Abstract :
Construction contracting companies face two critical decisions in competitive
bidding environment, which include: the bid/no-bid decision and the mark-up selection
decision. Making the right bid/no-bid decision is critical to the survival, sustainability, and
success of the contractors in the industry. There are many factors that affect this decision.
This makes the bidding decisions complex and complicated. Therefore, it is not an easy task
for managers to consider the combined impact of all these factors on the bid/no-bid decision
within a limited time frame with limited capacity of information they have for every single
bidding opportunity. This study proposes a Data Envelopment Analysis (DEA) approach
for making the bid/no-bid decision. DEA is a robust non-parametric linear programming
approach, which is mostly used for bench marking, performance measurement, and decision
making problems. The applicability of the proposed approach was demonstrated in a real
case study conducted in a Turkish construction contracting company. In the case study,
49 bidding opportunities formerly faced by the studied company were evaluated via the
developed DEA model. The accuracy rate of the proposed approach was 92%. Company
management found the proposed approach satisfactory and implementable in future bid/no-bid
decision problems.
