Multi-criteria decision making for identification of unbalanced bidding
Abstract
Unbalanced bidding is a serious problem in the competitive bidding practices of construction projects. Identification and prevention of unbalanced bidding is an important and complexity task for owners. This paper aims to propose an identification model of unbalanced bidding from multi-criteria decision making (MCDM) perspective. The VIKOR method is employed to detect unbalanced bidding, in which the line items and bidders are considered as criteria and alternatives in MCDM, respectively. And the engineer’s estimated price is chosen as evaluation benchmarking. Then relative distances between engineer’s estimated price and each bidding unit price are calculated to build decision matrix. The weights of factors are determined using entropy weight method. To illustrate the effectiveness of the proposed model, an application example is tested in detecting unbalanced bidding. Finally, the sensitivity analysis about VIKOR method is given. It shows that the presented model would provide a robust decision making support for owner in identifying unbalanced bidding.
First published online 18 December 2019
Keyword : project management, unbalanced bidding, multi-criteria decision making, VIKOR
How to Cite
Su, L., Wang, T., Li, H., Chao, Y., & Wang, L. (2020). Multi-criteria decision making for identification of unbalanced bidding. Journal of Civil Engineering and Management, 26(1), 43-52. https://doi.org/10.3846/jcem.2019.11568
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Afshar, A., & Amiri, H. (2010b). Risk-based approach to unbalanced bidding in construction projects. Engineering Optimization, 42(4), 369-385. https://doi.org/10.1080/03052150903220964
An, X. W., Li, H. M., Zuo, J., Ojur, O., Wang, Z., & Ding, J. (2018). Identification and prevention of unbalanced bids using the unascertained model. Journal of Construction Engineering and Management, 144(11), 05018013. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001563
Arditi, D., & Chotibhongs, R. (2009). Detection and prevention of unbalanced bids. Construction Management and Economics, 27(8), 721-732. https://doi.org/10.1080/01446190903117785
Bajari, P., Houghton, S., & Tadelis, S. (2014). Bidding for incomplete contracts: An empirical analysis of adaptation costs. NBER Working Papers, 104(4), 1288-1319. https://doi.org/10.1257/aer.104.4.1288
Burnett, J. E., & Wampler, B. M. (1998). Unit price contracts: A practical framework for determining competitive bid prices. Journal of Applied Business Research, 14, 63-72. https://doi.org/10.19030/jabr.v14i3.5704
Cattell, D. (2013). The highs and lows of unbalanced bidding models. In Proceedings of CIB World Building Congress. Queensland University of Technology, Brisbane, Australia.
Cattell, D., Bowen, P., & Kaka, A. (2004). A model to distribute mark-up amongst quotation component item prices: An outline. In Proceedings of the 2nd Postgraduate Conference on Construction Industry Development, Construction Industry Development Board (pp.154-165). Cape Town, Republic of South Africa.
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2007). Review of unbalanced bidding models in construction. Journal of Construction Engineering and Management, 133(8), 562-573. https://doi.org/10.1061/(ASCE)0733-9364(2007)133:8(562)
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2008). A simplified unbalanced bidding model. Construction Management and Economics, 26(12), 1283-1290. https://doi.org/10.1080/01446190802570506
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2010). The risks of unbalanced bidding. Construction Management and Economics, 28(4), 333-344. https://doi.org/10.1080/01446191003663264
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2011). Proposed framework for applying cumulative prospect theory to an unbalanced bidding model. Journal of Construction Engineering and Management, 137(12), 1052-1059. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000367
Christodoulou, S. E. (2008). A bid-unbalancing method for lowering a contractor’s financial risk. Construction Management and Economics, 26(12), 1291-1302. https://doi.org/10.1080/01446190802596238
Chotibhongs, R. (2011). Managing the bidding process for the construction owner-detection and prevention of unbalanced bids and collusive bids (PhD thesis). Illinois Institute of Technology, Chicago.
Dong, J. Y., Yuan, F. F., & Wan, S. P. (2017). Extended VIKOR method for multiple criteria decision-making with linguistic hesitant fuzzy information. Computers and Industrial Engineering, 112, 305-319. https://doi.org/10.1016/j.cie.2017.07.025
Doran, D. (2004). FMI/CMAA. Survey of construction industry ethical practices (Technical Report). McLean, VA: FMI Consulting and Construction Management Association of America.
Gates, M. (1967). Bidding strategies and probabilities. Journal of the Construction Engrg Division, 93(C01), 75-107.
Hyari, K. H. (2016). Handling unbalanced bidding in construction projects: Prevention rather than detection. Journal of Construction Engineering and Management, 142(2), 04015060. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001045
Hoogenboom, J., Dale, W. S., & Martell, C. (2006). Risk analysis and optimization of the (un)balanced bid. AACE International Transactions, R171-R176.
Hyari, K. H., Tarawneh, Z. S., & Katkhuda, H. N. (2016). Detection model for unbalanced pricing in construction projects: A risk-based approach. Journal of Construction Engineering and Management, 142(2), 04016078. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001203
Hyari, K. H., (2017a). The controversy around unbalanced bidding in construction: Seeking a fair balance. Journal of Professional Issues In Engineering Education and Practice, 143(1), 04016015. https://doi.org/10.1061/(ASCE)EI.1943-5541.0000300
Hyari, K. H. (2017b). Owner’s countermeasures to skewed bidding in construction projects: Review of current practices and proposal for new countermeasures. Journal of Construction Engineering and Management, 33(3), 04016053. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000502
Lan, S. L., Yang, C., & Huang, G. Q. (2017). Data analysis for metropolitan economic and logistics development. Advanced Engineering Informatics, 32, 66-76. https://doi.org/10.1016/j.aei.2017.01.003
Liu, X., Lin, L., & Zang, D. (2009). Stochastic programming models and hybrid intelligent algorithm for unbalanced bidding problem. Computer and Information Science, 2(1), 188-194. https://doi.org/10.5539/cis.v2n1p188
Liu, P. D., & Qin, X. Y. (2017). An extended VIKOR method for decision making problem with interval-valued linguistic intuitionistic fuzzy numbers based on entropy. Informatica, 28, 665-685. https://doi.org/10.15388/Informatica.2017.151
Mandell, S., & Nystrom, J. (2011, June). Endogenous risk in unbalanced bidding. In Conference “Management and Innovation for a Sustainable Built Environment” (MISBE2011), Delft University of Technology, Delft, Netherlands.
Manzo, F. A., & Tell, S. (1997). Unbalanced bids and avoiding disputes relating to them (Chapter 7). In N. Sweeney (Ed.), Wiley construction law update. Hoboken, NJ: Wiley.
Renes, S. (2011). Balancing the bids, solutions for unit price auctions. Rotterdam: Tinbergen Institute. https://doi.org/10.2139/ssrn.1775968
Renes, S. (2012). Fighting skewed bids in the EU, a comparative analysis. Rotterdam: Erasmus School of Law.
Shemshadi, A., Shirazi, H., Toreihi, M., & Tarokh, M. J. (2011). A fuzzy vikor method for supplier selection based on entropy measure for objective weighting. Expert Systems with Applications, 38(10), 12160-12167. https://doi.org/10.1016/j.eswa.2011.03.027
Shrestha, P. P., Shrestha, K., & Joshi, V. (2012, November). Investigation of unbalanced bidding for economic sustainability. In International Conference on Sustainable Design, Engineering, and Construction (ICSDEC 2012) (pp. 609-616). Fort Worth, Texas, USA. https://doi.org/10.1061/9780784412688.073
Simanaviciene, R., & Ustinovichius, L. (2010). Sensitivity analysis for multiple criteria decision making methods: TOPSIS and SAW. Procedia – Social and Behavioral Sciences, 2, 7743-7744. https://doi.org/10.1016/j.sbspro.2010.05.207
Son, J., Mack, M., & Mattila, K. G. (2006). Nonlinear cash flow optimization model. Canadian Journal of Civil Engineering, 33, 1450-1454. https://doi.org/10.1139/l06-086
Stramarcos, A., & Cattell, D. (2013). The ethics of item pricing. In 38th Australian University Building Educators Association Conference. Australasian Universities Building Education Association (AUBEA), Auckland, New Zealand.
Stark, R. M. (1968). Unbalanced bidding models – theory. Journal of Construction Division, 94(CO2), 197-209.
Stark, R. M. (1972). Technical note. Unbalancing of tenders. Proceedings of the Institute of Civil Engineers, 51(2), 391-392. https://doi.org/org/10.1680/iicep.1972.5968
Stark, R. M. (1974). Unbalanced highway contract tendering. Operations Research Quarterly, 25(3), 373-388. https://doi.org/10.2307/3007925
Wang, W. C. (2004). Electronic-based procedure for managing unbalanced bids. Journal of Construction Engineering and Management, 130(3), 455-460. https://doi.org/10.1061/(ASCE)0733-9364(2004)130:3(455)
Wu, G. D., Duan, K. F., Zuo, J., Zhao, X. B., & Tang, D. Z. (2017). Integrated sustainability assessment of public rental housing community based on a hybrid method of AHP-entropy weight and cloud model. Sustainability, 9(4), 603. https://doi.org/10.3390/su9040603
Yin, Y. L., Lu, Q., & Li, B. (2010). Research on the owner’s tactics to unbalanced bid under the mode of code of valuation with bill quantity of construction works. In Proceedings of IEEE 17th International Conference on Industrial Engineering and Engineering Management (IE&EM) (pp. 249-252). Xiamen, China. https://doi.org/10.1109/ICIEEM.2010.5646655
Afshar, A., & Amiri, H. (2010a). A min-max regret approach to unbalanced bidding in construction. KSCE Journal of Civil Engineering, 14, 653-661. https://doi.org/10.1007/s12205-010-0972-0
Afshar, A., & Amiri, H. (2010b). Risk-based approach to unbalanced bidding in construction projects. Engineering Optimization, 42(4), 369-385. https://doi.org/10.1080/03052150903220964
An, X. W., Li, H. M., Zuo, J., Ojur, O., Wang, Z., & Ding, J. (2018). Identification and prevention of unbalanced bids using the unascertained model. Journal of Construction Engineering and Management, 144(11), 05018013. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001563
Arditi, D., & Chotibhongs, R. (2009). Detection and prevention of unbalanced bids. Construction Management and Economics, 27(8), 721-732. https://doi.org/10.1080/01446190903117785
Bajari, P., Houghton, S., & Tadelis, S. (2014). Bidding for incomplete contracts: An empirical analysis of adaptation costs. NBER Working Papers, 104(4), 1288-1319. https://doi.org/10.1257/aer.104.4.1288
Burnett, J. E., & Wampler, B. M. (1998). Unit price contracts: A practical framework for determining competitive bid prices. Journal of Applied Business Research, 14, 63-72. https://doi.org/10.19030/jabr.v14i3.5704
Cattell, D. (2013). The highs and lows of unbalanced bidding models. In Proceedings of CIB World Building Congress. Queensland University of Technology, Brisbane, Australia.
Cattell, D., Bowen, P., & Kaka, A. (2004). A model to distribute mark-up amongst quotation component item prices: An outline. In Proceedings of the 2nd Postgraduate Conference on Construction Industry Development, Construction Industry Development Board (pp.154-165). Cape Town, Republic of South Africa.
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2007). Review of unbalanced bidding models in construction. Journal of Construction Engineering and Management, 133(8), 562-573. https://doi.org/10.1061/(ASCE)0733-9364(2007)133:8(562)
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2008). A simplified unbalanced bidding model. Construction Management and Economics, 26(12), 1283-1290. https://doi.org/10.1080/01446190802570506
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2010). The risks of unbalanced bidding. Construction Management and Economics, 28(4), 333-344. https://doi.org/10.1080/01446191003663264
Cattell, D. W., Bowen, P. A., & Kaka, A. P. (2011). Proposed framework for applying cumulative prospect theory to an unbalanced bidding model. Journal of Construction Engineering and Management, 137(12), 1052-1059. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000367
Christodoulou, S. E. (2008). A bid-unbalancing method for lowering a contractor’s financial risk. Construction Management and Economics, 26(12), 1291-1302. https://doi.org/10.1080/01446190802596238
Chotibhongs, R. (2011). Managing the bidding process for the construction owner-detection and prevention of unbalanced bids and collusive bids (PhD thesis). Illinois Institute of Technology, Chicago.
Dong, J. Y., Yuan, F. F., & Wan, S. P. (2017). Extended VIKOR method for multiple criteria decision-making with linguistic hesitant fuzzy information. Computers and Industrial Engineering, 112, 305-319. https://doi.org/10.1016/j.cie.2017.07.025
Doran, D. (2004). FMI/CMAA. Survey of construction industry ethical practices (Technical Report). McLean, VA: FMI Consulting and Construction Management Association of America.
Gates, M. (1967). Bidding strategies and probabilities. Journal of the Construction Engrg Division, 93(C01), 75-107.
Hyari, K. H. (2016). Handling unbalanced bidding in construction projects: Prevention rather than detection. Journal of Construction Engineering and Management, 142(2), 04015060. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001045
Hoogenboom, J., Dale, W. S., & Martell, C. (2006). Risk analysis and optimization of the (un)balanced bid. AACE International Transactions, R171-R176.
Hyari, K. H., Tarawneh, Z. S., & Katkhuda, H. N. (2016). Detection model for unbalanced pricing in construction projects: A risk-based approach. Journal of Construction Engineering and Management, 142(2), 04016078. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001203
Hyari, K. H., (2017a). The controversy around unbalanced bidding in construction: Seeking a fair balance. Journal of Professional Issues In Engineering Education and Practice, 143(1), 04016015. https://doi.org/10.1061/(ASCE)EI.1943-5541.0000300
Hyari, K. H. (2017b). Owner’s countermeasures to skewed bidding in construction projects: Review of current practices and proposal for new countermeasures. Journal of Construction Engineering and Management, 33(3), 04016053. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000502
Lan, S. L., Yang, C., & Huang, G. Q. (2017). Data analysis for metropolitan economic and logistics development. Advanced Engineering Informatics, 32, 66-76. https://doi.org/10.1016/j.aei.2017.01.003
Liu, X., Lin, L., & Zang, D. (2009). Stochastic programming models and hybrid intelligent algorithm for unbalanced bidding problem. Computer and Information Science, 2(1), 188-194. https://doi.org/10.5539/cis.v2n1p188
Liu, P. D., & Qin, X. Y. (2017). An extended VIKOR method for decision making problem with interval-valued linguistic intuitionistic fuzzy numbers based on entropy. Informatica, 28, 665-685. https://doi.org/10.15388/Informatica.2017.151
Mandell, S., & Nystrom, J. (2011, June). Endogenous risk in unbalanced bidding. In Conference “Management and Innovation for a Sustainable Built Environment” (MISBE2011), Delft University of Technology, Delft, Netherlands.
Manzo, F. A., & Tell, S. (1997). Unbalanced bids and avoiding disputes relating to them (Chapter 7). In N. Sweeney (Ed.), Wiley construction law update. Hoboken, NJ: Wiley.
Renes, S. (2011). Balancing the bids, solutions for unit price auctions. Rotterdam: Tinbergen Institute. https://doi.org/10.2139/ssrn.1775968
Renes, S. (2012). Fighting skewed bids in the EU, a comparative analysis. Rotterdam: Erasmus School of Law.
Shemshadi, A., Shirazi, H., Toreihi, M., & Tarokh, M. J. (2011). A fuzzy vikor method for supplier selection based on entropy measure for objective weighting. Expert Systems with Applications, 38(10), 12160-12167. https://doi.org/10.1016/j.eswa.2011.03.027
Shrestha, P. P., Shrestha, K., & Joshi, V. (2012, November). Investigation of unbalanced bidding for economic sustainability. In International Conference on Sustainable Design, Engineering, and Construction (ICSDEC 2012) (pp. 609-616). Fort Worth, Texas, USA. https://doi.org/10.1061/9780784412688.073
Simanaviciene, R., & Ustinovichius, L. (2010). Sensitivity analysis for multiple criteria decision making methods: TOPSIS and SAW. Procedia – Social and Behavioral Sciences, 2, 7743-7744. https://doi.org/10.1016/j.sbspro.2010.05.207
Son, J., Mack, M., & Mattila, K. G. (2006). Nonlinear cash flow optimization model. Canadian Journal of Civil Engineering, 33, 1450-1454. https://doi.org/10.1139/l06-086
Stramarcos, A., & Cattell, D. (2013). The ethics of item pricing. In 38th Australian University Building Educators Association Conference. Australasian Universities Building Education Association (AUBEA), Auckland, New Zealand.
Stark, R. M. (1968). Unbalanced bidding models – theory. Journal of Construction Division, 94(CO2), 197-209.
Stark, R. M. (1972). Technical note. Unbalancing of tenders. Proceedings of the Institute of Civil Engineers, 51(2), 391-392. https://doi.org/org/10.1680/iicep.1972.5968
Stark, R. M. (1974). Unbalanced highway contract tendering. Operations Research Quarterly, 25(3), 373-388. https://doi.org/10.2307/3007925
Wang, W. C. (2004). Electronic-based procedure for managing unbalanced bids. Journal of Construction Engineering and Management, 130(3), 455-460. https://doi.org/10.1061/(ASCE)0733-9364(2004)130:3(455)
Wu, G. D., Duan, K. F., Zuo, J., Zhao, X. B., & Tang, D. Z. (2017). Integrated sustainability assessment of public rental housing community based on a hybrid method of AHP-entropy weight and cloud model. Sustainability, 9(4), 603. https://doi.org/10.3390/su9040603
Yin, Y. L., Lu, Q., & Li, B. (2010). Research on the owner’s tactics to unbalanced bid under the mode of code of valuation with bill quantity of construction works. In Proceedings of IEEE 17th International Conference on Industrial Engineering and Engineering Management (IE&EM) (pp. 249-252). Xiamen, China. https://doi.org/10.1109/ICIEEM.2010.5646655