A competitive tendering strategy model and software system based on fuzzy set theory

Choosing an appropriate amount of margin, or markup, to add to the estimated cost of a construction project is one of the most significant decisions facing a contractor in preparing a tender. A competitive tendering strategy model that uses techniques of fuzzy set theory to help in setting margin on construction projects has been developed. The model provides recommendations of margin size based on an analysis of the company's objectives in tendering and the corporate, project, and competitive environment at the time of tendering. The use of fuzzy set theory allows assessments to be made in qualitative and approximate terms, which suit the subjective nature of the margin size decision. The goal of this model is to help a company achieve its objectives in tendering. The model has been implemented in the form of a prototype software system named PRESTTO. The competitive tendering strategy model is described and a sample project is presented to demonstrate its use in practice. The main conclusion of the paper is that fuzzy set theory can be applied successfully to model the margin size decision.