Open AccessOptimizing Bidding Strategy of the Roadway Projects – An Application of Utility Function Theory
Author(s) -
Wei Tong Chen,
Ferdinan Nikson Liem,
Tai-Jung Chen,
Theresia Avila Bria
Publication year - 2021
Publication title -
iop conference series. materials science and engineering
Language(s) - English
Resource type - Journals
eISSN - 1757-899X
pISSN - 1757-8981
DOI - 10.1088/1757-899x/1203/2/022141
Subject(s) - bidding , profit (economics) , function (biology) , competitor analysis , construction bidding , operations research , risk analysis (engineering) , business , set (abstract data type) , expected utility hypothesis , ebidding , duration (music) , real time bidding , decision maker , operations management , computer science , microeconomics , economics , marketing , engineering , project management , systems engineering , program management , art , programming language , literature , mathematical economics , evolutionary biology , pre construction services , biology
The "A+B" bid method is determined by the lowest combined bid. Contractors must greatly shorten construction time to be able to win bidding competitions. However, the risk under the shortened duration of construction increased rapidly. For this reason, it is important to propose a bidding strategy to acquire the best composition of construction cost and time. This research targeted contractors with a questionnaire regarding A+B bidding in Taiwan by applied “Utility Function Theory” to construct a decision model of the best construction cost and time. It was found that the optimal profit regressed from the modified utility function differs from contractors’ preliminary bids. In the situation that the difference in basic profits is not large, contractors can set up a decision maker’s utility function based on their ability to take a risk and simulate the major competitors based on experience to judge the potential success and risk from shortening the construction time.