Prepared By: Sameh Halaweh Mohannad Hanbali Odai Abu Al-Rub Supervisor: Eng. Reema Nassar Factors Affecting Bid/No Bid Decision Making IN The West Bank An-Najah National University Faculty Of Engineering Civil Engineering Department Sameh Halaweh 10823818 Odai Abu Al-Rub Mohannad Hanbali 1 Outline Introduction Methodology Data Collection & Analysis Conclusion & Recommendations To bid or Not to bid? Effects of bidding decision? How this dilemma can be solved? Factors remain the same? Problem Of The Study Objectives Explore & rank the factors. Elaborate the critical factors. Recommend some decision techniques. Recommend some improvements. Bagies (2009), Saudi Arabia. Ma (2011), Auckland. Enshassi (2011), Gaza Strip. Jarkas (2012), Qatar. Various models were conducted around the world. Previous Studies 5 Methodology Interviews & Search Identify Factors Questionnaire Conclusion & Recommendation Data Collection & Analysis Contractor Factors Client Factors Contract & Project Factors External Factors Factors Classification Contractors Classification Sample size Population = 61. Sample = 38. The questionnaire consisting of two parts: To Questionnaire Questionnaire Part 1 Part 2 includes the factors with four evaluation levels depending on its importance to the contractor. includes general questions, which is related to the company Data Collection After a final questionnaire is formed, the questionnaires were distributed over representative sample of contracting companies of that belongs to the desired classification categories around the West Bank from 1st of February to 1st of April 2013. Data collection Questionnaires were distributed by three means: Personal Delivery Emails Fax Personal delivery of questionnaire to the contracting companies was the main mean ,to ensure that the contractor would response for the questionnaire . The following tables represent the data collected from 38 contracting companies: Data Collection   Number Factors related to the contractor 1 Not Important 2 Little Important 3 Important 4 Very Important 1. Need for Work. 1 5 17 15 2. Current Workload. 0 2 25 11 3. Previous Experience in Similar Projects. 3 9 18 8 4. Strategy of the Company. 1 3 26 8 5. Classification Criteria for the Contractors. 1 5 18 14 6. Expected Risk. 1 15 12 10 7. Expected Profitability. 0 6 15 17 8. Expected Total Cost. 1 5 24 8 9. Pre-qualification Requirement. 1 12 19 6 10. Previous Profit in Similar Projects. 5 12 15 6 11. Availability of Other Projects. 3 8 21 6 12. Availability of Required Resources (raw materials, labors, equipments).   1   12   14   11 13. Availability of Required Cash 2 8 13 15 14. Financial facilities with Banks 6 13 12 7   Number Factors related to the general environment 1 Not Important 2 Little Important 3 Important 4 Very Important 1 Weather Condition 6 21 10 1 2 Laws and Government Regulations in Construction 6 17 12 3 3 Taxes 5 16 11 6 4 Inflation Rate 4 10 16 8 5 Political Situation 1 9 15 13 6 Economic Environment 0 5 15 18 7 Probable Number and Identity of Competitors 2 4 23 9 8 Situation of the Construction Industry 2 9 22 5   Number Factors related to the contract and project characteristics 1 Not Important 2 Little Important 3 Important 4 Very Important 1 Size of Project 0 5 16 17 2 Location of Project and Accessibility 0 5 18 15 3 Contract Duration 2 8 21 7 4 Size and Validity of Bonds and Insurance Required 6 16 13 3 5 Contract Conditions 3 10 19 6 6 Type of Project 3 10 20 5 7 Complexity of the Project 4 8 17 9 8 Value of Liquidated Damages 2 18 14 4 9 Adequacy of Tender Information 2 6 14 16 10 Proportion to Be Subcontracted 6 15 13 4 11 Time Available for Tendering Preparation 3 11 14 10 12 Tendering Duration 5 7 24 2 13 Identity of Consultant & Designer 5 4 13 16 14 Degree of Hazard of Works 3 14 13 8 15 Type of Contract. 2 15 18 3   Number Factors related to client/employer characteristics 1 Not Important 2 Little Important 3 Important 4 Very Important 1 Financial Stability of Employer 0 0 7 31 2 Identity and Reputation of Employer in the Industry 0 0 10 28 3 Previous Experience of Contractor with Employer 4 9 10 15 4 Promptness of Employer in Payments Process 0 4 14 20 5 Clients policy to Adopt the Advanced Payment 8 12 9 9 6 Client's policy in Resolving the Disputes and Litigations 9 12 11 6 7 Mean of Advertisement 6 19 11 2 8 Client’s Requirements 4 9 20 5 9 Type of Client 3 9 14 12 10 Project Source of Funding 1 4 12 21 11 The Client’s Level of Supervision, Restriction, Monitoring, and Controlling over the Contractors   8   8   10   12 12 Client’s Safety Requirements 6 12 9 11 13 Quality Level that the Clients Ask for 8 7 10 13 These are the results of analyzing the data of the first part of the questionnaire: The job role of the respondents is: 87% General Managers. The decision making in contracting companies depends on: 95% Experience and Intuition. The responsible to follow-up of the announcements of tenders is: 79% General managers. 4. The decision makers for bids in companies is: 92% General managers. 5. The common ways in companies to know about tenders are: 1.100% Newspaper. 2. 92% Invitations. 6.Number of years that the contracting companies have in construction sector are: 66% 10-20 years. the second part of the questionnaire: Data are analyzed using the “Relative Importance Index” technique (RII) to rank the factors affecting bid or no bid decision making in the West Bank. RII% = x 100% For example: To calculate RII% of “Need for work”, which has these values as mentioned in data collection N4 = 15, N3 = 17, N2 = 5, N1 = 1 RII% = x 100% = 80.26% Number Factors related to the general environment group RII% Ranks relative to the group Ranks relative to all factors 1 Weather Condition 53.95 8 50 2 Laws and Government Regulations in Construction 57.89 7 48 3 Taxes 61.84 6 44 4 Inflation Rate 68.42 5 30 5 Political Situation 76.32 2 15 6 Economic Environment 83.55 1 5 7 Probable Number and Identity of Competitors 75.66 3 17 8 Situation of the Construction Industry 69.74 4 27 Number Factors related to the contractor characteristics RII% Ranks relative to the group Ranks relative to all factors 1. Need for Work. 80.26   3   10 2. Current Workload. 80.92   2   9 3. Previous Experience in Similar Projects. 70.39   9   23 4. Strategy of the Company. 76.97   5   13 5. Classification Criteria for the Contractors. 79.61   4   11 6. Expected Risk. 70.39   9   23 7. Expected Profitability. 82.24   1   7 8. Expected Total Cost. 75.66   7   17 9. Pre-qualification Requirement. 69.74   12   27 10. Previous Profit in Similar Projects. 64.47   11   39 11. Availability of Other Projects. 69.74   12   27 12. Availability of Required Resources (raw materials, labors, equipments). 73.03   8   20 13. Availability of Required Cash. 76.97   5   13 14. Financial Facilities with Banks 63.16   14   41 Number Factors related to the contract and project characteristics RII % Ranks relative to the group Ranks relative to all factors 1 Size of Project 82.89 1 6 2 Location of Project and Accessibility 81.58 2 8 3 Contract Duration 71.71 5 22 4 Size and Validity of Bonds and Insurance Required 58.55 15 47 5 Contract Conditions 68.42 8 30 6 Type of Project 67.76 9 33 7 Complexity of the Project 70.39 6 23 8 Value of Liquidated Damages 63.16 13 41 9 Adequacy of Tender Information 78.95 3 12 10 Proportion to Be Subcontracted 59.87 14 45 11 Time Available for Tendering Preparation 70.39 6 23 12 Tendering Duration 65.13 11 38 13 Identity of Consultant & Designer 76.32 4 15 14 Degree of Hazard of Works 67.11 10 34 15 Type of Contract. 64.47 12 39 Number Factors related to client/employer characteristics RII% Ranks relative to the group Ranks relative to all factors 1 Financial Stability of Employer 95.39 1 1 2 Identity and Reputation of Employer in the Industry 93.42 2 2 3 Previous Experience of Contractor with Employer 73.68 5 19 4 Promptness of Employer in Payments Process 85.53 3 3 5 Clients Policy to Adopt the Advanced Payment 62.50 11 43 6 Client's policy in Resolving the Disputes and Litigations 59.21 12 46 7 Mean of Advertisement 55.92 13 49 8 Client’s Requirements 67.11 8 34 9 Type of Client 73.03 6 20 10 Project Source of Funding 84.87 4 4 11 The Client’s Level of Supervision, Restriction, Monitoring, and Controlling over the Contractors 67.11 8 34 12 Client’s Safety Requirements 66.45 10 37 13 Quality Level that the Clients Ask for 68.42 7 30 Top ten factors affecting bid/no bid decision making in the West Bank Rank Top Ten Factors Affecting Bid/No Bid Decision Making in the West Bank RII% 1. Financial Stability of Employer 95.39 2. Identity and Reputation of Employer in the Industry 93.42 3. Promptness of Employer in Payments Process 85.53 4. Project Source of Funding 84.87 5. Economic Environment 83.55 6. Size of Project 82.89 7. Expected Profitability 82.24 8. Location of Project and Accessibility 81.58 9. Current Workload 80.92 10. Need for Work 80.26 Decision techniques. Improvements for contractors. Improvements for clients. Recommendations Decision Techniques Mind Map Logic Flow Chart Pros & Cons Multiple Attributes Analysis Weighted Scoring Model Mind Map Logic Flow Chart Do I have enough resources Is the employer good Is the project in Nablus End Bid Start Yes Yes Yes No Not To Bid No No Pros & Cons Pros Score Cons Score Good financial stability of the employer 8 Unsuitable location 6 The company needs to work 8 The expected profit isn't high 7 Size of the project is suitable 7 Weak economic environment 6 Total 23 Total 19 Attributes Score Weight Size of the project 10 10% Location of the project 20 20% Financial stability of the employer 40 40% Expected profit 30 30% Multiple Attributes Analysis Attributes Project A (Score) Project B (Score) Size of the project 70 80 Location of the project 80 70 Financial stability of the employer 90 60 Expected profit 90 40 Attributes Project A Project B Size of the project 0 1 Location of the project 1 0 Financial stability of the employer 1 0 Expected profit 1 0 Multiple Attributes Analysis Attributes Project A (Score) Project B (Score) Size of the project 0 0.1 Location of the project 0.2 0 Financial stability of the employer 0.4 0 Expected profit 0.3 0 Total 0.9 0.1 Attributes Weight (W) Scores of Proj. A (S) W x S Scores of Proj. B (S) W x S Financial stability of the employer 30% 80 24 70 21 Size of the project 15% 75 11.25 60 9 Location of the project 10% 60 6 40 4 Expected profit 25% 75 18.75 50 12.5 Need for work 20% 80 16 80 16 Total 100% 370 76% 300 62.5% Weighted Scoring Model Recommended Improvements Of Bidding Strategies: Contractors 1 2 3 4 5 Taking the critical factors into account. Use some techniques. Avoid unethical behavior. Deal with each project uniquely. Hire a professional engineer. Recommended Improvements Of Bidding Strategies: Clients 1 2 3 4 5 Provide an advance payment. Determine the percentage of subcontractors. Use classification categories or prequalification Don′t select the lowest price only. Use unit price contracts mainly. 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