QUT ePrints

A method for identifying high outliers in construction contract auctions

Skitmore, Martin & Lo, Hing Po (2002) A method for identifying high outliers in construction contract auctions. Engineering, Construction and Architectural Management, 9(2), pp. 90-130.

Abstract

Construction contract auctions are characterised by (1) a heavy emphasis on the lowest bid as it is that which usually determines the winner of the auction, (2) anticipated high outliers due to the presence of non-competitive bids, (3) very small samples, and (4) uncertainty of the appropriate underlying density function model of the bids. This paper describes a method for simultaneously identifying outliers and density function by systematically identifying and removing candidate (high) outliers and examining the composite goodness-of-fit of the resulting reduced samples with censored normal and lognormal density function. The special importance of the lowest bid value in this context is utilised in the goodness-of-fit test by the probability of the lowest bid recorded for each auction as a lowest order statistic. Six different identification strategies are tested empirically by application, both independently and in pooled form, to eight sets of auction data gathered from around the world. The results indicate the most conservative identification strategy to be a multiple of the auction standard deviation assuming a lognormal composite density. Surprisingly, the normal density alternative was the second most conservative solution. The method is also used to evaluate some methods used in practice and to identify potential improvements.

Impact and interest:

Citation countsare sourced monthly from Scopus and Web of Science® citation databases.

These databases contain citations from different subsets of available publications and different time periods and thus the citation count from each is usually different. Some works are not in either database and no count is displayed. Scopus includes citations from articles published in 1996 onwards, and Web of Science® generally from 1980 onwards.

Citations counts from the Google Scholar™ indexing service can be viewed at the linked Google Scholar™ search.

Full-text downloads:

214 since deposited on 20 Jul 2006
27 in the past twelve months

Full-text downloadsdisplays the total number of times this work’s files (e.g., a PDF) have been downloaded from QUT ePrints as well as the number of downloads in the previous 365 days. The count includes downloads for all files if a work has more than one.

ID Code: 4474
Item Type: Journal Article
Additional URLs:
Keywords: Construction, contract, auctions, outliers, goodness, of, fit, censored samples, small samples
ISSN: 0969-9988
Subjects: Australian and New Zealand Standard Research Classification > TECHNOLOGY (100000)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 2002 Emerald Publishing
Copyright Statement: Reproduced in accordance with the copyright policy of the publisher.
Deposited On: 20 Jul 2006
Last Modified: 09 Jun 2010 22:32

Export: EndNote | Dublin Core | BibTeX

Repository Staff Only: item control page