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Bid cutting: an empirical study of practice in South-East Queensland

May, Dayne, Wilson, Owen D., & Skitmore, Martin (2001) Bid cutting: an empirical study of practice in South-East Queensland. Engineering Construction and Architectural Management, 8(4), pp. 250-256.

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Abstract

The nature, status and role of bid cutting in construction bidding are examined from economic, legal, ethical and management perspectives. Some possible means of countering its negative effects are considered including its prohibition by legislation, the use of bid depositories, earlier formalisation of subcontracts, withdrawal of subcontract prices and through alternative procurement methods.

An empirical survey of bid cutting practice is described involving a sample of main contractors (MCs) and subcontractors (SCs) in SouthEast Queensland. The practice of bid cutting was found to be widespread. All the MCs considered the practice to be ethical and all the SCs considered it to be unethical. In some cases, MCs awarded contracts elsewhere, even after telling SCs they had the job. Most of the SCs had tried individually to counteract bid cutting but were unable to continue this while others were complying with MC bid cutting attempts. SC bid withdrawals are very rare and litigation is never applied by either MCs or SCs. Mainly as a result of incomplete project documentation, MCs disliked the idea of making the subcontract binding at the time of main contract bid subject to its success, although it was generally recognised that it would reduce bid-cutting by the MC – view that was also shared by half the SCs. Most respondents thought the construction management procurement option might reduce bid cutting but none had sufficient direct experience to be sure.

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ID Code: 4145
Item Type: Journal Article
Keywords: Bid cutting, bid shopping, bid peddling, bidding, tendering, subcontracting, practice, economics, law, ethics
DOI: 10.1046/j.1365-232x.2001.00206.x
ISSN: 0969-9988
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 2001 Blackwell Publishing
Copyright Statement: The definitive version is available at www.blackwell-synergy.com
Deposited On: 16 May 2006
Last Modified: 11 Aug 2011 04:21

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