An Analysis of Risks in Contractor Bidding Strategies within the Sri Lankan Construction Sector

Abstract

Competitive bidding is widely employed by construction firms to secure projects, often by identifying optimal opportunities and submission strategies. However, certain bidding approaches may result in adverse outcomes, such as the "winner’s curse." This research investigates the key factors and strategies influencing bid decision-making and contractor behavior within the Sri Lankan construction sector. It evaluates the relevance and limitations of theoretical bidding models in real-world applications, with emphasis on risk management and market-responsive strategies. A critical literature review is structured around two principal themes: bidding strategies and associated risks. A thematic and critical review methodology synthesizes existing knowledge and highlights gaps. The study identifies and classifies various risky bidding strategies, ranking them based on their level of risk. Repetitive job bidding emerged as the least risky approach, while intuitive manipulation was identified as the most hazardous. Corresponding risk mitigation techniques are outlined, offering valuable insights for practitioners and policymakers aiming to enhance the effectiveness and resilience of bidding practices in the construction industry.