Construction tender pricing strategies in traditional procurement system

Abstract

The fundamental activities carried out by a contractor are estimating and submitting pricing proposal, therefore contractors are required to make decision during pricing of Bills of Quantities (BQ) regarding the most suitable pricing strategies to be applied. Despite numerous of study has been carried out to identify effective pricing strategies to allow competitive pricing, contractor choose no strategies but relied on their instinct and feeling. This study is conducted to identify the current pricing strategies used by contractors and to determine the internal and external variables in making pricing strategies decision. Target respondents for this study are estimator in Grade 7 contractors. Semi-structure interviews and content analysis method is used to analyse the obtained data. The findings show that the tender pricing strategies adopted are cost based pricing, hybrid pricing and the combination of cost based and historical price based strategies. On the other hand, top management decision and company strength and weaknesses are the two internal variables in making pricing decision. Besides, the external variables in selection of pricing strategies is owner's characteristics. Conclusively, this study can enhance the understandings on tender pricing strategies and outline the viable alternatives way to have a better position in project bidding.