Optimum Bid Estimation on Fixed Cost Contracts

Abstract

The paper presents a competitive bidding model which can be readily implemented in a competitive bidding environment within the construction industry. A method of obtaining a fast and accurate approximation of the optimum bid for a class of bidding problems is developed. The Newton Approximation Method is employed in approximating the root of an equation which maximizes the expected monetary value of a contract. A bidding chart and an example application of the technique are presented.