ALTERNATE PRICING STRATEGIES IN CONSTRUCTION

Abstract

Recent research findings on pricing strategies both in general and in construction are reviewed and explored.First, pricing strategy in general, mostly in the manufacturing industry, is reviewed.It includes the concepts of pricing strategy, predatory pricing, price wars, and price policy development.Second, pricing strategy in construction is explored.It includes various pricing models for bid price determination, such as the Friedman-Gates models, expected utility models, risk-pricing model, and the crew-day, multiple regression, and fuzzy-set pricing models.In conclusion, pricing strategies in construction are still predominantly based on a cost-based approach.More recent models try to close the gap between the models and the real life conditions of a bidder's decision-making process.It appears that there are more problems in cost-based pricing as opposed to market-based pricing.Consequently, it is highly recommended that, alternative pricing approach such as that are closer to the proposed market-based pricing model need to be explored and developed for use in the construction industry.