Primary factors influencing bid mark‐up size decisions of general contractors in Kuwait

Abstract

Purpose

Since the construction industry in the State of Kuwait is further governed by a competitive environment, which is driven by the lowest cost mentality, the aim of this study is to identify and rank the relative importance of factors perceived to influence bid mark‐up size decisions among local general contractors bidding on construction projects.

Design/methodology/approach

The effects of 40 identified factors, which were shortlisted based on previous relevant investigations and the input of local industry experts, were surveyed by a statistically representative sample of contractors. Using the “relative importance index” technique, the influence ranks of the factors explored were established.

Findings

The results reveal the following as the primary factors affecting general contractors' bid mark‐up size decisions: employer type and identity; project size; clarity of technical specifications; previous experience with employer; number and identity of competitors; previous experience in similar projects; design complexity level; current work load; design quality level; and tendering duration.

Research limitations/implications

Although the outputs contribute to the overall body of knowledge related to bidding in the construction industry, it is further recommended to determine the relationship between the factors explored, especially those perceived as most significant, and their tangible effects on contractors' mark‐up decisions.

Practical implications

The outcomes: demonstrate the importance of the “constructability” concept to construction costs; and assert that the conception of exerting pressure on designers to cut down design durations and fees, and further shortening tenders' durations to speed up the projects' development process, is “false economy”.

Originality/value

The findings fill a gap in knowledge of the factors affecting contractors' bid mark‐up decisions, which can be used to provide academics, employers, industry practitioners, and policy makers, direction for focusing, acting upon and controlling the primary factors perceived to impact the competitiveness level of the State's construction industry.

Citation

Jarkas, A.M. (2013), "Primary factors influencing bid mark‐up size decisions of general contractors in Kuwait", Journal of Financial Management of Property and Construction, Vol. 18 No. 1, pp. 53-75. https://doi.org/10.1108/13664381311305078