Managing uncertainties in construction tendering: a decision theory framework for supporting bidders

The tender procedure is a critical phase of the construction process because it defines the benchmarks for deciding the key feature of the contractor, the characteristics for the best success of the process according to principles of transparency, cost-effectiveness, and quality of the final product. The widely used methods comprise awarding scores assigned in relation to the improved performance offered by the bidder. Quantitative analyses have shown that one of the most rewarding factors is the execution time, a variable factor considering the uncertainty characterising the construction sector. For bidders, it is essential to have tools capable of accurately predicting the effective duration of a construction site based on the hypothesis of different scenarios. For clients, this is necessary to define the possibility of using cash flow and limit the extra costs because of the extension of work. The uncertainty nowadays takes additional variables linked to the pandemic and geopolitical conflicts, which have affected the construction industry in terms of available human resources and reliability of the supply chain. The research introduces a framework to define the possible optimal strategies a contractor can use during the bidding process by applying different criteria of decision theory on the values of estimated time profits based on the states of nature, the socio-economic situation at the time of the work. The results show some of the various strategies that a contractor could follow to maximise his profit. Lastly, some future developments of the framework are presented, such as the integration of accurate data based on case studies or contributions from experts in construction tendering.