Factors affecting the bid/ no bid decision making process of small to medium size contractors in Auckland

Abstract

Companies must have the capability to deal with various bidding situations successfully in today‟s highly competitive construction market. The first step that the companies need to consider is whether to bid or not to bid when they received a tender invitation. The contractors‟ decision is affected by various factors and influences. This decision is highly reliant to the specific project and the macro environment. It is difficult to make this crucial decision in a short time frame by the management team.

This research is looked at the factors affecting the bid/ no bid decision making and the focus group was on the small to medium sized contractors in Auckland region. Data were collected for by carrying out a face to face structured interview format, incorporating a questionnaire with eight participants. Through the course of the interview, both quantitative and qualitative questions were asked. “Experience and familiarity of your firm with this specific type of work”, “Possible contribution in building long-term relationships with other key parties” and “Current financial capability of the client” were the top 3 most important factors identified by the participants.

There are many differences between the small and medium sized contractors‟ opinion for the bid/ no bid decision. Small sized contractors have very similar responses about important factors affecting bid/ no bid decision. By contrast, every medium sized contractor has nearly every different individual comment on most important factors. It is seen that medium sized contractors have stronger individual business strategy. In comparison to the literature, it was apparent that the bid/ no bid decision making is very dependent on the location the contractors are. The Marco environment is a very big influence driver for contractors‟ decisions. So, it is important that the different construction contractors should not use one standard to make the bid/ no bid decision for projects in different countries.