzo, F. 1997. “Impact of an unbalanced bid on the change order process.” Accessed December 19, 2023. https://greyhawk.com/wp-content/uploads/2013/06/Dispute_Avoidance_Impact_of_Unbalanced_Bid_on_Change_Orders.pdf.
Manzo, F., and S. Tell. 1997. “Unbalanced bids and avoiding disputes relating to them.” Accessed December 17, 2023. https://www.cmaanet.org/sites/default/files/2018-04/Dispute_Avoidance_Unbalanced_Bids_and_Avoiding_Disputes_Relating_to_Them.pdf.
NCDOT (North Carolina DOT). 2018. Standard specifications for roads and structures. Raleigh, NC: NCDOT.
Nikpour, B., A. Senouci, and N. Eldin. 2017. “Detection tool for unbalanced bids.” Open J. Civ. Eng. 7 (3): 409–422. https://doi.org/10.4236/ojce.2017.73028.
NJDOT (New Jersey DOT). 2019. Standard specifications for road and bridge construction. Ewing Township, NJ: NJDOT.
NVDOT (State of Nevada DOT). 2014. Standard specifications for road and bridge construction. Carson City, Nevada: NVDOT.
Okere, G. 2017. “Reliance on and reliability of the engineer’s estimate in heavy civil projects.” Constr. Econ. Build. 17 (2): 92–114. https://doi.org/10.5130/AJCEB.v17i2.5348.
Polat, G., H. Turkoglu, and A. Damci. 2019. “A grading system-based model for detecting unbalanced bids during the tendering process.” Period. Polytech. Archit. 50 (2): 139–147. https://doi.org/10.3311/PPar.12669.
Polat, G., H. Turkoglu, A. Damci, and F. D. Akin. 2020. “Detecting unbalanced bids via an improved grading-based model.” Organ. Technol. Manage. Constr. 12 (1): 2072–2082. https://doi.org/10.2478/otmcj-2020-0004.
Ramezany, A. 2017. “Critical review of factors that lead to the negative image of the construction industry.” J. Multidiscip. Eng. Sci. Technol. 4 (3): 6796–6802.
Stark, R. 1968. “Unbalanced bidding models–Theory.” J. Constr. Div. 94 (2): 197–209. https://doi.org/10.1061/JCCEAZ.0000223.
Stramarcos, A., and D. Cattell. 2013. “The ethics of item pricing.” In Proc., 38th Australian University Building Educators Association Conf. Auckland, New Zealand: Univ. of Auckland.
Su, L., T. Wang, H. Li, Y. Chao, and L. Wang. 2020. “Multi-criteria decision making for identification of unbalanced bidding.” J. Civ. Eng. Manage. 26 (1): 43–52. https://doi.org/10.3846/jcem.2019.11568.
TXDOT (Texas DOT). 2014. Standard specifications for construction and maintenance of highways, streets, and bridges. Austin, TX: TXDOT.
TXDOT (Texas DOT). 2019. Project development process manual. Austin, TX: TXDOT.
Wang, W. 2004. “Electronic-based procedure for managing unbalanced bids.” J. Constr. Eng. Manage. 130 (3): 455–460. https://doi.org/10.1061/(ASCE)0733-9364(2004)130:3(455).
WisDOT (Wisconsin DOT). 2020. Construction and materials manual. Madison, WI: WisDOT.
WisDOT (Wisconsin DOT). 2023. Standard specifications. Madison, WI: WisDOT.
Wu, X., and F. Xu. 2021. “Detection model for unbalanced bidding in railway construction projects: Considering the risk of quantity variation.” J. Constr. Eng. Manage. 147 (7): 04021055. https://doi.org/10.1061/(ASCE)CO.1943-7862.0002058.
Yin, Y., L. Qiao, and B. Li. 2010. “Research on the owner’s tactics to unbalanced bid under the mode of code of valuation with bill quantity of construction works.” In Proc., Industrial Engineering and Engineering Management (IE&EM), 2010 IEEE 17th Int. Conf., 249–252. New York: IEEE.
Information & Authors
Information
Published In
Copyright
© 2024 American Society of Civil Engineers.
History
Published online: Aug 26, 2024
Published in print: Nov 1, 2024
Discussion open until: Jan 26, 2025
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.