Network Theory–Based Approach to Data-Driven Assessment of Bidding Competition in Highway Construction
Publication: Journal of Management in Engineering
Volume 40, Issue 1
Abstract
Competitive bidding in design-bid-build contracts holds the potential to lower bid prices, maximize project outcomes, and promote growth in the construction industry. However, these potential benefits of competitive bidding are contingent upon adequate competition among bidders. State highway agencies (SHAs) traditionally evaluate competition levels predominantly based on the number of bidders, neglecting other key elements such as bidders’ competitiveness. Moreover, little research focuses on addressing this limitation. This study proposes a novel data-driven network theory approach to measure competition from the owners’ perspective. Specifically, competition is modeled as a bidirected network of connected bidders using their past winning and losing records. We propose different measures of contractors to provide unique insights into the competitiveness of the bidders. These centrality measures are further correlated with the bidding performance using Spearman’s rank correlation coefficient. Our findings demonstrate that these proposed centrality measures bear stronger correlations with bidding performance than the number of bidders. By employing this novel approach, SHAs can better understand contractor competitiveness and competition levels during the project-letting phase.
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Data Availability Statement
Some or all data, models, or code used during the study were provided by a third party. Direct requests for these materials may be made to the provider as indicated in the Acknowledgements.
Acknowledgments
The authors would like to acknowledge that the South Dakota Department of Transportation provided the bid tabulation data for this study.
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Journal of Management in Engineering
Volume 40 • Issue 1 • January 2024
Copyright
© 2023 American Society of Civil Engineers.
History
Received: Feb 8, 2023
Accepted: Aug 11, 2023
Published online: Oct 5, 2023
Published in print: Jan 1, 2024
Discussion open until: Mar 5, 2024
ASCE Technical Topics:
- Bids
- Business management
- Competition
- Construction engineering
- Construction industry
- Construction management
- Contracts and subcontracts
- Correlation
- Design (by type)
- Engineering fundamentals
- Highway and road design
- Infrastructure
- Infrastructure construction
- Mathematics
- Practice and Profession
- Project management
- Statistics
- Transportation engineering
- Transportation management
- Transportation networks
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