Investigation into Contractors' Bidding Decisions in Gaza Strip

Abstract

Decision-making in construction industry is a very complex task due to uncertainty about many factors influencing the outcomes of the selected choice. Bidding decisions by contractors is one of the most critical decisions which can be made by contractors. In an attempt to uncover the underlying factors that characterize the two different but sequential decisions which are bid/no bid and markup size decisions, a questionnaire survey was conducted among 77 general contractors in Gaza Strip-Palestine regarding this issue. This research was able to identify 94 factors characterizing the bidding decision making process. The factors were categorized under three main categorize which are "Firms related factors", "project related factors" and "market conditions demand and strategic considerations" which are further divided into 16 groups. Characteristics of contractors, factors affecting bid/no bid and markup size decisions, and policies and practice of contractors are reported. The results indicate that some factors are considered very important for bid/no bid and markup size decisions. Other factors are found to have considerable importance for one decision but not for another. The study reveals that bid/no bid decision are greatly influenced by some factors, such as "current financial capability of the client", "project size", "financial status of the company", 'the donor of the project" and "terms of payment" are identified as the top five important factors. "Allowed project duration being enough", "the political environment, security situation and the cargo crossing point situation", "terms of payments", "stability of exchange rate in the country" and "the amount of changes expected throughout the execution of the project" are the highest ranked factors affecting markup size decision. One of the striking findings of this research was the distinct difference in approach of varying sizes of contractors regarding this issue. The contractors were classified into small and medium size contractors according to their annual sales. Some factors were considered high by both types of contractors for bid/no bid decision, such as "project size", "the current financial capability of the client", "the donor of the project" and "financial status of the company" and some were ranked high by one type but not by another. In markup size decision some of the factors which were found to be important by both types of contractors are "allowed project duration being enough", "the political environment, security situation and the cargo crossing point situation", "terms of payment" and " the amount of changes expected throughout the execution of the project".