An option pricing approach to optimal bidding in construction projects

Detalhes bibliográficos
Autor(a) principal: Ribeiro, João A.
Data de Publicação: 2017
Outros Autores: Pereira, Paulo J., Brandão, Elisio M.
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/11144/3744
Resumo: Reaching an optimal mark‐up value in the context of construction projects' bidding competitions has been a research topic for more than 40 years. This paper aims to contribute to this debate by applying a real options approach. The proposed model has a pure theoretical nature and is based on a maximization problem, whose outcome is the optimal price, that is, the price that should be included in the bid proposal. The model is later extended to accommodate the existence of penalty costs if the selected bidder refuses to enter into contract. Results reached using a numerical example demonstrate that the optimal price is higher when penalty costs are considered.
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spelling An option pricing approach to optimal bidding in construction projectspricing approachconstruction projectsReaching an optimal mark‐up value in the context of construction projects' bidding competitions has been a research topic for more than 40 years. This paper aims to contribute to this debate by applying a real options approach. The proposed model has a pure theoretical nature and is based on a maximization problem, whose outcome is the optimal price, that is, the price that should be included in the bid proposal. The model is later extended to accommodate the existence of penalty costs if the selected bidder refuses to enter into contract. Results reached using a numerical example demonstrate that the optimal price is higher when penalty costs are considered.Wiley Online Library2018-04-16T16:17:39Z2017-07-01T00:00:00Z2017-07info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/11144/3744eng0143-65701099-1468https://doi.org/10.1002/mde.2878Ribeiro, João A.Pereira, Paulo J.Brandão, Elisio M.info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-01-11T02:20:09Zoai:repositorio.ual.pt:11144/3744Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T01:33:58.068703Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv An option pricing approach to optimal bidding in construction projects
title An option pricing approach to optimal bidding in construction projects
spellingShingle An option pricing approach to optimal bidding in construction projects
Ribeiro, João A.
pricing approach
construction projects
title_short An option pricing approach to optimal bidding in construction projects
title_full An option pricing approach to optimal bidding in construction projects
title_fullStr An option pricing approach to optimal bidding in construction projects
title_full_unstemmed An option pricing approach to optimal bidding in construction projects
title_sort An option pricing approach to optimal bidding in construction projects
author Ribeiro, João A.
author_facet Ribeiro, João A.
Pereira, Paulo J.
Brandão, Elisio M.
author_role author
author2 Pereira, Paulo J.
Brandão, Elisio M.
author2_role author
author
dc.contributor.author.fl_str_mv Ribeiro, João A.
Pereira, Paulo J.
Brandão, Elisio M.
dc.subject.por.fl_str_mv pricing approach
construction projects
topic pricing approach
construction projects
description Reaching an optimal mark‐up value in the context of construction projects' bidding competitions has been a research topic for more than 40 years. This paper aims to contribute to this debate by applying a real options approach. The proposed model has a pure theoretical nature and is based on a maximization problem, whose outcome is the optimal price, that is, the price that should be included in the bid proposal. The model is later extended to accommodate the existence of penalty costs if the selected bidder refuses to enter into contract. Results reached using a numerical example demonstrate that the optimal price is higher when penalty costs are considered.
publishDate 2017
dc.date.none.fl_str_mv 2017-07-01T00:00:00Z
2017-07
2018-04-16T16:17:39Z
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dc.identifier.uri.fl_str_mv http://hdl.handle.net/11144/3744
url http://hdl.handle.net/11144/3744
dc.language.iso.fl_str_mv eng
language eng
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1099-1468
https://doi.org/10.1002/mde.2878
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dc.publisher.none.fl_str_mv Wiley Online Library
publisher.none.fl_str_mv Wiley Online Library
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