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Development of multi-criteria decision analysis models for bidding and contractor selection.

Abu-Shabeen, Nadine Nabeel (2008) Development of multi-criteria decision analysis models for bidding and contractor selection. PhD thesis, edinburgh Napier University.

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    Abstract/Description

    Estimating and bidding a job is one of those essential processes at the heart of a
    contractor's business. Risk and uncertainty are major considerations in bidding
    decisions for construction projects. Numerous factors need to be taken into account
    when making bidding decisions which make them multi-criteria decisions.
    The present study focuses on developing multi-criteria decision making models to
    assist in bidding decisions. The Analytical Hierarchy Process (AHP), which is a
    multi-criteria decision making tool, is used to quantify risk encountered in bidding
    decisions. The AHP has been employed to model both the bid/no bid and mark-up
    decisions. The data required for this study was collected from thirty firms operating in
    Gaza Strip by way of a written structured questionnaire. The data was analysed using
    the Criterium Decision Plus Software based on the AHP. Ten factors were selected to
    affect bid/no bid decisions while eleven factors were chosen to influence mark-up
    decision. Results from the questionnaire survey supported previous studies that profit
    is not the most important factor in making bid/no bid and mark-up decisions. The
    results also indicate that the most important factors when making the bid/no bid
    decision are: the 'need for work' followed by the 'company strength in industry' and
    'payment methods'. For the mark-up decision, the 'need for work', 'owner/client and
    consultant identity' and 'project size' are the most important factors. A real life case
    study was used to demonstrate the application of the two models. Twelve meetings
    were conducted with a contractor working in Gaza Strip construction industry in order
    to gather the required data for the validation. The case study consisted of three
    different projects, road works, electromechanical and building projects, and the
    contractor had to make a decision on which projects to bid for and then which of them
    will result in a higher mark-up. The validity of the two models was confirmed by
    applying a two-stage Linear Programming (LP) approach to the data obtained from
    the case study. The results from the LP approach agreed with the outcome from the
    AHP. The developed AHP models can be easily used by the contractors to assist in
    making bid/no bid and mark-up decisions.
    This study investigates the Fuzzy Sets Theory, which is a mathematical approach used
    to characterise and quantify uncertainty, as a bidding strategy. This study summarises
    the work that has been done to-date reviewing the fundamental concepts and
    applications of the Fuzzy Sets Theory in construction. Fuzzy Sets Theory was found
    to be used widely in construction research but most studies were found theoretical.
    The research also examines the challenges of using the reverse auction as an open
    bidding process. In construction industry, reverse auction is one such technique that
    uses secured Internet technology for tendering process. Advantages of on-line bidding
    include: the ability to submit more than one bid, time benefits, increasing
    competitiveness among contractors and attracting unknown bidders. The main
    drawback of reverse auctions is that the award of the product/service will be based on
    the price rather than on the quality of the product or service. Furthermore, security
    and legal issues need further considerations when forming e-contracts for the
    procurement of construction services.
    Selecting a suitable contractor to execute a particular project is an important decision
    for the client to take. Awarding construction contracts based on the price only is not
    always a successful strategy for contractor selection as it could result in construction
    delays and cost overruns. In addition to price, factors such as quality and safety need
    to be taken into account when making the contractor selection decision. In this study,
    two methods for contractor selection were compared: the points method and the
    Analytical Hierarchy Process. The two methods were applied to a real life case study
    for contractor selection. Financial and Quality factors were considered to affect the
    contractor selection decision. Both methods resulted in selecting the same contractor
    for executing the project under consderation. The Analytical Hierarchy process
    provides a flexible and computer based method for contractor selection decision.

    Item Type: Thesis (PhD)
    Uncontrolled Keywords: estimating; contracting; bidding; risk; multi-criteria decision making models; Analytical Hierarchy Process;
    University Divisions/Research Centres: Faculty of Engineering, Computing and Creative Industries > School of Engineering and the Built Environment
    Dewey Decimal Subjects: 600 Technology > 690 Building & construction > 692 Auxiliary construction practices
    600 Technology > 650 Management & public relations > 658 General management
    Library of Congress Subjects: T Technology > TH Building construction
    Item ID: 3746
    Depositing User: Mrs Lyn Gibson
    Date Deposited: 05 May 2010 11:55
    Last Modified: 12 Jan 2011 04:55
    URI: http://researchrepository.napier.ac.uk/id/eprint/3746

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