Unit-price-based model for evaluating competitive bids

A lump-sum lowest bid method allows project administrators of public construction projects to reject any bid if they determine the bid price is unreasonable. In practice however, few bids are rejected because of the lack of an objective process for evaluating the lowest bids. While past research assessed the bids based on total bid price, this study proposes a bid evaluation model developed based on the level of unit prices. In the proposed model, the lowest bid is assessed according to the unit prices electronically obtained from the owner and all qualified bidders. Moreover, a differential ratio is defined to measure the deviation between the unit prices submitted by both the owner and the lowest bidder. The merits of this innovative model are demonstrated by applying it to two subprojects of a building construction project. Practitioners and governmental officers have confirmed the feasibility of the model provided the languages or clauses describing the modeling algorithms are explicated in the general or special conditions of tendering documents.