The effect of client and type and size of construction work on a contractor's bidding strategy
Contractors making strategic decisions in respect of:
(1) The selection of contracts to bid for
(2) The bid levels necessary to secure them. If a contractor opts to bid, the pricing of the bid normally
comprises a two-stage formulation process consisting of a baseline cost estimate and subsequent mark-
up. E.g. overheads, profit and risk
The contractor `must choose a price high enough to provide sufficient contribution to overheads and
profits, yet low enough to ensure that a sufficient volume of work is actually obtained . . . in an
environment of considerable uncertainty about the behaviour of the competitors'
Factors influencing bidding behaviour were grouped by Drew and Skitmore  into those affecting: (1)
the behaviour of contractors as a group (e.g. market conditions, number and identity of competitors);
(2) individual contractor behaviour (e.g. contractor size, work and tenders in hand, availability of staff);
and (3) behaviour toward the characteristics of the contract (e.g. type and size of construction work,
Bid mark-up models proposed using a probabilistic approach to determine the most
appropriate mark-up level for a given contract.