Analytical model for analyzing construction claims and opportunistic bidding

S. Ping Ho, Liang Y. Liu

Research output: Contribution to journalArticle

Abstract

Construction claims are considered by many project participants to be one of the most disruptive and unpleasant events of a project. Construction claims occur for various reasons. There is a need to understand the dynamic nature between construction claims and opportunistic bidding. An analytical model, the Claims Decision Model (CDM), based on "game theory," was developed to study opportunistic bidding and construction claims. This model explains (1) how people behave during a potential or existing claiming situation, (2) how different claiming situations are related to opportunistic bidding behavior, and (3) what situations encourage or discourage opportunistic behavior. The results of this pilot study indicate that the equilibrium solution of a construction claim is to negotiate and settle, which concurs with most of the claim cases in the industry. The possible range of a negotiation settlement is obtained in this paper. The model provides the rationale for recent innovations to manage disputes. The model can also help project owners identify the possibility of opportunistic bidding, and can assist the project participants in analyzing construction claims.

Original languageEnglish (US)
Pages (from-to)94-104
Number of pages11
JournalJournal of Construction Engineering and Management
Volume130
Issue number1
DOIs
StatePublished - Jan 1 2004

Keywords

  • Analytical techniques
  • Bids
  • Claims
  • Construction industry
  • Contracts
  • Litigation

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Building and Construction
  • Industrial relations
  • Strategy and Management

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