A case-based decision support tool for bid mark-up estimation of international construction projects

The bid mark-up estimation is an unstructured decision problem that is usually solved by intuition. The aim of this paper is to present a decision support tool so that bid mark-up values may be estimated in a more systematic way. For this purpose, various factors that may affect the level of risk, opportunity and competition in a project option have been identified. Using the 95 cases obtained from the Turkish contractors working in international markets, a case-based reasoning model (CBR) has been developed to estimate the risk, opportunity and competition ratings. These ratings are further converted to risk and profit mark-up values by using linear utility functions constructed according to the boundary values which were identified by the respondents considering worst, average and best scenarios. The applicability of the model has been demonstrated on a real case study.

[1]  Ali A. Shash,et al.  Factors affecting a contractor's mark-up size decision in Saudi Arabia , 1992 .

[2]  Min Liu,et al.  Modeling a Contractor’s Markup Estimation , 2005 .

[3]  Tarek Hegazy,et al.  DBID: Analogy‐Based DSS for Bidding in Construction , 1993 .

[4]  Tarek Hegazy,et al.  Analogy‐Based Solution to Markup Estimation Problem , 1994 .

[5]  Weng Tat Chan,et al.  Case-based reasoning approach in bid decision making , 2001 .

[6]  Sangwook Lee,et al.  Bid-markup determination for microtunneling projects , 2004 .

[7]  Ali A. Shash,et al.  SUBCONTRACTORS' BIDDING DECISIONS , 1998 .

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

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

[10]  Simaan M. AbouRizk,et al.  UTILITY-THEORY MODEL FOR BID MARKUP DECISIONS , 1996 .

[11]  Mohammed Fadhil Dulaimi,et al.  The factors influencing bid mark-up decisions of large- and medium-size contractors in Singapore , 2002 .

[12]  David Arditi,et al.  Pricing strategy in the US construction industry , 2001 .

[13]  D. K. H. Chua,et al.  Impacts of Obstacles in East Asian Cross-Border Construction , 2003 .

[14]  M. F. Rubinstein.  Patterns of Problem Solving , 1975 .

[15]  Roger J. Best,et al.  Market-based management: strategies for growing customer value and profitability / Roger J. Best , 1999 .

[16]  Peter E.D. Love,et al.  Combining rule-based expert systems and artificial neural networks for mark-up estimation , 1999 .