Overhead Costs and Profit Calculation by Polish Contractors

Plebankiewicz, Edyta; Leśniak, Agnieszka

doi:10.3846/20294913.2012.763008

Cited by 31 publications

(21 citation statements)

References 32 publications

(29 reference statements)

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“…Therefore, many authors refer to artificial intelligence techniques that capture relationships between contract properties and mark-up value, consider more criteria than just profit maximisation, and allow for the uncertainty of input using, e.g., fuzzy logic. Tools based on Artificial Neural Network have been proposed by, among others, Moselhi et al (1993), Li and Love (1999), or Leśniak and Plebankiewicz (2013). Wang et al (2007) integrated cost model and multicriteria evaluation to provide a more flexible way of defining the bid price.…”

Section: Defining the Bid Price When Cheapest Bid Winsmentioning

confidence: 99%

Modelling contractor’s bidding decision

Biruk

Jaśkowski

Czarnigowska

2017

Engineering Management in Production and Services

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A B S T R A C TThe authors aim to provide a set of tools to facilitate the main stages of the competitive bidding process for construction contractors. These involve 1) deciding whether to bid, 2) calculating the total price, and 3) breaking down the total price into the items of the bill of quantities or the schedule of payments to optimise contractor cash flows. To define factors that affect the decision to bid, the authors rely upon literature on the subject and put forward that multi-criteria methods are applied to calculate a single measure of contract attractiveness (utility value). An attractive contract implies that the contractor is likely to offer a lower price to increase chances of winning the competition. The total bid price is thus to be interpolated between the lowest acceptable and the highest justifiable price based on the contract attractiveness. With the total bid price established, the next step is to split it between the items of the schedule of payments. A linear programming model is proposed for this purpose. The application of the models is illustrated with a numerical example. The model produces an economically justified bid price together with its breakdown, maintaining the logical proportion between unit prices of particular items of the schedule of payment. Contrary to most methods presented in the literature, the method does not focus on the trade-off between probability of winning and the price but is solely devoted to defining the most reasonable price under project-specific circumstances. The approach proposed in the paper promotes a systematic approach to real-life bidding problems. It integrates practices observed in operation of construction enterprises and uses directly available input. It may facilitate establishing the contractor's in-house procedures and managerial decision support systems for the pricing process. K E Y W O R D S decision support; decision to bid; pricing strategy, contractor cash flows, linear programming

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Section: Defining the Bid Price When Cheapest Bid Winsmentioning

confidence: 99%

Modelling contractor’s bidding decision

Biruk

Jaśkowski

Czarnigowska

2017

Engineering Management in Production and Services

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“…This requires big flexibility and ability in the area of adjusting to changing conditions. In order to maintain and even to improve the position of a construction enterprise on the construction market, it is necessary to use methods that aid management [4,[14][15][16][17]20,22,[24][25][26]31]. One such method is the use of the process approach to management which is promoted by ISO 9001 standards which involve the identification, analysis and evaluation of processes and making corrective changes if needed.…”

Section: Introductionmentioning

confidence: 99%

Identification and evaluation of processes in a construction enterprise

Hoła

2015

Archives of Civil and Mechanical Engineering

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“…The unit price must include all of the mentioned cost's elements. Traditional method of cost estimating is based on calculation of costs elements of separately: the direct cost (labour, materials, and equipment), indirect cost, and profit [19]. This traditional approach is accurate but time consuming, and therefore new methods are still being sought by means of new mathematical tools that can support the effectiveness of the calculation.…”

Section: Literature Reviewmentioning

confidence: 99%

“…This traditional approach is accurate but time consuming, and therefore new methods are still being sought by means of new mathematical tools that can support the effectiveness of the calculation. Studies that are worth considering include ones that are employing artificial neural networks [20][21][22], linear regression [23], fuzzy sets [19], and support vector machines [24]. Researchers [25] proposed a hybrid model where multivariate regression method and the artificial neural network (ANN) method have been combined to provide a cost estimate model.…”

Section: Literature Reviewmentioning

confidence: 99%

Cost Calculation of Construction Projects Including Sustainability Factors Using the Case Based Reasoning (CBR) Method

Leśniak

Zima

2018

Sustainability

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Abstract:The idea of sustainable development and the resulting environmentally friendly attitudes are increasingly used in construction projects. Designing in accordance with the principles of sustainable development has an impact on the costs of construction works. The authors of this paper proposed an approach to estimate the costs of sports field construction using the Case Based Reasoning method. In their analysis, they distinguished 16 factors that affect the cost of a construction project and are possible to already be described at an early stage of its preparation. The original elements of the work include: consideration of such environmental factors as the environmental impact of the building, materials used, the impact of the facility on the surroundings affecting the amount of implementation costs and development of own database containing 143 construction projects that are related to sports fields. In order to calculate the similarity of cases, different calculation formulas were applied depending on the type of data (quantitative, qualitative, uncertain, no data). The obtained results confirmed that the CBR method based on historical data and using criteria related to sustainable development may be useful in cost estimation in the initial phase of a construction project. Its application to the calculation of the costs that are related to the implementation of sports fields generates an error of 14%, which is a very good result for initial calculations. In the short run, such factors as the impact of the object and the type of materials that are used from the perspective of their influence on the environment may be decisive as far as the costs determined in the life cycle of the building are concerned, as well as the lowest costs of the building construction ensuring the appropriate quality and respect for the environment.

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Overhead Costs and Profit Calculation by Polish Contractors

Cited by 31 publications

References 32 publications

Modelling contractor’s bidding decision

Modelling contractor’s bidding decision

Identification and evaluation of processes in a construction enterprise

Cost Calculation of Construction Projects Including Sustainability Factors Using the Case Based Reasoning (CBR) Method

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