a logistic regression approach to modelling the contractor's decesion to bid

A logistic regression approach to modelling the contractor's decesion to bid

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Introduction The bidding process involves two crucial decisions: first, whether or not to bid for a project and, second, the determination of the bid price (Shash, 1993). While the latter has been subject to intense research interest (for example, Friedman, 1956; Gates, 1967; Willenbrock, 1972; Fine, 1975; Carr, 1982; Moselhi et al ., 1991; Dozzi and AbouRizk, 1996; Li and Love, 1999; Chua and Li, 2000; Dulaimi and Shan, 2002; Marzouk and Moselhi, 2003), there has been comparatively little in the way of objective research into the former. The bid/no-bid decision is both complex and dy- namic, involving many factors (Shash, 1993), while the selection of the most appropriate projects for which to bid is fundamental to a successful commercial strategy. Moreover, the decision to bid, as with that of determin- ing the project mark-up, is very important as success or failure of a contractor’s business lies in the outcome derived from those decisions. What evidence there is, however, suggests that this decision is usually deter- mined by subjective rather than objective information (Fellows and Langford, 1980; Ahmad and Minkarah, 1988; Shash, 1998). Improvement in the contractor’s selection of projects would give significant benefit to the construction industry and consequently to its clients. Further, a suitable decision support model can be a stra- tegic tool in determining the most appropriate projects to seek and for which to submit a bid. The aim of the paper is to: investigate and analyse the factors that influence the decision to bid process; and model the decision to bid process and in doing so, to distinguish relationships within the decision domain. Background Previous research into the decision to bid Construction organizations are required to be selective, choosing which work they will tender for from a Construction Management and Economics (July 2004) 22 , 643–653 A logistic regression approach to modelling the contractor’s decision to bid DAVID J. LOWE * and JAMSHID PARVAR Project Management Division, Manchester Centre for Civil and Construction Engineering, UMIST, Manchester M60 1QD, UK Received 6 June 2003; accepted 17 November 2003 Significant factors in the decision to bid process are identified and a pro-forma to elicit a numerical assessment of these factors is developed and validated using the bid/no-bid decision-makers from a UK construction company. Using the pro-forma, data were collected from the collaborating company for historical bid opportunities. Statistical techniques are used to gain a better understanding of the data characteristics and to model the process. Eight variables have a significant relationship with the decision to bid outcome and for which the decision- makers are able to discriminate. Factor analysis is used to identify the underlying dimensions of the pro-forma and to validate functional decomposition of the factors. Finally, two logistic regression models of the decision to bid process are developed. While one model is ultimately rejected, the selected model is capable of classifying the total sample with an overall predictive accuracy rate of 94.8%. The results, therefore, demonstrate that the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/06/2011 for the course ETHICS 234 taught by Professor Shah during the Spring '11 term at Birla Institute of Technology & Science, Pilani - Hyderabad.

Page1 / 12

A logistic regression approach to modelling the contractor's decesion to bid

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online