Probabilistic Analyses of Tender Uncertainties

At a tender in the Netherlands the contract is in general awarded to the contractor with the lowest bid. For the owner an engineering firm’s cost estimate should be a good forecast of the bids in the tender. The amount of spread needed around the mean of the cost estimate and its position with respect to the average bid determine the performance of an estimator. An owner would select a well performing engineering firm based on past performances. However, these performances are not available because these have never been investigated on a large scale yet. First, this paper determines and compares the performances of three engineering firms. Hereby it makes a distinction between those periods, in which forbidden preliminary discussions did and those in which they did not take place. Second, it investigates the effect of preliminary discussions on the bids. Third, it determines if a second opinion can contribute to the accuracy of the cost estimate. Finally, calculations for the determination of the optimal number of contractors to be invited for a tender will be shown. The approach followed in this paper will be of interest to practitioners as well as academics. CE Database keywords: probabilistic methods, tenders, bids and cost estimates 1 TU Delft, Faculty of Civil Engineering and Geosciences, The Netherlands 2 Holland Railconsult, Utrecht, The Netherlands