A competitive strategy model for highway construction proposals

[Extract from Preface] A contractor bidding on highway construction projects faces two conflicting objectives: first to be the low bidder so as to win the project, and second, to earn as high a profit as possible. The conflict is apparent because the higher the contractor bids, the more profit is realized, but the less likely he is of being the low bidder. The submitted bid will be a compromise between these two objectives, and will be based both on the contractor's cost experience with similar projects and his knowledge of the industrial environment at that time. Models are developed in this dissertation to aid the contractor in making his decisions when bidding for paving projects. These models involve the development of a distribution of low bids which can be expected for a specific project, based on the required work items. From this distribution and the estimated cost of the project, the optimum bid, maximizing the expected profit, is determined.