Tendering strategies: an empirical study of their relationship to the level of building and construction

Abstract

This research report investigates the relationship between contractor's tendering strategies and the changing level of building and construction using data taken for a sample of projects that the Ministry of Works and Development have called tenders for over the past ten years. From this data it was possible to measure the change in the relative price level of building (ie the cost to the buyer) over the period, and to provide a method of predicting the likely cost of building adjusted for the level of competition. The results show that there was a significant change in the price level between the peak of construction activity in 1974 to that of 1978, in the order of 20-25 per cent. It is also evident that the capacity of the industry has adjusted to the present low level of demand and that any increase in the level of construction is going to bring with it a corresponding increase in the price level.