A Bid / no-Bid Decision Support Model Using Utility Theory

Abstract

The continuation of companies in general and construction companies in particular depends mainly on the implementation of new projects on an ongoing basis, and choosing the appropriate project for the company that it is compatible with its policy and future vision is considered the basis on which the companies are based. The bidding process is one of the ways in which the company obtains projects. For this purpose, the company's decision to bid is one of the most important decisions it must make.

Given the importance of this decision and the need to have tools to help the contractor make it, this study addressed the most important factors influencing decision-making, which formed the basis for building a model to support the contractor's decision to bid/no bid using utility theory.

In order to determine the factors influencing decision-making, the descriptive approach was applied through literature review and expert interviews. After that, a questionnaire was distributed to construction companies in Syria to determine the degree of importance of these factors, as it had been discovered that the most important factors influencing decision-making in Syria was availability of the required cash by 90%, followed by the availability of material by 87% and exchanging rate by%85.6 .

The influential factors were classified into two groups: encouraging and discouraging factors. The model was then designed to support the decision using the utility theory and assist the contractor use the model in a more accessible way. A program was designed using the Visual Studio application.

To verify the validity of the model, it was tested in a small company to help it decide whether to bid for three announced projects through an invitation to tender. The model was able to prove its validity by 67%, in other words two out of three projects that were tested.

The utility theory model that had been created allows analyzing the quantitative and qualitative data that are involved in decision-making, and allows the contractor to participate in the decision-making process, as the contractor can determine the amount of his desire to bid, which was not mentioned in most previous studies.