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Study on the issues of the lowest bidding through the analysis of working budget ratio of Korean construction companies

  • Construction Management
  • Published:
KSCE Journal of Civil Engineering Aims and scope

Abstract

Lowest bidding is one of the bidding methods in which the party that bids at the lowest price is determined as the successful bidder. Although it was adopted for the purpose of strengthening and restructuring the construction industry while easing the regulations related to delivering public construction projects, the abolition of the lowest bidding system is under discussion as it is pointed out to be one of the major causes for deteriorating construction companies’ profitability. In order to overcome the limitations of inadequate reliability and representativeness of previous studies, this study has collected and analyzed numerous execution statements for public construction projects in order to understand the present condition related to whether a reasonable construction cost that is necessary for carrying out constructions is secured for the lowest bidding and what the problems are in execution of public construction projects. The average performance rate of projects ordered by lowest bidding was calculated at 104.8% through analysis of the execution statements for the public construction projects. In addition, this study analyzed the trend of change of performance rates in terms of contract amount, public owner types, and evaluation ranking of the contractor’s construction capability.

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Authors and Affiliations

  1. Civil Engineering, Inha University, Incheon, 22212, Korea

    Sungkwon Woo

  2. Hyundai Engineering & Construction, Seoul, 03058, Korea

    Siwook Lee

  3. Civil, Infrastructure and Environmental Engineering, Khalifa University, Abu Dhabi, P.O. Box 127788, UAE

    Chung-Suk Cho

  4. Korea Electric Power Corporation, Naju, 58217, Korea

    Sang Bin Kim

Authors
  1. Sungkwon Woo
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  2. Siwook Lee
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  3. Chung-Suk Cho
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  4. Sang Bin Kim
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Correspondence to Chung-Suk Cho.

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Woo, S., Lee, S., Cho, CS. et al. Study on the issues of the lowest bidding through the analysis of working budget ratio of Korean construction companies. KSCE J Civ Eng 21, 1587–1594 (2017). https://doi.org/10.1007/s12205-016-0886-6

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  • DOI: https://doi.org/10.1007/s12205-016-0886-6

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