Suicide bidding

In this article, we will explore Suicide bidding in depth, a topic that has sparked much interest and debate in recent years. From its origins to its impact on today's society, we will examine all aspects related to Suicide bidding to provide a comprehensive and complete overview. Through interviews, research and analysis, we will seek to better understand this topic and its influence on different areas of daily life. From its relevance in academia to its role in popular culture, Suicide bidding has captured the attention of many and has generated a series of questions and concerns that we will try to address in this article. Join us on this journey of discovery and learning about Suicide bidding!

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Auction Room, Christie's, circa 1808.
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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

  1. ^ 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.
  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.