Construction Innovation: Information, Process, Management

Purpose – Traditionally, construction projects are awarded based on the lowest submitted tendering prices. However, this awarding method often causes problems on project delay, poor risk assessment and increased claims from variations. This paper aims to address these issues.

Design/methodology/approach – Nowadays, clients require tenderers to submit both bidding prices and contract duration. This bidding method is called an optimal price-time bidding model, the details of which are investigated in this paper, using 24 Hong Kong private and public foundation price-time contracts.

Findings – The results show that private foundation projects produce better time and cost savings when compared with public foundation projects, meaning that the former are generally more effective in using the optimal price-time bidding model than in public foundation projects. To further explore the effectiveness of the price-time bidding model, case studies from a private and a public foundation project are investigated to show that private foundation projects using the price-time bidding model are more effective than public foundation projects.

Originality/value – This paper encourages contractors to consider both time and cost factors in tendering and construction processes, noting that high liquidated and ascertained damages (LAD) charges need to be applied. This can provide a “balanced environment” for contractors in the construction industry.