Estimating the number of new and repeated bidders in construction auctions

Abstract

The number of new bidders-bidders from whom there is no previous registered participation-is an important variable in most bid tender forecasting models, since the unknown competitive profile of the former strongly limits the predictive accuracy of the latter. Analogously, when a bidder considers entering a bid or when an auctioneer is handling a procurement auction, assessing the likely proportion of experienced bidders is considered an important aspect, as some strategic decisions or even the awarding criteria might differ. However, estimating the number of bidders in a future auction that have not submitted a single bid yet is difficult, since there is no data at all linking their potential participation, an essential requirement for the implementation of any forecasting or estimation method. A practical approach is derived for determining the expected proportion of new bidders to frequent bidders as a function of the population of potential bidders. A multinomial model useful for selective and open tendering is proposed and its performance is validated with a dataset of actual construction auctions. Final remarks concern the valuable information provided by the model to an enduring unsolved bidding problem and the prospects for new research continuations.

Standard Deviation of Bids for Construction Contract Auctions

“…Some models focus on anticipating the identities of specific participating bidders (Ballesteros-Pérez et al 2016a). Others anticipate only the number of new bidders (bidders from which there is as yet no previous information), as well as the size of the bidders' population (market size) (Ballesteros-Pérez et al 2019;Ballesteros-Pérez and Skitmore 2016). Finally, models measuring the performance (effectiveness) of some bidders from past auctions have also been proposed (Ballesteros-Pérez et al 2014, 2015a.…”

Enhancement of Bid Decision-Making in Construction Projects: A Reliability Analysis Approach

“…For about 86% of projects in the global market, about 8.7 trillion dollars are spent on public bidding, for allocating projects to contractors (Leśniak, 2015;Ballesteros-Pérez & Skitmore, 2016). Contractors worldwide face the challenging task of bid decision-making and offering a bid price high enough to generate a decent profit and low enough to win the bid (Asgari et al, 2016).…”

“…Few studies have attempted to develop workable, systematic methods for bid decision-making (Sonmez & Sözgen, 2017). Subsequently, there is need for a workable bid decision-making solution that overcomes the deficiencies discussed above, and enhances the accuracy of bid pricing (Ballesteros-Pérez & Skitmore, 2016;Sonmez & Sözgen, 2017). According to Li et al (2020), bid decision-making requires complex maldistributed analysis, for which there exists no comprehensive simple analytical methods.…”