Risk perception and propensity in bid/no-bid decision-making of construction projects

Abstract

Purpose

Making the right bid/no-bid decision is critical to the success and development of construction contracting enterprises. Decision makers’ personal characteristics, such as risk perception and propensity, have great impact on bid/no-bid decisions, which is the major concern of this research. The purpose of this paper is to explore the relationship among decision makers’ risk perception, risk propensity, and their bid/no-bid decision making of construction projects, as well as the factors influencing the risk perception and propensity.

Design/methodology/approach

In total, four hypotheses were proposed based on an extensive literature review. Experimental questionnaires were distributed to employees working in Chinese construction contracting enterprises with knowledge of construction bidding, and 134 valid questionnaires were obtained. Multivariate statistical analysis through SPSS 19.0 was used to analyze the acquired data.

Findings

Data analysis shows that in the context of international construction contracting: risk perception has a negative influence on bid/no-bid decision making; while risk propensity produces a positive influence and the probability and magnitude of potential gain or loss both have significant impacts on risk perception, and the probability plays a more important role.

Originality/value

This research studied the bid/no-bid decision making of construction projects from the new perspectives of risk perception and risk propensity of the decision makers.

Citation

Chen, Y.Q., Zhang, S.J., Liu, L.S. and Hu, J. (2015), "Risk perception and propensity in bid/no-bid decision-making of construction projects", Engineering, Construction and Architectural Management, Vol. 22 No. 1, pp. 2-20. https://doi.org/10.1108/ECAM-01-2013-0011