Addressing pricing: Value bidding for engineers and consultants

Carrie S. Sturts, F. H. Griffis

Research output: Contribution to journalArticle

Abstract

This paper presents a unique treatment of competitive bidding theory as applied to pricing engineering services. Unlike low-bid procurement, the selection of engineers and design consultants is often based on several factors such as quality, availability, reputation, resume, and references, and these criteria may or may not include price. From preliminary interviews, the authors conclude that there is a need for a systematic method of evaluating potential job opportunities and determining fair market prices. This hybrid model, Value-Bidding, refocuses the competitive bidding model from a fee-based selection criteria to a value-based selection criteria. Value-Bidding utilizes an established marketing research methodology, conjoint analysis, to establish the probability of winning based on multiple factors. The resulting analytical model enables engineers to analyze market conditions, evaluate client priorities, systematically track competitors, and optimize proposals, while maximizing the probability of winning, maximizing profit, and optimizing price.

Original languageEnglish (US)
Pages (from-to)621-630
Number of pages10
JournalJournal of Construction Engineering and Management
Volume131
Issue number6
DOIs
StatePublished - Jun 2005

Keywords

  • Bids
  • Business administration
  • Construction industry
  • Consulting services
  • Engineering services
  • Market research
  • Pricing
  • Professional role

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Building and Construction
  • Industrial relations
  • Strategy and Management

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