Optimal Markup Policy in Sequential Competitive Bidding

by Hongbin (Ben) Chen, (S.M.ASCE), Univ of Michigan, Arbor, United States,
Robert I. Carr, (F.ASCE), Univ of Michigan, Arbor, United States,
Photios G. Ioannou, (M.ASCE), Univ of Michigan, Arbor, United States,

Document Type: Proceeding Paper

Part of: Computing in Civil Engineering


Construction firms encounter resource constrains in their business operations. However, current competitive bidding models fail to consider the impact of a firm's constrained resources on the firm's profitability, particularly for the typical random stream of projects available for bidding. This paper presents a decision model with which a contractor can determine an optimal markup policy to make the best use of its limited resources in a market that provides a random sequence of project opportunities.

Subject Headings: Bids | Optimization models | Resource management | Commercial construction | Business administration | Profits | Rivers and streams | Public policy

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