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Full-Text Articles in Construction Engineering
Using Bayesian Networks To Assess The Risk Appetite Of Construction Contractors, David W. Cattell, P.E.D. Love
Using Bayesian Networks To Assess The Risk Appetite Of Construction Contractors, David W. Cattell, P.E.D. Love
David Cattell
The pricing of items of construction work using Component Unit Pricing (CUP) Theory requires that contractors have to assess and quantify their risk profiles. Those contractors with a willingness to take on greater risks can then be rewarded with a prospect of greater profits. CUP Theory provides a basis by which this can be accomplished by way of the manner and extent to which contractors spread their overall bid prices amongst all of the constituent component item prices. Conversely, this theory also facilitates that contractors who want to moderate their exposure to risk are able to do so, independently of …
An Overview Of Component Unit Pricing Theory, David Cattell
An Overview Of Component Unit Pricing Theory, David Cattell
David Cattell
Component unit pricing (CUP) theory presents a fresh approach to item pricing, described as the process of distributing the overall price among its constituent component items. This theory provides explanation and proof that different distributions of mark-up among the items of a project produce different levels of reward for contractors, while exposing them to different degrees of risk. The theory describes the three identified sources of these rewards, namely those of improved cash flow, escalation in compensation and valuations of likely variations. In addition, it also provides the first explanation of the three risks involved, namely the risk of ‘rejection’, …
The Risks Of Unbalanced Bidding, David William Cattell, Paul Anthony Bowen, Ammar P. Kaka
The Risks Of Unbalanced Bidding, David William Cattell, Paul Anthony Bowen, Ammar P. Kaka
David Cattell
Unbalanced bidding models have largely ignored the risk aspect of item pricing. Many researchers have acknowledged that there are considerable risks associated with unbalancing a bid but little has been done to describe these risks, let alone model them. A new framework is proposed by which all of these risks can be assessed. It identifies that these risks comprise the risk of rejection, the risk of reaction, and the risk of being wrong. It is further proposed that the value-at-risk ('VaR') method of measuring risk is a convenient way by which to combine all of these risks into one composite …
A Simplified Unbalanced Bidding Model, David William Cattell, Paul Anthony Bowen, Ammar P. Kaka
A Simplified Unbalanced Bidding Model, David William Cattell, Paul Anthony Bowen, Ammar P. Kaka
David Cattell
Much research effort to date has focused on the development and use of bidding models in optimizing contractors' bid prices in competitive tendering environments. Unbalanced bidding models, in particular, have the objective of maximizing a project's prospective profits by using techniques of applying differentiated mark-ups to all of a project's items of work. It is shown here that these unbalanced bidding models have been unnecessarily complicated by incorporating consideration of a project's item costs. Bidding models can be significantly simplified by having the objective of maximizing a project's top-line revenue rather than maximizing bottom-line profit. A new model, incorporating all …
Review Of Unbalanced Bidding Models In Construction, David W. Cattell, Paul A. Bowen, Ammar P. Kaka
Review Of Unbalanced Bidding Models In Construction, David W. Cattell, Paul A. Bowen, Ammar P. Kaka
David Cattell
Unbalanced bidding describes an activity otherwise known as item price loading. It is a practice used to some extent by building contractors to determine the prices that they will allocate to the individual component items within a project. This practice takes advantage of the contractor’s opportunity to manipulate these prices without this affecting their overall bid price for a project. Three types of loading are described, namely those of “front-end loading”, “back-end loading”, and “quantity error exploitation” (otherwise known as “individual rate loading”). Several scientists have expressed an interest in this field, starting with Marvin Gates in 1959. All of …
A Model To Distribute Mark-Up Amongst Quotation Component Items: An Outline, David Cattell, Paul A. Bowen, Ammar P. Kaka
A Model To Distribute Mark-Up Amongst Quotation Component Items: An Outline, David Cattell, Paul A. Bowen, Ammar P. Kaka
David Cattell
The outline of a proposed new unbalanced bidding model is discussed. Background is provided as regards the role of item price loading, otherwise known as unbalanced bidding. Three types of loading are described, namely those of ‘front-end loading’, ‘back-end loading’ and ‘quantity error exploitation’ (otherwise known as ‘individual rate loading’). It is proposed that one single mathematical model could embrace all three of the above types and that the aspect of risk may be addressed partially by means of using the quadratic programming techniques employed within the field of Modern Portfolio Theory. MPT is a field pioneered by Markowitz in …