The Research On Construction Project Bidding System

Bidding system in construction project has been more and more widely used in china recently and it also serves as a general contracting form in international construction field. The bidding system creates a fair environment for competition, promotes optimal resource allocation and brings much economic benefit for the purchaser. The legal system concerning bid and tender has been improved continually since the first bidding law in2000.Those laws set regulations for the problems such as what kinds of project must be purchased through bidding, who are responsible for supervising the process of the bid, what’s the principle for establishing bid evaluation committee, what kind of method is used to evaluate the tender, and the bid agency’s qualification management etc. Despite those regulations, there still exist many problems in bidding process. Excessive competition had been caused by the lowest price bid method, which led to a large number of jerry-built project as the price is too low to cover the normal cost. While in comprehensive bidding, bidders usually choose to bribe the experts who are responsible for evaluating the tender. Those issues are closely related to the motive of bidders during the tender. On that account, it’s very necessary to find the inner reason for those problems on the perspective of what bidders and tenders are decided on when bidding so that we can design system that provide enough incentive for the participators to obey and improve the inefficient phenomenon mentioned above.This article is divided into three parts to analyze the bidding system for construction project. The first part analyzes the progress of China’s bidding system, summarizes the history background regulations, laws and the existed problems concerned about bidding and how the government make measures to conquer them,based on what we could analyze whether they are efficient or not. The second part analyzes the actual mechanism of malicious quotation caused by the conspiracy between contractor and supervisor in the lowest-price-bidding. The conspiracy between contractor and supervisor can save contractor’s money from repairing or reworking once found by the supervisor when contractor offer project of inferior quality, which can offset the loss caused by low price tender when bidding. It shows that a penalty on contractor once collusion found can prohibit collusion to some extent, while it can’t eliminate the probability of conspiracy due to the limited responsibility of the supervisor. But strictly controlled qualification for the supervisor combined with penalty on contractor can solve this problem. In the third part, we build a model focus on the comprehensive bidding based on the theory of mechanism design, we find the equilibrium between the tender and bidders and it shows that comprehensive bidding can optimize the resource allocation and maximize the social surplus when the buyer’s evaluation standard is consistent with the whole society’s benefit.And the buyer can improve his expected return by set a minimum-score before the tender.