Abstract
Reverse auction theory is the basis for competitive construction bidding process. The lowest bid method is utilized for selecting contractors in public projects. The winning contractor having the lowest bid value could be cursed when the submitted bid value results in negative profits. This is caused by many factors such as the contractor's estimation accuracy and markup. This is addressed in this paper by providing a model simulating the construction competitive bidding and the occurrence of the winner's curse. To this end, the authors show the extent to which the winner's curse affects the status of contracting companies. The objectives are to understand the characteristics of the competitive bidding phase in construction and to study the behavior of contractors subject to competitive bidding and the occurrence of the winner's curse. As such, the authors implemented a two-step methodology that incorporates (1) developing a general simulation model involving a population of contractors and projects using agentbased modeling for the competitive bidding process and (2) analyzing the results of the simulation model. This model should provide a better understanding to the construction profession as in contractors, project owners and Departments of Transportation of how decisions are made in this bidding environment.
Recommended Citation
A. Elsayegh et al., "An Agent-Based Model to Study Competitive Construction Bidding and the Winner's Curse," Procedia Computer Science, vol. 168, pp. 147 - 153, Elsevier B.V., May 2020.
The definitive version is available at https://doi.org/10.1016/j.procs.2020.02.278
Meeting Name
Complex Adaptive Systems Conference (2019: Nov. 13-15, Malvern, PA)
Department(s)
Engineering Management and Systems Engineering
Second Department
Civil, Architectural and Environmental Engineering
Keywords and Phrases
Agent-based modeling; Construction bidding; Contracting; Simulation; Winner's curse
International Standard Serial Number (ISSN)
1877-0509
Document Type
Article - Conference proceedings
Document Version
Final Version
File Type
text
Language(s)
English
Rights
© 2020 The Authors, All rights reserved.
Creative Commons Licensing
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Publication Date
13 May 2020
Included in
Civil Engineering Commons, Operations Research, Systems Engineering and Industrial Engineering Commons
