Examining the Microeconomics of Bid Difference of Engineer & Contractor Bids in Highway Construction
Abstract
This study examines microeconomic factors that affect Bid Difference between the designer’s Engineer’s Estimate and the contractor’s Winning Bid. Historically, the accuracy of the Engineer’s Estimate and the Winning Bid vary. To account for this discrepancy, the Federal Highway Administration (FHWA) recommends a contingency be included in all Engineer’s Estimates. Statistical analysis was performed to determine if state Departments of Transportation (DOTs) were currently meeting the recommended Bid Difference values. Data was collected from California, North Carolina, and Ohio from 2012 through 2014. Statistical analysis indicates that current practices to develop an Engineer’s Estimate met the FHWA recommended values. With the use of Pearson Correlation and Linear Regression, statistical analysis was performed to determine what factors may affect Bid Difference. The research suggests that competition based microeconomic factors affected Bid Difference, and these factors were not accounted for in the Engineer’s Estimate. The results of linear regression analysis suggest that when these factors are not included in the Engineer’s Estimate, the Bid Difference is more likely to exceed the FHWA recommended contingency.
Recommended Citation
Ryan, Robert; Rapp, Randy R.; Shaurette, Mark; and Hubbard, Sarah
(2018)
"Examining the Microeconomics of Bid Difference of Engineer & Contractor Bids in Highway Construction,"
The Professional Constructor: Vol. 43:
No.
2, Article 7.
Available at:
https://open.clemson.edu/aic-journal/vol43/iss2/7
