Suicide bidding
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Suicide bidding is a response to a
sealed-bid auctions with the lowest bid winning.[1]
The motive for such bidding is to keep the company's
skilled labour employed, even if the project only breaks even or makes a loss.[2]
This can result in poor quality work, poor service and debates over loopholes in contract wording in attempts to charge clients extra,[3] or even insolvency on the part of the contractor.[4]
The practice has particularly been noted in construction bidding. Around 2010, suicide bidding was widespread due to the economic crisis and strong competition.[5] 2010 survey by the Chartered Institute of Building found that 82% of respondents believed that “suicide bidding” existed within the industry.[2] It was considered to have contributed to the financial collapse of British firms Connaught plc and Rok plc in 2010.[3]
The
best value.[4]
Some commissioning bodies, such as
terms in tenders to protect them from legal challenge in the event of refusing to award the contract according to the lowest tender.[3]
See also
References
- S2CID 159251582. Retrieved 21 May 2021.
- ^ a b Procurement in the Construction Industry. Chartered Institute of Building. December 2010. pp. 3, 12.
- ^ a b c Brown, Carl. "Landlords crack down on 'suicide-bidding'". Inside Housing. Retrieved 2011-05-31.
- ^ a b Prior, Grant (28 April 2011). "Government urged to stamp out suicide bidding". Construction Enquirer. Retrieved 31 May 2011.
- ^ MANGANELLI, BENEDETTO; MORANO, PIERLUIGI; TAJANI, FRANCESCO (2016). "An empirical analysis of winning bids in public procurement in the Italian construction sector" (PDF). Trans. Bus. Econ. 13: 129–137. Retrieved 16 May 2021.
- ^ Lane, Michael (19 November 2009). "Crossrail discourages suicide bidding". Construction News. Retrieved 2011-05-31.