ARCOM

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Cheung, S-O, Lam, T, Lueng, M and Wan, Y (2001) An analytical hierarchy process based procurement selection method. Construction Management and Economics, 19(04), 427-37.

Costantino, N, Pietroforte, R and Harnill, P (2001) Subcontracting in commercial and residential construction: an emperical investigation. Construction Management and Economics, 19(04), 439-47.

Isidore, L J, Back, W E and Fry, G T (2001) Integrated probabilistic schedules and estimates from project simulated data. Construction Management and Economics, 19(04), 417-26.

Manavazhi, M R and Xunzhi, Z (2001) Productivity oriented analysis of design revisions. Construction Management and Economics, 19(04), 379-91.

Marasini, R, Dawood, N and Hobbs, B (2001) Stockyard layout planning in precast concrete products industry: a case study and proposed framework. Construction Management and Economics, 19(04), 365-77.

Mochtar, K and Arditi, D (2001) Pricing strategy in the US construction industry. Construction Management and Economics, 19(04), 405-15.

Type: Journal Article
Keywords: Cost based pricing; market-based pricing; pricing variables; bidding procedure
ISBN/ISSN: 0144-6193
URL: https://doi.org/10.1080/01446190010020372
Abstract:
This paper presents several issues related to pricing in construction. First, problems with current pricing strategy in construction are explored. Second, pricing strategies based on a market-based approach are proposed. Third, survey findings of the top 400 US contractors are presented regarding their current pricing practices and the applicability of the proposed pricing strategies. In conclusion, the belief that current pricing strategy in construction is predominantly cost-based is confirmed by the survey findings; indeed, in setting the markup, most contractors rely on their intuition after subjectively assessing the competition. The three internal pricing variables that have the largest statistically significant contingency coefficients with pricing strategy are ’marketing intelligence capabilities’, ’annual contract value’, and ’the type of client in most projects’. ’Owner’s characteristics’, ’competitors’ characteristics’, and ’market demand’ are statistically significant external variables in making pricing strategy decisions. A change of bidding procedure is proposed so that all parties in construction can maximize the benefits of market-based pricing strategies.