10 Factors Affecting Tender Price
In a recent study, we looked at the perceptions of construction professionals regarding the factors influencing the success of the tender process. In a literature review and questionnaire survey, we identified 15 factors that influence tender price. Technology advances are boosting productivity and lowering costs, and these factors are critical in determining the success of the construction tender. But what factors affect the tender price most? Let’s consider these factors. The following table explains why these factors matter for a successful tender process.
A number of conflicting interests and expectations are influencing the tender process. Directors with social identities derived from the interests of the firm typically exercise strategic mark-up logic. While focusing on the overall costs of the tender, they also examine the resource implications of specific items. In addition, they focus on their firm’s performance against forecasts and competitors. However, a number of these objectives conflict, making compromises necessary. Nevertheless, this research reveals the importance of understanding the scope of works before making decisions about the tender price.
In the study, nine constructs and three pricing strategies were identified. This research provides some useful insights for SMEs in the construction industry. The authors found that pricing risk is one of the key factors influencing the tender price. The firm’s profit maximisation was measured in terms of maximum profit, as well as the cost-effectiveness of the project. The study also suggests the importance of maintaining good relationships with suppliers and subcontractors, since these can provide useful information. The study also showed that bidders should keep in mind the time pressure, quality, and complexity of the project, in order to maximize its profit margin.