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Background: Pooled procurement is key to managing drug spending amid rising healthcare costs, but conclusive evidence on its sustained impact is lacking, driven by market competition. Objective: This study aims to evaluate the trends and factors influencing the price changes of drugs awarded for pooled procurement systems utilizing a drug price index analysis. Methods: This retrospective study involved a review of secondary data on public pooled procurement of drugs in Malaysia. Drugs were selected through purposive sampling and focused on eight therapeutic subgroups that showed significant patterns of expenditure and consumption. The observed data are retrieved from centralized contracts that were managed through a tendering process spanning from 2010 to 2021. A price index was computed to assess fluctuations in pharmaceutical pricing and market competition. To assess the influence of potential variables on market competition, quantified through the drug price index, a multiple linear regression analysis was utilized. The variables studied include product age, quantity index, bidding periods, therapeutic subgroups, and market competition elements such as types and number of competing products, dosage form, and types of procurements. The significance level was set at p

Gates' (1967) bidding model was one of the earliest proposed for construction bidding. Its most celebrated formula allows for calculating the probability of any bidder submitting the lowest bid when competing against several known competitors. This model has been shown to outperform many recent bidding models. However, it also suffers from important limitations that keep it from being applied in wider contexts. In this paper, we overcome two of such limitations. First, we extend Gates' model to calculate the probability of a bidder ending in any position other than the first (lowest). Second, we propose an approach for extrapolating the probabilities of all bidders underbidding each other, even in those situations of limited access to historical bidding information. Overcoming these limitations significantly enhances Gates' model in two ways. First, it allows anticipating the probabilities of winning an auction in best value auctions where bidders who submitted a competitive but not necessarily the lowest bid can still win. Second, our extension allows applying Gates' formula in situations of incomplete information. This is especially interesting when some bidders have not met in previous auctions and there is no information from them individually underbidding each other. [ABSTRACT FROM AUTHOR]

Pooled procurement is key to managing drug spending amid rising healthcare costs, but conclusive evidence on its sustained impact is lacking, driven by market competition. This study aims to evaluate the trends and factors influencing the price changes of drugs awarded for pooled procurement systems utilizing a drug price index analysis. This retrospective study involved a review of secondary data on public pooled procurement of drugs in Malaysia. Drugs were selected through purposive sampling and focused on eight therapeutic subgroups that showed significant patterns of expenditure and consumption. The observed data are retrieved from centralized contracts that were managed through a tendering process spanning from 2010 to 2021. A price index was computed to assess fluctuations in pharmaceutical pricing and market competition. To assess the influence of potential variables on market competition, quantified through the drug price index, a multiple linear regression analysis was utilized. The variables studied include product age, quantity index, bidding periods, therapeutic subgroups, and market competition elements such as types and number of competing products, dosage form, and types of procurements. The significance level was set at p < 0.05. The median price index, derived from the analysis of 88 drugs involved in 335 tenders over 10 years was 89.28 (range between 1.91 and 123.81). The observed trends indicated a consistent decline in the median drug price index throughout the bidding periods. The regression model, encompassing 19 selected variables, demonstrated the ability to predict the drug price index shown by the F-statistic (F (19, 315) = 68.022, p < 0.0005) with adj. R2 = 0.79. The coexistence of innovative or reference products and their generic or biosimilar equivalents in a market may promote competition. Five to eight competing products resulted in remarkably low drug prices. Pooled procurement is one of the approaches to cost containment that is potentially subject to the dynamics of market competition. Time can be a limiting factor that hinders the realization of greater savings. Therefore, it is important to strike a delicate balance when considering regulatory measures, such as patents and barriers to market entry, in order to maintain a fair and competitive landscape within the industry. [ABSTRACT FROM AUTHOR]

Public construction projects in Saudi Arabia are fraught with several challenges threatening open and fair competition, which consequently negatively influence the decision of contractors to participate in bidding. Nevertheless, the construction sector has witnessed rapid reforms since 2016, which have resulted in the issuing of new legislation and regulations as well as the creation of governing bodies. Hence, the concept of open and fair competition plays a significant role in the governance of these challenges in the upstream process of construction tendering. Therefore, this paper explores challenges that are hindering contractors' participation in the tendering phase of public construction projects in light of these new legislations and authorities. Twelve challenging factors were identified from a structured literature review of previous relevant empirical studies available in online search engines since the 1980s. Those factors were measured through Delphi survey questionnaires, which provided respondents with the option of adding new challenging factors. Thus, twenty factors were identified. A descriptive method was used to determine and prioritize these challenging factors. The survey findings indicate that the most influential hindering factors are (1) awarding contracts based on the lowest bidder, (2) inadequate or incomplete specifications, (3) poor contract documents, and (4) poor cost-estimating practices. These findings are vital in exposing the lack of relationships between the construction industry, regulators, and stakeholders for robust partnerships, thereby helping to ensure the fair participation of contractors, which boosts open and fair competition concepts for public construction projects. [ABSTRACT FROM AUTHOR]

Public construction projects in Saudi Arabia are fraught with several challenges threatening open and fair competition, which consequently negatively influence the decision of contractors to participate in bidding. Nevertheless, the construction sector has witnessed rapid reforms since 2016, which have resulted in the issuing of new legislation and regulations as well as the creation of governing bodies. Hence, the concept of open and fair competition plays a significant role in the governance of these challenges in the upstream process of construction tendering. Therefore, this paper explores challenges that are hindering contractors’ participation in the tendering phase of public construction projects in light of these new legislations and authorities. Twelve challenging factors were identified from a structured literature review of previous relevant empirical studies available in online search engines since the 1980s. Those factors were measured through Delphi survey questionnaires, which provided respondents with the option of adding new challenging factors. Thus, twenty factors were identified. A descriptive method was used to determine and prioritize these challenging factors. The survey findings indicate that the most influential hindering factors are (1) awarding contracts based on the lowest bidder, (2) inadequate or incomplete specifications, (3) poor contract documents, and (4) poor cost-estimating practices. These findings are vital in exposing the lack of relationships between the construction industry, regulators, and stakeholders for robust partnerships, thereby helping to ensure the fair participation of contractors, which boosts open and fair competition concepts for public construction projects.

Design–build (DB) projects have become increasingly popular for construction projects in developing countries due to the cost and scheduling advantages and their design optimization ability. As a result, much research has been conducted on improving DB efficiency in terms of cost, scheduling, risk management, etc. However, the existing studies have mainly focused on the owner’s roles, whereas general contractors (GCs) must also take many risks on behalf of owners in DB projects. The adequate identification and assessment of risks before engaging a contractor can increase the likelihood of a project’s success, at least from a DB contractor’s perspective. Therefore, this study interviewed procurement experts to conduct a survey at the local level, then analyzed, developed, and proposed an additional risk management process (RMP) for use by GCs during the bidding process of DB projects. A case study was conducted with a large Vietnamese GC to evaluate the effectiveness of the process and find ways to optimize it in the future. The results of the study showed that risk management during a DB project is imperative. Nevertheless, preparing bids is time-consuming and increases the contingency costs, reducing the competitiveness of the bid prices for contractors. Therefore, depending on the specific project and risk management objectives, an RMP is recommended for adjusting the risk management target to reduce the risk, while still maintaining the competitiveness of the bid prices.

Abstract Unbalanced construction bidding covers different allocations of mark-up between contract project items to attempt and increase win chances with unbalance but without changing of total bid price. Many models have been developed to increase both the systemized execution and detection of unbalancing but, although unbalancing is thought to be widespread in general, substantially not known it use. Proposed unbalanced construction bidding models of many researchers neglected part of improve profitability. This paper inspects and integrates the construction bidding models techniques for determining price of each unit quantity and take advantage of bidder benefits, then all proposed mathematical models is studied carefully and more modifications will be done to tries to be fair and equitable for providing owner quantities that impact directly on items prices. Finally it was concluded that the maximum/minimum models are preferred for many world cases. At end of paper, a case of study will be presented to demonstrate the use of proposed models for optimizing project bidding. Also, this paper will serve as a guide for construction project stakeholders with effective management to perform a competitive level of project pricing. [ABSTRACT FROM AUTHOR]

Abstract This paper examines how different factors related to contract characteristics and the operational and tender environments affect the number of unique bidders placing bids in tenders for bus contracts. A generalized Poisson model is used with a comprehensive data set containing most of the recently tendered bus contracts in Sweden, spanning the period 2007–2015. The main finding from the analysis is that most contract characteristics change participation in tenders by approximately 0.1–0.5 bidders. Operator-restricting measures such as special requirements on buses have a similar limited effect. Further, the number of tenders that are open at the same time as a specific tender was shown to reduce participation by almost two bidders. Finally, there is evidence that the local competitive environment is of importance, and the public transport authorities therefore need to be concerned with entry barriers in their tenders. Highlights • Tender documentation data is used to analyze what drives the number of bids. • Most factors the public transport authorities can decide upon give small changes in the number of bids. • Special requirements lower participation. • The number of simultaneous tenders is an important factor. • There is evidence that the local competitive environment is important. [ABSTRACT FROM AUTHOR]

The statistical distribution representing bid values constitutes an essential part of many auction models and has involved a wide range of assumptions, including the Uniform, Normal, Lognormal and Weibull densities. From a modelling point of view, its goodness is defined by how well it enables the probability of a particular bid value to be estimated – a past bid forex-postanalysis and a future bid forex-ante(forecasting) analysis. However, there is no agreement to date of what is the most appropriate form and empirical work is sparse. Twelve extant construction data-sets from four continents over different time periods are analysed in this paper for their fit to a variety of candidate statistical distributions assuming homogeneity of bidders (ID not known). The results show there is no one single fit-all distribution, but that the 3p Log-Normal, Fréchet/2p Log-Normal, Normal, Gamma and Gumbel generally rank the bestex-postand the 2p Log-Normal, Normal, Gamma and Gumbel the bestex-ante– withex-antehaving around three to four times worse fit thanex-post. Final comments focus on the results relating to the third and fourth standardized moments of the bids and apost hocrationalization of the empirical outcome of the analysis. [ABSTRACT FROM PUBLISHER]

The number of new bidders – bidders from whom there is no previous registered participation – is an important variable in most bid tender forecasting models, since the unknown competitive profile of the former strongly limits the predictive accuracy of the latter. Analogously, when a bidder considers entering a bid or when an auctioneer is handling a procurement auction, assessing the likely proportion of experienced bidders is considered an important aspect, as some strategic decisions or even the awarding criteria might differ. However, estimating the number of bidders in a future auction that have not submitted a single bid yet is difficult, since there is no data at all linking their potential participation, an essential requirement for the implementation of any forecasting or estimation method. A practical approach is derived for determining the expected proportion of new bidders to frequent bidders as a function of the population of potential bidders. A multinomial model useful for selective and Open tendering is proposed and its performance is validated with a dataset of actual construction auctions. Final remarks concern the valuable information provided by the model to an enduring unsolved bidding problem and the prospects for new research continuations. [ABSTRACT FROM PUBLISHER]

The number of bidders,N, involved in a construction procurement auction is known to have an important effect on the value of the lowest bid and the mark-up applied by bidders. In practice, for example, it is important for a bidder to have a good estimate ofNwhen bidding for a current contract. One approach, instigated by Friedman in 1956, is to make such an estimate by statistical analysis and modelling. Since then, however, finding a suitable model forNhas been an enduring problem for researchers and, despite intensive research activity in the subsequent 30 years, little progress has been made, due principally to the absence of new ideas and perspectives. The debate is resumed by checking old assumptions, providing new evidence relating to concomitant variables and proposing a new model. In doing this and in order to ensure universality, a novel approach is developed and tested by using a unique set of 12 construction tender databases from four continents. This shows the new model provides a significant advancement on previous versions. Several new research questions are also posed and other approaches identified for future study. [ABSTRACT FROM PUBLISHER]

In the global construction context, the best value or most economically advantageous tender is becoming a widespread approach for contractor selection, as an alternative to other traditional awarding criteria such as the lowest price. In these multi-attribute tenders, the owner or auctioneer solicits proposals containing both a price bid and additional technical features. Once the proposals are received, each bidder’s price bid is given an economic score according to a scoring rule, generally called an economic scoring formula (ESF) and a technical score according to pre-specified criteria. Eventually, the contract is awarded to the bidder with the highest weighted overall score (economic + technical). However, economic scoring formula selection by auctioneers is invariably and paradoxically a highly intuitive process in practice, involving few theoretical or empirical considerations, despite having been considered traditionally and mistakenly as objective, due to its mathematical nature. This paper provides a taxonomic classification of a wide variety of ESFs and abnormally low bids criteria (ALBC) gathered in several countries with different tendering approaches. Practical implications concern the optimal design of price scoring rules in construction contract tenders, as well as future analyses of the effects of the ESF and ALBC on competitive bidding behaviour. [ABSTRACT FROM PUBLISHER]

Abstract: The effectiveness and cost-effectiveness of two main types of instruments (feed-in tariffs and quotas with tradable green certificates) have usually been compared in the literature on renewable electricity promotion. Due to negative past experiences with a third instrument (auctions), this instrument has been broadly dismissed in academics and, until recently, also in policy practice. However, and based on an in-depth review of experiences with auction schemes for renewable electricity around the world, this paper argues that some of the problems with auctions in the past can be mitigated with the appropriate design elements and that, indeed, auctions can play an important role in the future implementation of renewable electricity support instruments around the world. The paper provides a proposal for the coherent integration of several design elements. [Copyright &y& Elsevier]

Purpose – Since the construction industry in the State of Kuwait is further governed by a competitive environment, which is driven by the lowest cost mentality, the aim of this study is to identify and rank the relative importance of factors perceived to influence bid mark-up size decisions among local general contractors bidding on construction projects. Design/methodology/approach – The effects of 40 identified factors, which were shortlisted based on previous relevant investigations and the input of local industry experts, were surveyed by a statistically representative sample of contractors. Using the "relative importance index" technique, the influence ranks of the factors explored were established. Findings – The results reveal the following as the primary factors affecting general contractors' bid mark-up size decisions: employer type and identity; project size; clarity of technical specifications; previous experience with employer; number and identity of competitors; previous experience in similar projects; design complexity level; current work load; design quality level; and tendering duration. Research limitations/implications – Although the outputs contribute to the overall body of knowledge related to bidding in the construction industry, it is further recommended to determine the relationship between the factors explored, especially those perceived as most significant, and their tangible effects on contractors' mark-up decisions. Practical implications – The outcomes: demonstrate the importance of the "constructability" concept to construction costs; and assert that the conception of exerting pressure on designers to cut down design durations and fees, and further shortening tenders' durations to speed up the projects' development process, is "false economy". Originality/value – The findings fill a gap in knowledge of the factors affecting contractors' bid mark-up decisions, which can be used to provide academics, employers, industry practitioners, and policy makers, direction for focusing, acting upon and controlling the primary factors perceived to impact the competitiveness level of the State's construction industry. [ABSTRACT FROM AUTHOR]

A great body of knowledge exists on the theory of auctions and competitive bidding that is of potential relevance to construction contract tendering. Most of this, however, contains assumptions—such as perfect information—that are unlikely to be tenable in practice. The aim, therefore, is to examine the effects of relaxing some of the more restrictive of these assumptions to align more closely with the construction tendering situation. In particular, the effects of additive and multiplicative (scalar) mark-ups in equilibrium are examined for first and second price auctions in situations where bidders have different, uncertain, costs. This is illustrated first by Monte Carlo simulation—by which bids are generated randomly from a normal distribution for six bidders and mark-ups applied systematically for each bidder in turn until equilibrium is reached. An extensive numerical analysis is then applied to obtain equilibrium results for both mark-up values and expected profit from the simple symmetric case through to more complex asymmetric cases for the uniform and normal distributions. In general, it is found that first price auction bidders with relatively high cv levels and a larger number of bidders involved bid higher in equilibrium but can expect little profit unless the number of bidders involved is small. Where there are asymmetries, stronger bidders (i.e. those with lower costs and less variability) bid much higher and achieve much higher profits in equilibrium. From the seller's point of view, it is cheaper, in equilibrium, to have a homogeneous group of low variability bidders. The work contributes to the body of knowledge on the economic theory of auctions by closing some of the gap between theory and practice. [ABSTRACT FROM AUTHOR]

Abstract: Identifying the optimum mark-up for a project increases the chance of winning the tender. The aim of this study is to investigate the factors considered by more successful and profitable contractors in mark-up size decision. From the literature, 52 factors that may affect mark-up were identified. A postal survey was conducted to whether contractors felt that the factors are important in determining mark-ups. The questionnaire requested respondents to indicate on a five-point scale the importance of various factors. They were also asked the usual profitability level in their successful projects and their success rates in tendering. Data were collected via mailed questionnaire. Twenty-one of the 52 factors were found to be important. Of these, factors relating to client characteristics (payment record, size and type of client) are the most significant. Contractors who are profitable and successful would place more emphasis on factors that affect schedule-cost-quality of the project. It is recommended that contractors who are less profitable and successful take note of these findings. [Copyright &y& Elsevier]

What constitutes unacceptable client behaviour in competitive tendering is considered based on theoretical, legislative and moral considerations. A range of malpractices is then identified through the examination of reported abuses. Finally, a case study is presented which illustrates some of these practices and the difficulties faced by those affected in offering resistance. It is suggested that a practical solution may found by requiring clients to make a more direct contribution to tenderers' costs. [ABSTRACT FROM AUTHOR]

Two-envelope fee bidding is used frequently in allocating commissions to willing consultants such as architects, engineers and surveyors. Consultant fees and technical scores are normally aggregated to form a total score. The consultant obtaining the highest total score is usually awarded the commission. The consultant's objective is to get the highest total score possible because this maximizes the chance of winning. Consultants can submit to the procurer any of a number of different technical proposals which is then converted to a technical score. Only one technical score+fee combination will result in the highest total score, i.e. the optimum technical score+fee combination. This paper offers consultants an approach to better identify their optimum technical score+fee combination. In using this approach consultants need to develop a total score continuum based on (1) the consultant's original technical proposal and fee, (2) the absolute lowest fee and corresponding technical score, and (3) the absolute highest technical score and corresponding fee. The total score becomes the dependent variable and the fee the independent variable. Since the total score continuum is regressed on three points it will almost certainly be curvilinear in shape. Given that the optimum total score is at the highest point of the continuum, the optimum fee can be determined through differentiation. The corresponding technical score can then be found. After adjusting the original technical proposal to reflect the corresponding technical score, the optimum fee and adjusted technical proposal can then be submitted to the procurer. [ABSTRACT FROM AUTHOR]

Consultants' fees and technical submissions in two-envelope fee tendering are usually converted to scores. The fee scores and technical (quality) scores are then multiplied by predetermined weightings and aggregated. To preserve the desired influence of the predetermined weightings, the fee score and technical score variability differences need to be balanced, otherwise, when aggregated, one variable will end up dominating the other variable. Currently, such adjustments are not undertaken in the popular two-envelope fee tendering models. It seems that in many cases the consultant selection becomes biased in favour of the lowest fee rather than the quality. Important influences that contribute to the fee-technical score variability imbalance include suicidal fees and non-serious fees (which increases fee variability) and similar size consultant firms with similar experience and workload levels offering similar, if not identical, services (which reduces technical score variability). This paper offers four alternative approaches to the correction of the fee-technical score variability imbalance. If the client is able to distinguish between suicidal, serious and non-serious fees, then it is suggested that first the consultants submitting suicidal and non-serious fees should be disregarded. A normalization approach (in which the consultant's technical and fee scores are re-scaled to fall between unity and zero) should then be applied. If the client is unable or unwilling to distinguish between suicidal, serious and non-serious fees then aggregating on the basis of the consultants fee and technical score rankings appears to be the best method out of the three remaining approaches. [ABSTRACT FROM AUTHOR]

Consultants, in competing for work through two-envelope fee tendering, have been urged to consider variability differences between fees and technical scores, since the criterion with the greatest variability will influence which consultant is awarded the contract. Fee and technical score variability arising from different client fee tendering competitions is analysed in this paper, and a method proposed for determining whether a particular client's two-envelope fee tendering competition is likely to be dominated in terms of technical score or fee. Such information should be useful to consultants, as part of their bidding strategy, in deciding whether to aim for a higher technical score or submit a lower fee. Standard deviation is used to measure fee and technical score variability. Fee and technical score standard deviations are determined for each tendering competition, expressed as a ratio and aggregated over a series of competitions. A technical score-fee standard deviation ratio approximately equal to unity indicates that for future competitions consultants should adopt a balanced bidding strategy in putting equal emphasis on fee and technical score. A smaller ratio indicates that consultants should adopt a 'low fee' strategy whereas a larger ratio shows that consultants should adopt a 'high technical score' strategy. Fee tendering data from two large Hong Kong public sector clients were analysed. Fees were found to dominate the vast majority of tendering competitions, thereby indicating that consultants would be wise to adopt a low fee strategy in future competitions. [ABSTRACT FROM AUTHOR]

A method for analysing the competitiveness of a consultant's two-envelope fee tendering history is proposed and illustrated in an application to one of Hong Kong's larger quantity surveying practices. Separate measures for determining consultants' fee, quality score and overall competitiveness are considered to accommodate the special nature of the Hong Kong system, which makes cross-auction comparisons impossible. Maximum fee competitiveness is assumed to be the lowest submitted tender fee, while maximum quality score competitiveness is taken to be the highest quality score attained by a competing consultant. Fees and quality score are then expressed as separate competitiveness ratios relative to these maximums and aggregated for determining overall competitiveness. In analysing bidding performance it was found that this consultant's fee, quality score and overall competitiveness are all above the competitor average. These competitiveness measures reveal large differences in variability between quality score and fees, with quality score variability being considerably lower. Such a large imbalance in competitiveness variability effectively discounts quality and promotes the influence of the fee, since competitiveness ratio differences between fees are much larger than the competitiveness ratio differences between quality scores. [ABSTRACT FROM AUTHOR]

Design–build (DB) projects have become increasingly popular for construction projects in developing countries due to the cost and scheduling advantages and their design optimization ability. As a result, much research has been conducted on improving DB efficiency in terms of cost, scheduling, risk management, etc. However, the existing studies have mainly focused on the owner's roles, whereas general contractors (GCs) must also take many risks on behalf of owners in DB projects. The adequate identification and assessment of risks before engaging a contractor can increase the likelihood of a project's success, at least from a DB contractor's perspective. Therefore, this study interviewed procurement experts to conduct a survey at the local level, then analyzed, developed, and proposed an additional risk management process (RMP) for use by GCs during the bidding process of DB projects. A case study was conducted with a large Vietnamese GC to evaluate the effectiveness of the process and find ways to optimize it in the future. The results of the study showed that risk management during a DB project is imperative. Nevertheless, preparing bids is time-consuming and increases the contingency costs, reducing the competitiveness of the bid prices for contractors. Therefore, depending on the specific project and risk management objectives, an RMP is recommended for adjusting the risk management target to reduce the risk, while still maintaining the competitiveness of the bid prices. [ABSTRACT FROM AUTHOR]

This paper discusses the content, origin and development of tendering theory as a theory of price determination. It demonstrates how tendering theory determines prices and how it is different from game and decision theories, and that in the tendering process, with non-cooperative, simultaneous, single sealed bids with individual private valuations, extensive public information, a large number of bidders and a long sequence of tendering occasions, there develops a competitive equilibrium. The development of a competitive equilibrium means that the concept of the tender as the sum of a valuation and a strategy, which is at the core of tendering theory, cannot be supported, and that there are serious empirical, theoretical and methodological inconsistencies in the theory. [ABSTRACT FROM AUTHOR]

This paper describes an empirical study to test the proposition that all construction contract bidders are homogeneous, i.e. they can he treated as behaving collectively in an identical (statistical) manner. An examination of previous analyses of bidding data reveals a flaw in the method of standardizing bids across different size contracts and a new procedure is proposed which involves the estimation of a contract datum. Three independent sets of bidding data were then subjected to this procedure and estimates of the necessary distributional parameters obtained. These were then tested against the bidder homogeneity assumption, resulting in the conclusion that the assumption may be appropriate for a three-parameter log-normal shape, but not for scale and location. [ABSTRACT FROM AUTHOR]