ARCOM

Abstracts – Browse Results

Click on the titles below to expand the information about each abstract.
Viewing 6 results ...

Ranasinghe, M (1996) Total project cost under inflation: a simplified model for decision makers. Construction Management and Economics, 14(06), 497-504.

Type: Journal Article
Keywords: competitiveness; Monte Carlo; operating characteristic curve(OCC); probability; success; unit price
ISBN/ISSN: 0144-6193
URL: https://doi.org/10.1080/014461996373214
Abstract:
Winning a bid and making a profit deeply influence the bidding philosophy of behaviour of a construction market. Estimators commonly calculate direct costs and add overheads and profit in what is a simple arithmetic exercise. This paper studies a database of bids submitted on airport construction in French Polynesia. By analysing the distribution of bid prices placed on elemental cost items, an optimal bid is determined for overall success and profitability through using statistical techniques such as operating characteristic curves and overrun profiles. It is seen that successful and profitable contractors have overall profitability indexes in the range of 0.205-0.341 in the French Polynesian construction market. Similar analyses can be conducted for other construction markets, which can give a contractor a better grasp over their estimating technique. This process assists owners in determining whether contractors are bidding within reasonable limits and whether the contractor is a safe or unsafe risk.