| This dissertation is a unique treatment of competitive bidding theory. The methodology presented here utilizes an established marketing research methodology, Conjoint analysis, to establish the probability of winning based on multiple factors. This hybrid model, Value-Bidding, refocuses the competitive bidding model from fee-based selection criteria to value-based selection criteria. The resulting analytical model enables engineers to analyze market conditions, evaluate owner's priorities, systematically track competitors, and optimize job proposals, while maximizing the probability of winning, maximizing profit and optimizing price.; Traditionally, competitive bidding theory models the lowest-bidder-wins scenario, and the probability of winning is based on the probability that the bidder's price is lower than the competitors. (Friedman, 1956; Gates, 1967) Though this is a reasonable model for construction services, the fee-based competitive bidding models are not applicable for engineering design services. The selection criteria for engineer services often involves several factors, such as quality, availability, reputation, resume and references, and may or may not include price. From preliminary interviews, the author concluded that there is a need for a systematic method of evaluating potential engineering job opportunities and determining fair market prices.; The goal of this dissertation is to inject science into the art of pricing engineering services. Value-Bidding is broad in scope and can address the process of selling multi-faceted services or products in a competitive environment. Value-Bidding supports the: (1) Definition of services; (2) Evaluation of potential competitors; (3) Evaluation of the probability of winning.; The result of this research can support broad business decisions or service, product and price development for individual job proposals. In addition, the Value-Bidding methodology helps engineers optimize their technical and price proposals to meet business objectives, such as profit maximization or market expansion. |
