A factor-based probabilistic cost model to support bid-price estimation

An appropriate bid price is essential for winning a construction project contract. However, making an accurate cost estimate is both time-consuming and expensive. Thus, a method that does not take much time and can approximate a proper bid price can help a contractor in making bid-price decisions wh...

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Bibliographic Details
Published in:Expert systems with applications 2012-04, Vol.39 (5), p.5358-5366
Main Authors: Wang, Wei-Chih, Wang, Shih-Hsu, Tsui, Yu-Kun, Hsu, Ching-Hsiang
Format: Article
Language:English
Subjects:
Approximation
Bidding
Contractors
Cost division
Cost engineering
Division
Expert systems
Factors
Housing
Probabilistic cost
Probabilistic methods
Probability theory
Residential housing project
Simulation
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Summary:An appropriate bid price is essential for winning a construction project contract. However, making an accurate cost estimate is both time-consuming and expensive. Thus, a method that does not take much time and can approximate a proper bid price can help a contractor in making bid-price decisions when the available bid-estimation time is insufficient. Such a method can also generate a target cost and provide a cross-check for their bid prices that were estimated using a detailed process. This study proposes a novel model for quickly making a bid-price estimation that integrates a probabilistic cost sub-model and a multi-factor evaluation sub-model. The cost sub-model, which is simulation-based, focuses on the cost divisions to save estimation time. At the same time, the multi-factor evaluation sub-model captures the specific factors affecting the cost of each cost division. The advantages of the proposed model are demonstrated by its application to three residential housing projects located in northern Taiwan. The steps for applying this model to other contractors are also provided.
ISSN:0957-4174
1873-6793
DOI:10.1016/j.eswa.2011.11.049