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.

Available under License Creative Commons Attribution Non-commercial.

Download (63MB)


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 10:55
Last Modified: 12 Jan 2011 04:55

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics

Edinburgh Napier University is a registered Scottish charity. Registration number SC018373