Release of Construction Clients’ Pre-tender Cost Estimates: An Experimental Study

Abstract

Clients engage consultant quantity surveyors or cost engineers to perform project cost estimates before calling for tender submissions. This experimental study examines the impact of releasing the clients’ pre-tender cost estimates prior to bidding on student subjects’ bidding behavioural patterns, and the extents to which their bidding tends to agree with the behavioural patterns proposed by Milgrom and Weber’s theory. The results show that the provision of clients’ pre-tender cost estimates prior to bidding does affect bidders’ bidding behaviour. Bidders with access to the clients’ pre-tender cost estimates prior to bidding, on average, recorded lower bids than those with no access to the estimate. However, the lower average bids do not result in statistically significant lower winning bids. These findings provide evidence in support of Milgrom and Weber’s theory, demonstrating the practicality of an experimental approach using student subjects for testing theories in building economics research. The practical implication is that construction clients would need to consider their information policy on releasing pre-tender cost estimates to enhance efficiency in their procurement for construction services.

SPCTR: Sealed Auction-Based Procurement for Closest Pre-Tender with Range Validation

“…In the first case, Alice is corrupted, and in the second case, Bob is corrupted. In each case, we can finally infer that equation (1) holds. erefore, we conclude that the algorithm Π is secure against semihonest adversaries.…”

“…For leveraging the competitive nature of suppliers to keep the procurement cost reasonable, the auction mechanism is introduced in the procurement. Pre-tender bidding, a popular type of auction-based procurement bidding, is widely used as a standard business requirement for many organizations in recent years [1,2]. In what follows, the process of pre-tender bidding is briefly described.…”