The effect of experience on contractors' competitiveness in recurrent bidding

Abstract

This paper considers the relationship between bidding competitiveness, organizational learning and experience and it measures the effect of contractors' bidding experience on competitiveness in recurrent bidding, a notion that conceptualizes a continuous decision-making process in which experiential learning plays a key role. The data analysis demonstrates that contractors who bid more frequently over a six-year period are more competitive than contractors who bid occasionally. It is found that greater bidding competitiveness is positively correlated with the frequency of bidding attempts. An analysis of contractors' bidding performance on a pairwise basis supports this finding. Not only does the pairwise analysis show that the bidding competitiveness of experienced contractors who bid frequently is greater, but also that experienced contractors' bidding attempts fall within a relatively small competitiveness range when compared with that of contractors who only bid occasionally. A key finding of this paper is the existence of some experienced contractors, who may be perceived as being ‘experienced market players’, having the attribute of a more competitive and consistent bidding performance. This research should be useful to procurers looking to prequalify contractors on the basis of experience and to contractors in analysing their bidding performance and/or their competitors' bidding performance.