SIM-UTILITY: Model for Project Ceiling Price Determination
Publication: Journal of Construction Engineering and Management
Volume 128, Issue 1
Abstract
Before considering bids submitted by competing contractors for a public procurement project, the owner should determine a project ceiling price or cost estimate to use as a reference point for evaluating the bids. A high ceiling price conflicts with the owner’s interests in minimizing costs. Meanwhile, a low ceiling price can jeopardize the project if all bids exceed the ceiling price. This paper proposes a model for determining a reasonable project ceiling price. The model, called SIM-UTILITY, is based on a utility theory and facilitated by a cost simulation approach. The utility theory is applied to reflect the owner’s preferences regarding the determination criteria, while the simulation approach is used to generate more objective project cost data to support execution of the utility theory. The advantages of SIM-UTILITY are proven by its successful application to three construction projects in Taiwan. A computerized SIM-UTILITY is expected to be broadly applicable to public construction projects in Taiwan.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 128 • Issue 1 • February 2002
Pages: 76 - 84
Copyright
Copyright © 2002 American Society of Civil Engineers.
History
Received: Dec 12, 2000
Accepted: Feb 21, 2001
Published online: Feb 1, 2002
Published in print: Feb 2002
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