Unbalanced bidding in construction projects: a contractors’ perspective

Abstract

Published research on unbalanced bidding either shows the owners’ perspective or intends to represent the contractors’ views through theoretical models. This paper aims to reflect the contractors’ perspective on this topic through an empirical approach. 86 interviews with experienced contractors in the Jordanian construction field were held and their standpoints on unbalanced bidding were obtained and analyzed. The analysis reveals that front end loading and quantity error exploitation are the most widely used forms of unbalanced bidding. The main motives for adopting unbalanced pricing are found to be; increasing chances of winning bids; improving project’s profitability; and minimizing financing costs of projects. The surveyed contractors showed deep understanding of the risks associated with this practice on both the contractor and owner alike to the extent that the majority thereof surprisingly asked for explicit prohibition on this practice in bidding regulations. The paper provides some practical recommendations to that aim at limiting this practice. The outcomes of the paper should prove to be useful to owners in shaping policies regarding unbalanced pricing in bidding documents as well as understanding contractors’ motives to this practice. Although the survey was conducted in Jordan, the results obtained is expected to have much wider applicability, and recommendations obtained can be useful in many other countries.

Keywords:

• Bid evaluation
• competitive bidding
• contractors
• contracts
• pricing
• skewed pricing
• unbalanced

Disclosure statement

No potential conflict of interest was reported by the author(s).