Comparing Contractors' Decision to Bid in Different Market Environments

Bee-Lan Oo, Derek Drew, Hing-Po Lo


Abstract

The competitive situations within the Australia,Hong Kong and Singapore constructionmarket environments are compared byobserving the contractors’ decision to bidbehaviour according to two extreme marketconditions (i.e. booming and recession) anddifferent number of bidders scenarios (rangingfrom 4 to 30). Data were collected via adesigned experiment so as to make directcomparisons possible. This study providesevidence that contractors’ decision to bidbehaviour varies in different marketenvironments. Inline with decreasingprobability of winning, the ‘bid’ responses ofthe three groups of contractors decrease asthe number of bidders increases. However, allAustralian respondents declined to bid whenthe number of bidders exceeded 10, even inrecession. This is in stark contrast to HongKong and Singapore where about 30% ofrespondents were willing to bid in competitionscontaining 30 bidders, even in boom periods.In addition, the ‘bid’ responses of Australiawere higher in booming than in recessiontimes when the number of bidders, N ≤ 4. TheHong Kong construction market environmentwas found to be the most competitive withconsiderably higher proportions of ‘bid’responses; this was followed by the Singaporeand Australia, respectively.

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