Bidding Decision Model Based on Prospect Theory and Game Theory

2013 ◽  
Vol 723 ◽  
pp. 951-959 ◽  
Author(s):  
Min Yuan Cheng ◽  
Chia Chi Hsiang

In the construction industry, most of the owners apply competitive bidding to award a contract to the lowest price qualified contractor. This study proposes a model concerning the preferences and the behaviors of all decision makers whom participation in an competitive bidding to assist contractors to make optimal bidding strategy decisions and set appropriate bidding prices. Researchers demonstrated model applicability using an actual case study, which shows how this model help the construction company’s primary decision maker to determine the appropriate bidding price in a multi-competitors condition.

Author(s):  
Nagwan El- Sayed Abo El- Enen, Khaled Mohamed Heiza, Ibrahim Nagwan El- Sayed Abo El- Enen, Khaled Mohamed Heiza, Ibrahim

Due to recent environmental and Political requirements, and regulations of the construction industry, in which bridges is one of its important category, deciding its proper constructability is becoming vital. Therefor the objective of this research is to develop a decision model for selecting proper constructability of green bridges constructions, the model was built based on analytical network process (the ANP) soft were program, integrated with value engineering approach. For this analytical study different parameters are identified and ranked to be implemented for the decision model developed on the biases of four surveying studies conducted in this study the results of these surveying's was be analyzed by using the statically analytical program; "SPSS". Model validation and reliability is carried out using the analytical network process (ANP) for statistically analysis using case study which is a cable bridge project constructed in Egypt. ANP proves to be an effective framework for assessing readiness to adopt and facilitating TQM. The result of the study illustrate that the proper constructability alternative in green bridge concept for this determinate project is the concrete box girder type, upon this there is a cost loss of $3, 500 per square meter, equivalent to 50% losses, respect to the life cycle cost this is due to did not using the best alternate of the estimated project. upon the possibility of applying this decision model to such studies of infrastructure projects, and with respect to the results gained; it is recommend to apply the ANP model with respect to VE procedures to bridges projects of all kinds and their determinants, as well as all other construction projects, especially national ones, in future studies, which allows decision- makers to make decisions that aim at the highest quality without any waste in unnecessary costs.


Author(s):  
Jose Leao E Silva Filho ◽  
Danielle Costa Morais

This paper presents a group decision-making model using a distance aggregator based on Ordered Weighted Distance (OWD) which offers a solution that can reduce disagreement between decision makers (DMs). This paper discusses decision rules and sets out measures to evaluate compensatory effects that have a bearing on DMs’ opinions. The model uses formulations of distances to reveal the differences in opinion among DMs and discusses the meanings of distance and the information presented by each DM. Finally, a case study of a logistics problem is used to illustrate how the model is applied.


2013 ◽  
Vol 732-733 ◽  
pp. 1438-1443
Author(s):  
Pin Jie Xie ◽  
Jian Chao Hou ◽  
Quan Sheng Shi

It is an urgent problem to solve for generation companies that how to find the optimal bidding strategy to obtain the highest profits and to decrease the risk to the lowest level. This paper presented a new bidding decision model with risk management for generation companies based on the conditional value at risk (CVaR). In the process of building the optimal bidding decision models, three situations are considered separately, including only consider maximize the expected return or the CVaR value of benefit, and considering the benefit and risk (CVaR). By this method, the generation companies can be determined the two decision variables of bidding price and bidding output to maximize its revenue at the same time to declare the risk.


2020 ◽  
Vol 20 (4) ◽  
Author(s):  
Abhijnan Datta ◽  
Johan Ninan ◽  
Shankar Sankaran

The literature on megaprojects are oriented towards ‘knowing’ the problems and ‘knowing’ the solutions, and there is a dearth in literature aimed at explaining strategies adopted in ‘doing’ or implementing that knowledge. Particularly, the literature highlights communication as important as part of the ‘knowing,’ while there is a gap in ‘doing,’ as performance improvements are still not evident. This research aims to explore how this knowing-doing gap in the communication of risk information was addressed by using 4D visualization. This article discusses the vent facility of a megaproject in Australia as a case study to illustrate the innovation. The 4D model developed for the facility helped the project team to visualize the construction of a critical part of the project, discuss the construction methodology, identify the risks in the construction process and persuade the non-technical decision-makers of the project to take appropriate action. The risks identified through the visualization covered safety, program, and interface risks. This study offers insights into the role of visualization in bridging the knowing-doing gap in the construction industry in the context of a megaproject.


2011 ◽  
Vol 17 (1) ◽  
pp. 63-71 ◽  
Author(s):  
Mohamed Marzouk ◽  
Lobna El-Mesteckawi ◽  
Moheeb El-Said

Contract relationships in construction projects in Egypt have become increasingly strained in recent years. Working relationships, communications, and contractual commitments are often not carried out in good faith. Hence, adversarial approaches to public and private sectors of the construction industry in Egypt generate a substantial increase in the use of binding arbitration and the judicial system for the settlement of contractual disagreements. In this research, a survey questionnaire was designed to obtain the relative weights of the factors that influence the Dispute Resolution Strategy (DRS) Decision. Twenty six combinations of project situations were established based on ten factors, established after studying the causes of disputes with the aid of literature and unstructured interviews, which affect the DRS-Decision. Experts were asked to perform pair-wise comparisons for the ten factors and advise on the recommended resolution methodology for the different status of DRS-Decision's factors. Although negotiation is usually the first attempt to solving any dispute, it sometimes could waste time and consequently money without reaching a satisfying solution. A computer model is proposed to inform the user of whether to quit negotiation and/or any amicable solution to save time and money and resort to arbitration/litigation instead, or to stick to negotiation and/or any amicable solution as it's the only way by which the dispute could be resolved. Results obtained from the survey were utilized in the development of the computer model to provide a simple and an easy to use tool that could advise decision makers on the most appropriate dispute resolution strategy that would mostly succeed; save time and money. A case study is presented to validate the computer model and demonstrate its use. Santrauka Statybos dalyvių santykiai statybos projektuose pastaruoju metu tampa labai įtempti. Dažnai darbiniai santykiai, komunikacija ir sutartiniai įsipareigojimai nėra vykdomi sąžiningai. Todėl priešiški požiūriai į statybos pramonės viešąjį ir privatųjį sektorius Egipte sukelia reikšmingą teisinių ginčų sistemų ir arbitražo taikymo didėjimą. Šiame tyrime, siekiant nustatyti santykinį veiksnių, lemiančių ginčų sprendimo strategijos (GSS) sprendimo santykinį reikšmingumą, buvo sudaryta tyrimo anketa. Remiantis dešimčia veiksnių, kurie daro poveikį GSS sprendimams ir buvo nustatyti remiantis literatūros bei nestruktūrizuotais pokalbiais studijuojant ginčų priežastis, buvo sudaryti dvidešimt šeši projektų situacijų deriniai. Ekspertų buvo prašoma atlikti dešimties veiksnių porinį lyginimą ir pasirinkti ginčo sprendimo metodologiją esant skirtingoms GSS sprendimų veiksnių reikšmėms. Nors derybos, kaip įprasta, yra pirmasis bandymas spręsti bet kokį ginčą, kartais tai gali būti tik laiko ir lėšų švaistymas nepasiekiant norimo rezultato. Pasiūlytas kompiuterinis modelis, kuris gali informuoti naudotoją, ar verta siekiant taupyti laiką ir pinigus nutraukti derybas ir (arba) kitą taikų procesą, vietoj to pradėti teismo arba arbitražo procesą, ar tęsti derybas ir (arba) taikų procesą kaip vienintelį būdą išspręsti ginčą. Remiantis tyrimo rezultatais buvo sukurtas paprastai naudojamas kompiuterinis modelis, kuris sprendimų priėmėjui gali patarti, kokią ginčo sprendimo strategiją reikėtų pasirinkti, kuri iš jų yra sėkmingiausia, taupo laiką ir pinigus. Siekiant parodyti kompiuterinio modelio veikimą pateikta atvejo analizė.


2019 ◽  
Vol 25 (4) ◽  
pp. 306-321 ◽  
Author(s):  
Rachel Perez Palha ◽  
Adiel Teixeira De Almeida ◽  
Danielle Costa Morais ◽  
Keith W. Hipel

Selection processes in civil engineering infrastructure projects might require more time and effort than the decisionmakers involved in these projects are normally prepared to devote to running them. A novel approach is proposed to sort these activities into classes that represent their impact on the project, namely additive-veto sorting model, which should be considered before any bidding procedure. Therefore, problems regarding the client’s satisfaction caused by subcontractors can be avoided, and the decision-makers involved in the selection problem can devote to each class an effort compatible with the impact that activity might have on the project. The novelty of this method is that it was built to reflect the quasi-compensatory rationality of decision-makers in the construction industry; it provides them with insights on subcontractors’ activities, and it is grounded on and inspired by a real case study. The new parameters proposed within this model introduce the idea of vetoing an activity being assigned to a class when this activity is incompatible with the decision-maker’s preferences. By using this novel method, the authors succeeded in finding results that avoided a complete compensation amongst the factors considered, taking into account ranges that would be of significant importance in the decision process.


2013 ◽  
Vol 838-841 ◽  
pp. 3083-3086
Author(s):  
Min Tai Cheng

Government agencies and private sector clients typically use competitive bidding in order to award a contract to the lowest price qualified bidder. Bid price usually includes cost of construction and a markup, the scale of which is typically determined as a percentage of construction costs. Bidding strategy influences markup scale significantly and impacts contractor profit and the probability of winning the competitive contract. Further, this study is intend to compare Carr expected profit and cost-balance oriented screening under bid-to-win probability, considering to bid for new work and implementations in progress in a series of bidding states for bidding strategic decision to find out which one is the best choice in competitive bidding states for the contractor.


Author(s):  
Melanie E. Kreye ◽  
Yee Mey Goh ◽  
Linda B. Newnes

Due to the current market development of servitisation, manufacturing companies are required to compete through the provision of services as opposed to physical products. For such companies, the shift towards being a service provider often means they have to bid for service contracts, sometimes competitively. In the context of competitive bidding, the decision makers face various influencing uncertainties. Ignoring these uncertainties or their influences can result in problems such as the generation of too little profit or even a loss or the exposure to financial risks. Raising the decision maker’s awareness of the uncertainties can provide valuable information to assist in the decision-making process. The research presented in this paper presents an approach to modeling the uncertainties at the competitive bidding stage for long-life, high-value service contracts. The aim of this research is to provide decision makers with a decision matrix which illustrates the probability of winning the service contract and the probability of making a profit. The framework utilized for identifying the uncertainties and a layered approach for analyzing these uncertainties is described. These are then applied to a case study where the modeling approaches and data gathering methods are explained and the results are displayed via the decision matrix.


2014 ◽  
Vol 598 ◽  
pp. 656-660
Author(s):  
Fu Gui Dong

Owing to the fact that the power can not be stored directly and the supply must meet the demand in real time, the price of electricity is more volatile than other commodities. In order to hedge the risk, the power plant can sign the power sale contracts with big customers by the promissory price. Using the Bayesian equilibrium theory, this paper establishes the bidding models on two power plants competing for selling the electricity to the big customer. The computing result shows that the power plant’s optimal bidding strategy equals to the mean of the competitor’s ceiling bidding price and its own marginal cost.


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