The Science in Human Intuition: Optimum Bid Markup Calculations in Competitive Bidding Environments Using Probabilistic Neural Networks

Abstract

The study presented in this paper seeks the development of a model to be used by the construction industry for optimum bid markup calculations in static and non-static competitive bidding environments. The framework presented herein incorporates both the quantitative and qualitative factors that are inherent in the prevalent competitive bidding environment, and assesses the uncertainties pertaining to the underlying bidding factors and the estimation of optimum bid markups. More importantly, the described model supplements the subjective measures intuitively introduced in competitive bids by incorporating all relevant historical project and competitor data, thus providing its users with the means to assess the probability of winning at suggested bid markups.