On competitive bidding: scoring and position probability graphs

Iso-score curves graph (iSCG) and mathematical relationships between Scoring Parameters (SP) and Forecasting Parameters (FP) can be used in Economic Scoring Formulas (ESF) used in tendering to distribute the score among bidders in the economic part of a proposal. Each contracting authority must set an ESF when publishing tender specifications and the strategy of each bidder will differ depending on the ESF selected and the weight of the overall proposal scoring. The various mathematical relationships and density distributions that describe the main SPs and FPs, and the representation of tendering data by means of iSCGs, enable the generation of two new types of graphs that can be very useful for bidders who want to be more competitive: the scoring and position probability graphs.

The iso-Score Curve Graph. A new tool for competitive bidding

The present work describes a new tool that helps bidders improve their competitive bidding strategies. This new tool consists of an easy-to-use graphical tool that allows the use of more complex decision analysis tools in the field of Competitive Bidding. The graphic tool described here tries to move away from previous bidding models which attempt to describe the result of an auction or a tender process by means of studying each possible bidder with probability density functions. As an illustration, the tool is applied to three practical cases. Theoretical and practical conclusions on the great potential breadth of application of the tool are also presented.

Military procurement : hearings before a subcommittee of the Committee on Armed Services ... Eighty-sixth Congress, first session, on S. 500, amending Title 10, United States Code, with respect to procurement procedures of the armed services; S. 1383, requiring the use of competitive bidding ... ; [and] S. 1875 ... July 13, 15, 21, 24, 28, and 31, 1959.

Mode of access: Internet.

Scoring rules and abnormally low bids criteria in construction tenders: A taxonomic review

In the global construction context, the Best Value or Most Economically Advantageous Tender is becoming a widespread approach for contractor selection, as an alternative to other traditional awarding criteria such as the Lowest Price. In these multi-attribute tenders, the owner or auctioneer solicits proposals containing both a price bid and additional technical features. Once the proposals are received, each bidder's price bid is given an economic score according to a scoring rule, generally called an Economic Scoring Formula (ESF) and a technical score according to pre-specified criteria. Eventually, the contract is awarded to the bidder with the highest weighted overall score (economic + technical). However, Economic Scoring Formula selection by auctioneers is invariably and paradoxically a highly intuitive process in practice, involving few theoretical or empirical considerations, despite having being considered traditionally and mistakenly as objective, due to its mathematical nature. This paper provides a taxonomic classification of a wide variety of ESF and Abnormally Low Bid Criteria (ALBC) gathered in several countries with different tendering approaches. Practical implications concern the optimal design of price scoring rules in construction contract tenders, as well as future analyses of the effects of ESF and ALBC on competitive bidding behaviour.

Scoring rules and abnormally low bids criteria in construction tenders: a taxonomic review

In the global construction context, the best value or most economically advantageous tender is becoming a widespread approach for contractor selection, as an alternative to other traditional awarding criteria such as the lowest price. In these multi-attribute tenders, the owner or auctioneer solicits proposals containing both a price bid and additional technical features. Once the proposals are received, each bidder’s price bid is given an economic score according to a scoring rule, generally called an economic scoring formula (ESF) and a technical score according to pre-specified criteria. Eventually, the contract is awarded to the bidder with the highest weighted overall score (economic + technical). However, economic scoring formula selection by auctioneers is invariably and paradoxically a highly intuitive process in practice, involving few theoretical or empirical considerations, despite having been considered traditionally and mistakenly as objective, due to its mathematical nature. This paper provides a taxonomic classification of a wide variety of ESFs and abnormally low bids criteria (ALBC) gathered in several countries with different tendering approaches. Practical implications concern the optimal design of price scoring rules in construction contract tenders, as well as future analyses of the effects of the ESF and ALBC on competitive bidding behaviour.

The construction contract bidder homogeneity assumption : an empirical test

This paper describes an empirical study to test the proposition that all construction contract bidders are homogeneous ie. they can be treated as behaving collectively in an identical (statistical) manner. Examination of previous analyses of bidding data reveals a flaw in the method of standardising bids across different size contracts and a new procedure is proposed which involves the estimation of a contract datum. Three independent sets of bidding data were then subjected to this procedure and estimates of the necessary distributional parameters obtained. These were then tested against the bidder homogeneity assumption resulting in the conclusion that the assumption may be appropriate for a three parameter log-normal shape, but not for scale and location.

Contracting for infrastructure projects as credence goods

Large infrastructure projects are a major responsibility of urban and regional governments, who usually lack expertise to fully specify the demanded projects. Contractors, typically experts on such projects due to experience with similar projects elsewhere, advise of the needed design in their bids. Producing the right design is nevertheless costly. We model such infrastructure projects taking into account their credence goods feature and the costly design effort they require and examine the performance of commonly used contracting methods. We show that when building costs are homogeneous and public information, multi-stage competitive bidding involving shortlisting of two contractors and contingent compensation of both contractors on design efforts outperforms sequential search and the traditional Design-and-Build approach. If building costs are private information of the contractors and are revealed to them after design cost is sunk, sequential search may be superior to the other two methods.

Analysis of the distribution of the number of bidders in construction contract auctions

The number of bidders, N, involved in a construction procurement auction is known to have an important effect on the value of the lowest bid and the mark up applied by bidders. In practice, for example, it is important for a bidder to have a good estimate of N when bidding for a current contract. One approach, instigated by Friedman in 1956, is to make such an estimate by statistical analysis and modelling. Since then, however, finding a suitable model for N has been an enduring problem for researchers and, despite intensive research activity in the subsequent thirty years little progress has been made - due principally to the absence of new ideas and perspectives. This paper resumes the debate by checking old assumptions, providing new evidence relating to concomitant variables and proposing a new model. In doing this and in order to assure universality, a novel approach is developed and tested by using a unique set of twelve construction tender databases from four continents. This shows the new model provides a significant advancement on previous versions. Several new research questions are also posed and other approaches identified for future study.

Contractor key competitiveness indicators: A China study

A proper method to assess contractor competitiveness is important both for assisting clients in the selection of proper contractors and for assisting contractors in the development of more competitive bidding strategies. Previous studies have identified various indicators for assessing contractor competitiveness, and several assessment methods have been introduced. Nevertheless, these studies are limited because they are unable to tell which indicators are more important in different market environments. This paper identifies the key competitiveness indicators �KCIs� for assessing contractor competitiveness in the Chinese construction market. An index value is used to indicate the relative significance of various competitiveness indicators based on which KCIs are identified. The data applied in this study are from a survey of the construction industry in mainland China. The research findings provide valuable information for both existing businesses and the construction professionals who plan to compete for construction works in the Chinese market. The study provides useful references for further studies that compare the KCIs used in the Chinese construction industry and those used in other construction industries.

Government initiatives to expand access to employer-based health insurance

Employer-based health insurance is declining at records rates, which leaves an increasing number of people without access to affordable health insurance. As a result, municipalities are experiencing financial difficulties to provide health care services for their growing uninsured population. In attempt to combat this issue, three health polices have emerged within the last ten years, called Living Wage with a health insurance provision, Pay or Play, and Health Care Preference. These policies are gaining popularity as civic leaders recognize their ability to promote a public health goal by leveraging the power of city and county contracts to include a health insurance component in the competitive bidding practice for government contracts. ^ This is the first paper to conduct a retrospective analysis on whether these three health policies have been able to increase access to employer-based health insurance and/or support the local health care safety net based on the experiences of six municipalities over a 5-year period from 2001-2006. Although there was variation between the effectiveness of the policies, all three demonstrated success in that a number of contractors extended existing health insurance to employees not previously covered and the increased cost of contracting for the local government was, on average, less than 1 percent of the total operating budget. ^

The EU power sector needs long-term price signals. CEPS Special Report No. 135/April 2016

By 2030, half of the EU’s electricity demand will be covered by renewables and will need to be accompanied by flexible conventional back-up resources. Due to the high upfront costs inherent to renewables and the progressively lower running times associated with back-up capacity, the cost of capital will have a proportionately greater impact on total costs than today. This report examines how electricity markets can be designed to provide long-term price signals, thereby reducing the cost of capital for these technologies and allowing for a more efficient transition. It finds that current market arrangements are unable to provide long-term price signals. To address this issue, we argue that a system for long-term contracts with a regulated counterparty could be implemented. A centralised system where capacity or energy or a combination of both is contracted, could be introduced for conventional and renewable capacity, based on a regional adequacy assessment and with a competitive bidding system in place to ensure cost-effectiveness. Member states face a number of legislative barriers while implementing these types of systems, however, which could be reduced by merging legislation and setting EU framework rules for the design of these contractual agreements.

Computer aided licence selection

A model of multiple criteria decision making is presented for selecting the “best” of a finite number of alternatives. Techniques of scoring the alternatives and weighting the criteria are combined with different evaluating procedures and amalgamated in an interactive algorithm. Application of this method for choosing the best tender in a competitive bidding is discussed and a case is presented in some detail.