Suicide bidding
In this article, we will explore the fascinating world of Suicide bidding, analyzing its most relevant aspects and its impact on today's society. From its origins to its evolution today, Suicide bidding has played a crucial role in various fields, attracting the attention of experts and fans alike. Along these lines, we will examine its importance, its challenges and the possible solutions it offers to improve our understanding and use. From its influence on popular culture to its relevance in everyday life, Suicide bidding continues to generate debate and spark continued interest in academic circles and beyond. Join us on this journey to discover more about Suicide bidding and its impact on the contemporary world.
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Suicide bidding is a response to a tendering exercise in which a potential supplier, anxious to win business, submits a proposal to carry out the work for less than it will cost. These procurement processes are typically modelled as reverse 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 Civil Engineering Contractors Association acknowledged that the practice had become "rife" in the desperate competition for work during the late-2000s recession, but blamed the public sector procurement process for focussing on the lowest price rather than best value.[4]
Some commissioning bodies, such as Crossrail, openly discourage the practice.[6] In 2011, some housing associations began including specific 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
- ^ Biruk, S.; Jaśkowski, P.; Czarnigowska, A. (2017). "Modelling contractor's bidding decision". Engineering Management in Production and Services. 9 (1). doi:10.1515/jem-2017-0007. ISSN 2543-6597. 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.