Global factors affecting margin-size of construction projects

Abstract

Identifying the optimum margin-size for a project is very important in order for contractors to win a tender. The aim of this study is to investigate the "global" factors that must be considered by contractors when deciding on the margin-size, irrespective of which country the project is located. The research design is based on a meta-analysis of six disparate works undertaken in Australia, Canada, Saudi Arabia, Singapore, the UK and the USA. Cross-country comparisons are made, so as to identify factors that are considered by the majority of the contractors. One factor that affects margin-size in all the countries being investigated is the "need for work". Other "global" factors are: the risk involved owing to the nature of the work; current workload; reliability of company pricing; and competitiveness of other bids. It is recommended that contractors who are entering new geographical locations consider these factors when deciding on the margin-size of their bids. There are also factors considered in margin-size estimation that are country specific. In addition, contractors in some countries do not consider certain factors that are deemed important by their counterparts in other countries. Non-indigenous contractors who want to bid for projects in foreign countries are urged to use the findings of this study to find out the factors they need to consider when deciding on the margin-size. © World Scientific Publishing Company.