Change search
ReferencesLink to record
Permanent link

Direct link
The balance of unbalanced bidding
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Transport Studies, CTS. VTI, Sweden.
2015 (English)In: 8TH NORDIC CONFERENCE ON CONSTRUCTION ECONOMICS AND ORGANIZATION, 2015, 97-103 p.Conference paper (Refereed)
Abstract [en]

Based on anecdotal evidence, claims are made that unbalanced bidding is a serious problem in the construction industry. This concept is based on a situation with a contractor being more informed than the client. The asymmetry in information can be used by the contactor to skew unit prices in the ex ante bid and in order to enhance the ex post profit. This is done by increasing the unit price of a quantity that is expected to go up and lower the unit price of a quantity expected to decrease. Research regarding unbalanced bidding has to a large extent focused on models to assists clients in detecting and contractors in optimising the skew. There is also theoretical literature on efficiency losses of unbalanced bidding. The latter models show that it is rational for an informed contractor to raise unit prices on relative underestimated quantities. However, empirical studies that capture the magnitude of the problem are lacking. This paper sets out to fill that void. The analysis is based on a unique dataset of 15 Swedish road investments and 2 795 observations. Data consist of ex ante unit prices and quantities that are related to the final (ex post) quantities. By looking for a positive correlation between these variables and controlling for other affecting variables, the hypothesis of unbalanced bidding can be empirically tested. Along earlier studies on US data, this paper, using more project specific control variables concluded that the effect is even smaller or non-existent.

Place, publisher, year, edition, pages
2015. 97-103 p.
, Procedia Economics and Finance, ISSN 2212-5671 ; 21
Keyword [en]
Public procurement, road construction, unbalanced bidding, unit price contracting
National Category
Civil Engineering
URN: urn:nbn:se:kth:diva-173177DOI: 10.1016/S2212-5671(15)00155-0ISI: 000358679700012OAI: diva2:853504
8th Nordic Conference on Construction-Economics-and-Organization (CEO), MAY 28-29, 2015, Tampere, FINLAND

QC 20150914

Available from: 2015-09-14 Created: 2015-09-07 Last updated: 2015-09-14Bibliographically approved

Open Access in DiVA

No full text

Other links

Publisher's full text

Search in DiVA

By author/editor
Nyström, Johan
By organisation
Centre for Transport Studies, CTS
Civil Engineering

Search outside of DiVA

GoogleGoogle Scholar
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Altmetric score

Total: 10 hits
ReferencesLink to record
Permanent link

Direct link