Bid/no-bid decision factors for Chinese international contractors in international construction projects

Factors affecting bid/no-bid decisions of international projects are more complex than those of domestic projects. The purpose of this paper is to identify and rank decision factors considered by variously sized Chinese international contractors (CICs) and categorize those groups of factors important to experienced practitioners.,The analysis of factors identified by a literature review is conducted based on data derived from questionnaire results received from 119 CIC project and bidding managers. The relative importance of factors is measured by mean value and standard deviation. The discrepancy in rank and importance value perceived by variously sized CICs are explored by ranking disparity analysis, non-parametric test and Spearman’s rank correlation coefficient test. Finally, factor analysis is used to categorize the underlying groups of factors considered by CICs.,In sum, 41 factors are identified through the literature review as having an impact on the bid decision. Significant disparities in ranking and importance are found in several factors, which partially affect the consistency of the ranking of factors perceived between large and small-medium CICs. Ultimately, nine major factors are identified as impacting the bidding decision, with “contractor’s capability” and “country risk of the host country,” being the most important.,The weight of a factor considered in a decision varies across contractors as a function of contractor size. Whether using models or subjective judgment in making decisions, it is beneficial to fully understand the main groups of factors influencing the decision. Vulnerability to country risk emerges as the first criterion accessed in the bid decision.,A comprehensive set of factors is established for CICs, including both general factors common to domestic projects, and international factors unique to international projects. All factors are grouped by inferential analysis from the perspective of contractors, which reveals the underlying mechanism of the bid decision-making process. While the data were collected from CICs, the methodology in exploring factors, along with implications, is determined to be applicable internationally.

[1]  Seung Heon Han,et al.  Predicting Profit Performance for Selecting Candidate International Construction Projects , 2007 .

[2]  Chris Hendrickson,et al.  EXCHANGE RATE RISK MANAGEMENT IN INTERNATIONAL CONSTRUCTION VENTURES , 2001 .

[3]  Agnieszka Leśniak,et al.  Modeling the Decision-Making Process Concerning Participation in Construction Bidding , 2015 .

[4]  Mohammad S. El-Mashaleh,et al.  Empirical Framework for Making the Bid/No-Bid Decision , 2013 .

[5]  K. Muralidhar,et al.  Enterprise risk management in the Middle East oil industry , 2010 .

[6]  Chris Fortune,et al.  BID/ NO-BID DECISION MODELLING FOR CONSTRUCTION PROJECTS , 2006 .

[7]  Oluwole Alfred Olatunji,et al.  Bid or no-bid decision factors of indigenous contractors in Nigeria , 2017 .

[8]  Derek S. Drew,et al.  Heterogeneous Approach to Modeling Contractors' Decision-to-Bid Strategies , 2008 .

[9]  Beverly A. Sauer,et al.  Communicating Risk in a Cross-Cultural Context , 1996 .

[10]  D. K. H. Chua,et al.  Key Factors in Bid Reasoning Model , 2000 .

[11]  Irem Dikmen,et al.  Neural Network Model to Support International Market Entry Decisions , 2004 .

[12]  Emad Mohamed,et al.  Modeling bid/no bid decisions using fuzzy fault tree , 2018 .

[13]  A. Bageis,et al.  Factors affecting the bid/no bid decision in the Saudi Arabian construction contractors , 2009 .

[14]  He Zhi,et al.  Risk management for overseas construction projects , 1995 .

[15]  Harri Haapasalo,et al.  Business models and project selection in construction companies , 2015 .

[16]  Nicholas Chileshe,et al.  Critical factors influencing the bid/no bid decision in the Australian construction industry , 2016 .

[17]  A. B. Ngowi,et al.  The globalisation of the construction industry - A review , 2005 .

[18]  Abraham Warszawski.  Strategic planning in construction companies , 1996 .

[19]  Abdulrezak N. Mohamed,et al.  SCBMD: A knowledge-based system software for strategically correct bid/no bid and mark-up size decisions , 2008 .

[20]  A. Shash.  Factors considered in tendering decisions by top UK contractors , 1993 .

[21]  Xueqing Zhang,et al.  Factor Analysis of Public Clients’ Best-Value Objective in Public–Privately Partnered Infrastructure Projects , 2006 .

[22]  R. Orr,et al.  AN EMPIRICAL ANALYSIS OF CHINESE CONSTRUCTION FIRMS' ENTRY INTO AFRICA , 2007 .

[23]  S. El-Sayegh.  Risk assessment and allocation in the UAE construction industry , 2008 .

[24]  Seung Heon Han,et al.  Multicriteria Financial Portfolio Risk Management for International Projects , 2004 .

[25]  Seung Heon Han,et al.  Causes of Bad Profit in Overseas Construction Projects , 2007 .

[26]  Yong Qiang Chen,et al.  Risk perception and propensity in bid/no-bid decision-making of construction projects , 2015 .

[27]  David Arditi,et al.  Factors Affecting International Construction , 2005 .

[28]  Benson T.H. Lim,et al.  The effect of bidding success in construction bidding , 2012 .

[29]  Igor Martek,et al.  International Market Selection Model for Large Chinese Contractors , 2016 .

[30]  S. H. Han,et al.  Quantitative Analysis for Country Classification in the Construction Industry , 2017 .

[31]  L. Friedman.  A Competitive-Bidding Strategy , 1956 .

[32]  E. Pellicer,et al.  Factors affecting contractor’s bidding success for international infrastructure projects in Australia , 2017 .

[33]  Paul. Olomolaiye,et al.  Critical success criteria for mass house building projects in developing countries , 2008 .

[34]  Irem Dikmen,et al.  Identification of Risk Paths in International Construction Projects Using Structural Equation Modeling , 2011 .

[35]  Irem Dikmen,et al.  Using fuzzy risk assessment to rate cost overrun risk in international construction projects , 2007 .

[36]  Robert A. Rubin,et al.  Construction Law and Practice in Japan , 1988 .

[37]  Irtishad Ahmad.  Decision‐Support System for Modeling Bid/No‐Bid Decision Problem , 1990 .

[38]  Seung Heon Han,et al.  Approaches for Making Risk-Based Go/No-Go Decision for International Projects , 2001 .

[39]  P. Lam,et al.  Critical Success Factors for PPPs in Infrastructure Developments: Chinese Perspective , 2010 .

[40]  Will Hughes,et al.  The impact of contract duration on the cost of cash retention , 2000 .

[41]  Mohammed Wanous,et al.  To bid or not to bid: a parametric solution , 2000 .

[42]  Ibrahim Mahamid,et al.  Factors affecting contractor's business failure: contractors' perspective , 2012 .

[43]  Abdulaziz M. Jarkas,et al.  Critical Factors Determining Bid/No Bid Decisions of Contractors in Qatar , 2014 .

[44]  Peter M. Bentler,et al.  Practical Issues in Structural Modeling , 1987 .

[45]  R. Fellows,et al.  An examination of the importance of resource considerations when contractors make project selection decisions , 1992 .

[46]  David B. Ashley,et al.  Political Risks in International Construction , 1987 .

[47]  Zhen Yu Zhao,et al.  Are Chinese contractors competitive in international markets? , 2008 .

[48]  Irem Dikmen,et al.  A case-based decision support tool for bid mark-up estimation of international construction projects , 2007 .

[49]  Derek S. Drew,et al.  Applying a random coefficients logistic model to contractors' decision to bid , 2007 .

[50]  Xianbo Zhao,et al.  Project System Vulnerability to Political Risks in International Construction Projects: The Case of Chinese Contractors , 2014 .

[51]  Edward J. Jaselskis,et al.  BIDDING CONSIDERATIONS IN DEVELOPING COUNTRIES , 1998 .

[52]  Sherif Ali Mohtady Mohamed,et al.  Factors affecting the bid/no bid decision in the Palestinian construction industry , 2010 .

[53]  Hamzah Abdul-Rahman,et al.  The impact of organizational culture on international bidding decisions: Malaysia context , 2015 .

[54]  Mohammed Wanous,et al.  A neural network bid/no bid model: the case for contractors in Syria , 2003 .

[55]  Aminah Robinson Fayek,et al.  A survey of the bidding practices of Canadian civil engineering construction contractors , 1999 .

[56]  M. Wanous,et al.  TENDERING FACTORS CONSIDERED BY SYRIAN CONTRACTORS , 1998 .

[57]  Bon-Gang Hwang,et al.  Critical success factors for enterprise risk management in Chinese construction companies , 2013 .

[58]  M. Cheng,et al.  Bidding Decision Making for Construction Company using a Multi-criteria Prospect Model , 2011 .

[59]  Raymond Y. C. Tse,et al.  Cultural Considerations in International Construction Contracts , 2003 .

[60]  M. Dulaimi,et al.  Risk management framework for construction projects in developing countries , 2004 .

[61]  Adam J. Koch.  Selecting overseas markets and entry modes: two decision processes or one? , 2001 .

[62]  Abdulrezak N. Mohamed,et al.  A framework for contractors to reach strategically correct bid/no bid and mark-up size decisions , 2007 .

[63]  Miroslaw J. Skibniewski,et al.  Comparison of U.S. and Japanese Practices in Public Construction , 1989 .

[64]  Makarand Hastak,et al.  ICRAM-1: Model for International Construction Risk Assessment , 2000 .

[65]  F. Musso,et al.  How Do Smaller Firms Select Foreign Markets? , 2012 .

[66]  Irtishad Ahmad,et al.  Questionnaire Survey on Bidding in Construction , 1988 .

[67]  Peter R H Wood,et al.  International market selection by business service firms: Key conceptual and methodological issues , 1994 .