Suicide bidding

Source: Wikipedia, the free encyclopedia.

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

  1. S2CID 159251582
    . Retrieved 21 May 2021.
  2. ^ a b Procurement in the Construction Industry. Chartered Institute of Building. December 2010. pp. 3, 12.
  3. ^ a b c Brown, Carl. "Landlords crack down on 'suicide-bidding'". Inside Housing. Retrieved 2011-05-31.
  4. ^ a b Prior, Grant (28 April 2011). "Government urged to stamp out suicide bidding". Construction Enquirer. Retrieved 31 May 2011.
  5. ^ 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.
  6. ^ Lane, Michael (19 November 2009). "Crossrail discourages suicide bidding". Construction News. Retrieved 2011-05-31.