Bid-price variability in the Sri Lankan Construction Industry

Abstract

The purpose of this study is to examine the bid-price variability in construction tenders and the project variables that would give rise to variability. This topic is interesting because the bid price variability reflects market inefficiency and business strategies.The research is designed as a regression model. Data on bids from 62 projects is used in the model. The current literature reveals six project variables that can affect the bid price variability. The analysis shows that only three projects variables, namely, quality of tender documents, level of prequalification requirements, and minimum grading requirement have significant impact on bid price variability. The findings suggest that the quality of tender documents and high levels of prequalification are major sources of bid variability. Steps should be taken to improve the information content of tender documents and less stringent but appropriate prequalification criteria should be used.