Analysis of contractors’ bidding decision in the palestinian construction industry

Abstract

Both the bid decision and the determination of the bid price are very important to every contractor. The importance of such decisions lies in the fact that, the success or failure of a contractor's business depends on the outcomes derived from these decisions. The aim of this paper is to identify and analyze the factors which are believed to affect bidding and markup size decisions in the construction industry in Gaza Strip. A questionnaire survey elicited responses from 77 general contractors. The results indicated that, most of the contractors depend on subjective processes in making bid/no bid and markup size decisions are based on experience-based judgment. Some factors are considered important in both decisions while some other factors are considered important in one decision but not the other. The most important groups which affects bid no bid and mark up size were found to be 'client and consultant of the project' group, and 'project conditions contributing to profitability of the project' group. The results also showed that, the current financial capability of the client, project size and financial status of the company were the main factors affecting bid no bid decisions. Regarding mark up size decision, it was found that the duration of project, political environment, and terms of payment were the main factors affecting the mark up decision. Some recommendations are proposed in this study.