Optimal bid model for construction contracts

Abstract

Construction clients are increasingly calling for bids that require contractors to submit both bid price and highlight sustainability attributes. Contractors are faced with the problem of deciding which combination of bid price and sustainability attributes to submit. An important consideration is the cost of sustainability attributes to the client. This varies between contracts and types of projects. This paper proposes the use of a sustainability unit value which the client can use as a basis for determining the contractor's total combined bid. This kind of procurement method is traditionally known as the A+B method. To illustrate the mechanism of price-sustainability attribute bi-parameter procurement, a total combined ISO-map is developed. The contractor's price-sustainability performance curve is then incorporated into the map to determine the contractor's optimal bid parameters: tender price and sustainability performance. A mathematical optimisation bid model is developed for calculating the optimal bid parameters.