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CONSTRUCTION BID MODEL FOR RESIDENTIAL BUILDING PROJECTS IN DUBAI TAMADHUR H. F. AL JANABI A thesis submitted in fulfilment of the requirements for the award of the degree of Doctor of Philosophy (Civil Engineering) Faculty of Civil Engineering Universiti Teknologi Malaysia APRIL 2018 DEDICATION Dedicated to My Parents, Husband and my Children ACKNOWLEDGEMENT First and foremost, I would like to express my thanks to Almighty ALLAH on the successful completion of this research work. I also express my sincere and profound gratitude to my supervisor Professor Dr. Muhd Zaimi Abd Majid for his continuous assistance, support, guidance, and understanding throughout my graduate studies. His trust, patience, knowledge, great insight, modesty and friendly personality have always been an inspiration for me and will deeply influence my career and future life. I am also grateful to the Faculty of Civil Engineering; UTM for support, assistance and friendly treatment that did not only facilitated the work, but also made it pleasant. Furthermore, I am thankful to all the contracting companies in Dubai for the support provided to carry out the work. Moreover, I wish to express my deep gratitude to my friends in Malaysia and Dubai for their invaluable support and encouragement through the years. Likewise, my heartiest appreciation and special thanks to my parents, husband and children for their endless patience and understanding. ABSTRACT Many construction firms face hardships during the economic crisis due to inaccurate bidding and difficulty in obtaining new projects because of cost fluctuation. The best option for construction firms during an economic crisis is to control their construction bid costs that fit the situation. The bidding cost during the economic crisis has led to losses in the execution of projects. The study investigated how the construction sector of Dubai, United Arab Emirate, experienced poor bidding performance during the economic crisis. This is evident when material cost was fluctuating and the construction companies had a tough time getting new projects due to inaccurate bidding. This research looked into the details of construction bidding management during the bidding stage by developing a construction bid mathematical model to assist construction firms avoid bidding problems during the economic crisis. Using the data gathered from the year 2009 and 2010 economic crash, a construction bid mathematical model and bidding plan methodology were developed to better prepare construction companies during economic crisis. The chronology of this study was divided into two phases. Phase one involved conducting an extensive literature review and collecting secondary data. Phase two focused on primary data gathering and analysis of the data collected. Documentary analysis and questionnaire surveys were engaged as a source and tool to gather the data. Data were analyzed using coefficient of variation and severity index. From the available data, the bid mathematical model for bidding was successfully developed. Then, ten experts validated this model and the data were analyzed whereby the results showed that the model has successfully reduced the estimation inaccuracy as well as predicted the problem faced especially bidding during the economic crisis. The findings have shown that it is very important to have a crisis-response plan in place to eradicate risks, secure the market and provide solutions to problems faced during the crisis. In conclusion, the model can be used to minimize the adverse effects on the construction companies, including the projects and stakeholders in the construction industry. ABSTRAK Kebanyakan firma pembinaan mengalami kesusahan semasa krisis ekonomi disebabkan oleh bidaan yang tidak tepat dan kesukaran untuk mendapatkan projek baharu kerana kos yang tidak stabil. Pilihan terbaik untuk firma pembinaan semasa krisis ekonomi adalah untuk mengawal kos bida pembinaan yang sesuai dengan keadaan. Kos bidaan semasa krisis ekonomi menyebabkan kerugian dalam pelaksanaan projek. Kajian ini mengkaji bagaimana sektor pembinaan di Dubai, United Arab Emirate, mengalami prestasi bidaan yang lemah semasa krisis ekonomi. Ini terbukti apabila kos bahan turun naik dan syarikat-syarikat pembinaan mengalami kesukaran untuk mendapatkan projek baharu disebabkan oleh bidaan yang kurang tepat. Kajian ini meneliti butiran pengurusan bidaan pembinaan semasa peringkat pembidaan dengan membangunkan model matematik bida pembinaan untuk membantu firma pembinaan mengelakkan masalah pembidaan semasa krisis ekonomi. Dengan menggunakan data yang dikumpulkan daripada kemerosotan ekonomi pada tahun 2009 dan 2010, model matematik bida pembinaan dan metodologi pelan bidaan telah dibangunkan sebagai persediaan kepada syarikatsyarikat pembinaan semasa krisis ekonomi. Kronologi kajian ini dibahagikan kepada dua fasa. Fasa pertama melibatkan kajian literatur yang luas dan mengumpulkan data sekunder. Fasa kedua memberi tumpuan kepada pengumpulan data primer dan analisis data yang telah dikumpul. Kajian dokumentari dan tinjauan soal selidik digunakan sebagai sumber dan alat untuk mengumpulkan data. Data dianalisis menggunakan pekali variasi dan severity index. Daripada data yang ada, model matematik bida untuk bidaan berjaya dibangunkan. Sepuluh orang pakar mengesahkan model ini dan data yang dianalisis menunjukkan bahawa model tersebut berjaya mengurangkan ketidaktepatan anggaran serta meramalkan masalah yang dihadapi terutamanya dalam pembidaan semasa krisis ekonomi. Dapatan kajian menunjukkan bahawa pelan krisis-tindakan sangat penting untuk membasmi risiko, mendapatkan pasaran dan menyediakan penyelesaian kepada masalah yang dihadapi semasa krisis. Kesimpulannya, model ini boleh digunakan untuk meminimumkan kesan buruk ke atas syarikat-syarikat pembinaan, termasuk projek-projek dan pemegang taruh dalam industri pembinaan. TABLE OF CONTENTS CHAPTER 1 2 TITLE PAGE DECLARATION i DEDICATION ii ACKNOWLEDGEMENT iii ABSTRACT iv ABSTRAK v TABLE OF CONTENTS vi LIST OF TABLES xiii LIST OF FIGURES xvii LIST OF ABBREVIATIONS xx LIST OF APPENDICES xxi INTRODUCTION 1 1.1 Background of the Research 1 1.2 Problem Statements 3 1.3 Research Questions 5 1.4 Aim and Objective 5 1.5 Scope of the Research 6 1.6 Research Methodology 6 1.7 Significance of the Research 8 1.8 Thesis Organization 8 LITERATURE REVIEW 10 2.1 Introduction 10 2.2 Economic Crisis 11 2.3 Previous Works on Cost Bid 16 2.4 Construction Cost Biding 17 2.5 Residential Bidding Projects Competition in Dubai 20 2.6 Building Cost process for Construction Projects 21 2.7 Consultant and the Construction Firms 24 2.7.1 Construction Firm 24 2.7.2 Consultant 25 2.8 Factors Influencing the Success of Tender Bidding 26 2.9 Residential Building Bidding Plan 27 2.10 Problems of Construction Bidding Cost During the Economic Economic Crisise 28 2.11 Bidding Cost Risk 32 2.12 Construction bidding Cost Risk During the Economic Crises 34 2.13 Dubai’s Construction Economic Crises 37 2.14 Bidding Cost for Residential Building 39 2.15 Bidding Cost for Residential Building During Crisis 40 2.16 Factors Influencing Bidding Cost for Residential Building During Crisis 41 2.16.1 Project Characteristics 42 2.16.2 Contractor Characteristics 43 2.16.3 Tendering condition, Consultant and Design Characerisitics 2.17 2.16.4 External Factors and Market Conditions 45 2.16.5 Inaccuracy of Cost Estimation 45 Construction Bidding Cost High Level Component (Bill of Quantities Cost Item) 2.18 44 47 Construction Bidding Cost Low Level Components Unit Cost 50 2.18.1 Direct Cost 52 2.18.2 Material Cost 52 2.18.3 Labour Cost 54 2.18.4 Equipment Costs 56 2.18.5 Subcontractor Works 57 2.19 2.20 2.18.6 O verhead Cost 58 2.18.7 M ark Up 59 2.18.8 Profit 60 Construction Bidding Cost Component During Economic Crisis 60 Construction Bidding Cost Strategy and Objectives 62 2.20.1 Cost-based Bidding Cost Strategy 63 2.20.2 Market-based Bidding Cost Policy 63 2.20.3 Standard Rate Table Based Bidding Cost Strategy 2.20.4 Historical Based Price Bidding Cost Strategy 63 63 2.20.5 Subcontractors’ Bids based Bidding Cost Strategy 3 64 2.20.6 Cover Price 64 2.21 Importance of Bidding Cost Strategy 65 2.22 Construction Bidding Cost Techniques 66 2.23 Construction Bidding Cost Methods 68 2.23.1 Conference Estimate 68 2.23.2 Financial Method 69 2.23.3 Superficial Area Method 69 2.23.4 The Cube Mthod 70 2.23.5 Single Price Rate Method 70 2.23.6 Aproximate Quantities 71 2.23.7 Element Estimating (Work Item Estimating) 71 2.24 Accuracy of Bidding Cost Method 72 2.25 Factors Affecting the Accuracy of Construction Bidding Cost 75 2.26 Construction Bid Cost Model 77 2.27 Summary 85 METHODOLOGY 88 3.1 Introduction 88 3.2 Research Philosophy 88 3.2.1 Epistemology 89 3.2.1.1 Positivism 89 3.2.1.2 Interpretivism 90 3.2.2 Ontological Consideration 90 3.2.2.1 Realist Position 91 3.2.2.2 Relativist Position 91 3.2.3 Cignition and Neuroscience 92 3.2.4 Philosophical Stance of Research 93 3.3 Research Approach 94 3.4 Research Design 96 3.5 Method 97 3.6 Data Collection 101 3.6.1 Documentary Analysis 101 3.7 3.8 3.6.1.1 Documentary Analysis Grouping 103 3.6.1.2 Data Analysis 105 Methodology of the Survey 106 3.7.1 Area of the Research 106 3.7.2 Survey Within Documentary Analysis 106 3.7.3 Sampling Method of Data Collection 106 3.7.4 Data Collection (Documentary Analysis) 107 Survey 107 3.8.1 Questinnaire Survey 108 3.8.2 Quesionnaire Survey Phase 2 111 3.8.2.1 On Questionnaire Phase 1 and 2 (Data analysis) 112 3.8.3 Measuring Respondents’ Level of Agreement 3.9 for Questionnaire Phase 2 113 3.8.4 Sampling of Respondents 114 Construction Bid Cost Mathematical Model 114 3.9.1 Model Design 115 3.9.2 Testing and Validation of the Model 116 3.9.2.1 Confidentiality 116 3.9.2.2 Reliability 116 3.9.2.3 Validity 116 3.9.2.4 Model Testing 4 117 3.10 Construction Bidding Component 121 3.11 Mathematical Model Development Methods 122 3.12 Summary 122 RESULTS AND DISCUSSION 123 4.1 Introduction 123 4.2 Documentary Data for Residential Building Projects in Dubai 4.3 Documentary Analysis Group A for Construction Bidding Cost During the Economic Crisis 4.4 123 135 Documentary Analysis Group B for Bidding Cost Component during the Economic Crisis With Respect to Item of Project Prices 139 4.4.1 Preliminaries 139 4.4.2 Site Work 142 4.4.3 Concrete Work 145 4.4.4 Masonry Work 148 4.4.5 Thermal and Moisture Protection Work 150 4.4.6 Masonry Works and Thermal and Misture Protection Work 4.5 152 4.4.7 Door and Windows 153 4.4.8 Metal Works 156 4.4.9 Carpentary Work 158 4.4.10 Metal Works and Carpentry Works 160 4.4.11 Finishes 160 4.4.12 Mechanical/Electrical and Plumbing Works 163 4.4.13 Conveying System 166 4.4.14 Accessories 169 4.4.15 External Works 171 4.4.16 Provisional Sum 173 Factors Influencing Bidding Cost of Residential Building During Economic Crisis. 176 4.5.1 Project Characteristics 178 4.5.2 Client Characteristics 179 4.5.3 Contractor Characteristics 180 4.5.4 Bidding Conditions for Consultants and Design 4.6 181 4.5.5 External Factors and Market Condition 182 4.5.6 Inaccuracy in Cost Estimations 182 Construction Bidding Plan for Cost Component During the Economic Crisis 183 4.6.1 Main Construction Bidding Cost Components During the Economic Crisis 4.7 5 183 4.6.2 Construction Bidding Plan 184 Summary 187 DEVELOPMENT OF CONSTRUCTION BID MODEL 188 5.1 Introduction 188 5.2 Model Design 190 5.2.1 Item Price Constraint 190 5.2.2 Maximum and Minimum PriceItem Constraints 192 5.2.3 Maximum and Minimum Price Item Percentage Constraint 194 5.2.4 Maximum and Minimum Price Rate Constraint 197 5.3 Tender Price Constraint 199 5.4 Selection of Variables 201 5.5 Construction Bid Mathematical Model Development 202 5.5.1 Regression Model of the Collected Data 202 5.5.2 Item Wise Regression Modeling 203 5.5.3 206 5.6 Item Percentage Wise Regression Modelling Questionnaire Regression Modelling 209 5.6.1 210 Variable Regression Modelling 5.7 5.8 5.9 5.10 6 Re-estimation of the Crisis Budding Project Using the Model 213 Testing of Model Validly and Evaluation 216 5.8.1 Evaluation of Model by Expert 216 5.8.2 Model Accuracy 217 Construction Bid Cost Mathematical Model Benefits to the Construction Firms 219 Summary 220 CONCLUSIONS AND RECOMMENDATIONS 222 6.1 Introduction 222 6.2 Conclusions 221 6.2.1 Identification and Establishment of Factors that Influence Bidding Cost for Residential Buildings During Economic Crisis. 224 6.2.2 Establishment of the Components of Bid Model Necessary to be Considered in Bidding Cost Model During the Economic Crisis 224 6.2.3 Development of Construction Bid Mathematical Model of a Residential Building Project in Dubai During the Economic Crisis 225 6.2.4 Validation of the Model Using Statistics and Experts Oponion 227 6.3 Contribution of the Research 227 6.4 Limitation of the Research 229 6.5 Recommendation for Future Research 230 REFERENCES Appendices A - D 232 267 – 294 LIST OF TABLES TABLE NO. TITLE PAGE 2.1 Bidding Cost Problems during the economic crisis 30 2.2 Factors influencing the residential buildings’ bidding cost 46 2.3 Classification of construction labor source 55 2.4 Comparison of Costs 59 2.5 Methods of Construction Bidding Cost 73 2.6 Factors affecting construction bidding cost for residential building project 2.7 76 The details of the mathematical model for the construction bid cost 83 3.1 Summary of philosophical considerations 92 3.2 Strengths and weaknesses of mixed methods research 97 3.3 Design of questionnaire phase 1 110 3.4 Design of questionnaire phase 2 112 3.5 The respondent sampling 114 4.1 Project A 124 4.2 Project B 125 4.3 Project C 126 4.4 Project D 127 4.5 Project E 128 4.6 Project F 129 4.7: Project G 130 4.8 Project H 131 4.9 Project I 132 4.10 Project J 133 4.11: Project K 134 4.12 Project L 135 4.13 Dubai Construction Bidding Cost Analysis 136 4.14 Preliminaries bidding cost analysis 140 4.15 Site work bidding cost analysis 143 4.16 Concrete works bidding cost analysis 146 4.17 Masonry bidding cost analysis 148 4.18 Thermal and Moisture Protection bidding cost analysis 150 4.19 Doors and windows bidding cost analysis 154 4.20 Metal Works bidding cost analysis 156 4.21 Carpentry work bidding cost analysis 158 4.22 Finishes bidding cost analysis 161 4.23 MEP bidding cost analysis 164 4.24 Conveying System bidding cost analysis 167 4.25 Accessories bidding cost analysis 169 4.2 External works bidding cost analysis 171 4.27 Provision sums bidding cost analysis 174 4.28 Residential buildings influence cost factors 176 4.29 Residential buildings cost factor related to project characteristics 178 4.30 Cost factors relating to client characteristics 179 4.31 Cost factors relating to contractor characteristics 181 4.32 Cost factors relating to tendering situations, consultants and design 181 4.3 Cost factors external environment and market conditions 182 4.34 Cost factors associated with cost estimating inaccuracies. 183 4.35 Questionnaire Survey 1 Analysis 184 5.1 Regression Modeling for Preliminaries 203 5.2: Site Work Regression Modeling 203 5.3 Concerete Work Regression Modelling 203 5.4 Masonry Work Regression Modelling 204 5.5 Thermal and Moisture Protection Regression Modelling 204 5.6 Doors and Windors Regression Modelling 204 5.7 Metal Work Regression Modeling 205 5.8 Carpentry Work Regression Modelling 205 5.9 Finishes Work Regression Modelling 205 5.10 MEP Work Regression Modelling 205 5.1 Conveying System Regression Modelling 206 5.12 Regression Modelling for Preliminary Percentage. 206 5.13 Site Work Percentage Regression Modelling 206 5.14 Concrete Work Percentage Regression Modelling 207 5.15 Masonry Work Percentage Modelling 207 5.16 Thermal and Moisture Protection Percentage Modelling 207 5.17 Door and Windows Percentage Regression Modelling 208 5.18 Metal Work Percentage Regression Modelling 208 5.19 Carpentry Work Percentage Regression Modelling 208 5.20 Finishes Work Percentage Regression Modelling 208 .21 MEP Work Percentage Regression Modelling 209 5.22 Conveying System Percentage Regression Modelling 209 5.23 Project Total Price Regression Modelling 209 5.24 Calculation for independent variable (A1and A1% to A6 and A6%) for each project 5.2 Calculation for average independent variables (A1and A1% to A4 and A4%) 5.26 212 Calculation for the average of independent variables (A9 and A9% to A11 and A11%) 5.29 212 Calculation for the average of independent variables (A5 and A5% to A8 and A8%) 5.28 211 Calculation for independent variables (A1and A1% to A4 and A4%) 5.27 211 213 Projects maximum and minimum limits of the project ltem cost price per square foot for 2009 and 2010 analysis before and after substiting the independent cariables 5.30 214 Projects item maximum and minimum percentages price per square foot 215 5.31 5.32 Correlation coefficient calculation for model inputs and outptputs 217 Correlation coefficentfor the model inputs and outputs 218 LIST OF FIGURES FIGURE NO. TITLE PAGE 1.1 Research Methodology. 7 2.1 Value of GCC Contracts Awarded, 2007 – 2013. 12 2.2 Construction Bid process. 23 2.3 Tender Cost Index from 2008-2015. 38 2.4 Theoretical Frame Work. 40 2.5 A model of residential buildings’ bidding cost influential factors. 43 2.6 Cost Elements sources. 51 3.1 Research Methodology Flow Chart 100 3.2 Summary of Documentary analysis Flow 102 3.3 Questionnaires Phase 1 Flow Chart Process 109 4.1 Dubai Building Bidding Cost per square foot in 2009 and 2010 4.2 Percentage of Preliminaries of total bidding cost in 2009 and 2010 4.3 141 Preliminaries bidding cost per square foot in 2009 and 2010 4.4 137 141 Percentage of Site work of total bidding cost in 2009 and 2010 144 4.5 Site work bidding cost per square foot in 2009 and 2010. 144 4.6 Percentage of concrete work of total bidding cost in 2009 and 2010 4.7 4.8 146 Concrete work bidding cost per square foot in 2009 and 2010 147 Masonry work of total bidding cost in 2009 and 2010 149 4.9 Masonry work bidding cost per square foot in 2009 and 2010. 4.10 Percentage of thermal and moisture protection of total bidding cost in 2009 and 2010 4.11: 165 Percentage of conveying system of total bidding cost in 2009 and 2010 4.23 164 MEP work bidding cost per square foot in 2009 and 2010. 4.22 162 Percentage of MEP of total bidding cost in 2009 and 2010 4.21 160 Finishes work bidding cost per square foot in 2009 and 2010 4.20 159 Percentage of Finishes work of total bidding cost in 2009 and 2010 4.19 159 Carpentry work bidding cost per square foot in 2009 and 2010. 4.18 157 Percentage of carpentry work of total bidding cost in 2009 and 2010 4.17 157 Metal works bidding cost per square foot in 2009 and 2010. 4.16 155 Percentage of metal works of total bidding cost in 2009 and 2010 4.15 154 Doors and windows bidding cost per square foot in 2009 and 2010 4.14 151 Percentage of doors and windows of total bidding cost in 2009 and 2010 4.13 151 Thermal and moisture protection bidding cost per square foot in 2009 and 2010. 4.12 149 167 Conveying system bidding cost per square foot in 2009 and 2010 168 4.24 Accessories of total bidding cost in 2009 and 2010 170 4.25 Accessories work bidding cost per square foot in 2009 4.26 and 2010 170 External works of total bidding cost in 2009 and 2010 172 4.27 External works bidding cost per square foot in 2009 and 2010 4.28 Percentage of provisional sum of total bidding cost in 2009 and 2010 4.29 172 174 Provision sum bidding cost per square foot in 2009 and 2010. 175 LIST OF ABBREVIATIONS AACE - American Association of Cost Engineers AED - United Arab Emirate Dirham AASE - Airborne Arctic Stratospheric Expeditions BCR - Beyond Contractual Reward BIM - Building Information Modelling BQ - Bill of Quantities CIOB - Chartered Institute of Buildings COV - Coefficient of Variation DCAM - Division of Capital Asset Management GCC - Gulf Corporation Council GFA - Gross Floor Area GSA - General Service Administration ICE - Institute of Civil Engineers IBS - Industrialized Building System MEED - Middle East Economic Digest MEP - Mechanical Electrical and Plumbing MTD - Maintenance Training Device PC - Prime Cost PRI - Profitability Requirement Index PRIR - Profitability Responsiveness Item Ranking RD - Repair and Alteration RICS - Royal Institute of Chartered Surveyors SF - Square Foot SMM - Standard Method of Measurement WSDOT - Washington Department of Transportation UAE - United Arab Emirate LIST OF APPENDICES APPENDIX TITLE A Statistics on Trends of Material Prices B BQs Items Details and Residential building PAGE 275 projects tender documents collected date check list 276 C Construction Companies Questionnaires Survey Phase 1 295 D Construction Companies Questionnaires Survey Phase 2 357 E Construction Companies Evaluation Letters 383 CHAPTER 1 1INTRODUCTION 1.1 Background of the Research Construction bidding cost for residential building projects in Dubai during economic crisis will be analyzed to determine the construction bid mathematical model for the year 2009 and 2010. This period was chosen to reflect the latest economic crisis of Dubai and show the difficulties of bid winning of residential building projects (MEED, Middle East Economic Digest Cost Indices Report, 2012). The bases of developing the bidding mathematical model which is a unique contribution for this study and will be a reference for the construction companies during the economic crisis (Jung et al, 2016). Instead of preparing precise basic reasons for fluctuations in price, forecasting bid levels was given more emphasis. And the achievement or disappointment of a project can be judged based upon various factors yet the most well-known factor is the cost. The most vital component to a client is ordinarily to finish the project within budget (Wood, 2010). Many unsuccessful businesses were the result of more and more inexperienced people forming construction firms and venturing into the construction sector each year, as free exit naturally follows free entry. The construction sector’s unpredictability including high risks further added to this situation. According to Kaka (1990), the high risks include elements of weather, site problems as well as the 2 need to price building materials before they were manufactured in the old way of tender bidding. It is obvious that difficulties of winning new bid of residential building existed in Dubai during the economic crisis in 2009 and 2010. According to Gugler et al, (2015), these difficulties were due to the wrong cost estimation. Likewise, Mansfield et al. (1994) asserted that wrong cost estimation was due to construction market fluctuation (The tender stage for Dubai’s residential buildings during the economic crisis is very crucial and important and the estimations done in these stages must be accurate and precise). The wrong cost estimation and the difficulties of getting new residential building projects were faced by the United Arab Emirates (UAE) construction firms in 2009. In addition, the construction market was suffering the effects of an economic liquidity crunch and that was evident in the impact on tender prices (MEED, 2012). Therefore, competing among contractors in the construction industry, increased which resulted high rate of residential building projects bid failure and the construction market instability. Many attempts to identify and solve the problem of construction bidding failure in residential building projects in the construction industry during the economic crisis were in conflict. The construction bidding cost has attracted a lot of attention in the recent years. However, more efforts are required to achieve a successful bidding especially during the economic crisis. To obtain an exact estimate for residential building projects in Dubai during economic crisis is very critical. While it is not easy to prepare the budget forecast as it involves predicting the nature of residential building project, on the other hand, lack of cost forecasting for residential building projects was the main cause for the failure of construction firms in Dubai during economic crisis (Challal and Tkiouat, 2012). To be able to conduct cost forecasts on a frequent basis, the method used has to be simple, fast and reliable. Current construction bid models for residential 3 building projects have not considered bid evaluation stage during economic crisis. Consequently, cannot be used for residential building during economic crisis (Apeldoorn, 2013; Pucker et al., 2006). Moreover, all residential building projects are known to have some form of risk due to market fluctuation especially during economic crisis. Most Dubai contractors did not adopt construction bid model for residential building projects during economic crisis. According to Latham (1994), risk of market fluctuation in the construction sector must be anticipated and handled well, reduced as much as possible, either solved together or relocated. In this regard, construction bid must be managed according in Dubai peculiarity taking into account construction market fluctuation during this economic crisis 2009 and 2010 (Myers, 2017). This research effort is made to introduce approaches for predicting construction bid model associated with residential building projects. 1.2 Problem Statements It is obvious that the residential building project during economic crisis can never be considered successful if the cost, upper and lower limits are applied to it are not satisfied (Elchaig et al, 2005). And most common causes of residential buildings failure in construction industry during economic crisis were low profits and inadequate market risk (Kanggari, 1988). Large construction companies in Dubai failed to dominate a respectable share of the market. To this effect, accurate market price fluctuation information, feedback of building materials, equipment and technologies during residential building projects necessary to allocate the required risk factor for this residential building bid during economic crisis is questionable. Consequently, these companies are always characterized by fluctuations and crisis effect. Also due to global economic crisis, the impact on tender prices after the real estate crash was reflected on the commodities, costs for thirty two (32) key items. 4 These include cost of materials, labor, plant and fuel. Likewise, it involves the price movements for major items, such as concrete in foundations, reinforcement steel and formwork to slabs and soffits. Tender prices is not just the material cost, but also the cost of transporting and placing the materials, it has tracked commodity items using this compounded rate as used in tender information (MEED Cost Indices Report, 2012). Most construction companies faced bidding cost issues due to the wrong estimation of cost especially during the economic crises period. The wrong estimation of cost is commonly found in the tender and bidding stages (www.dubaided.gov.ae). The tender stage is very crucial and the estimations done on these stages must be accurate in Dubai especially during economic crisis. If the contract sum was wrongly estimated, then the construction company will lose this job. This is not good for the company in terms of its image, reputation, loyalty and good market rating (Sriprasert, 2000). Currently, conventional bidding cost model could not adequately fulfill the needs of construction sector needs, since most of the conventional models did not incorporate the market fluctuation uncertainties in such a challenging environment, residential building projects must integrate market fluctuations (Abdallah, 2007). In Dubai, the shift towards construction bid cost was driven by two major reasons. Firstly, the need to estimate bid projects and secondly, the need for construction companies’ innovation in the bidding cost model of residential building projects. In developing countries like UAE, the high demand for residential buildings pressures on global market situation and competition compelled construction companies to innovate alternative bidding models to improve estimation for residential building projects (Al Sharif, 2007). Construction markets are complex and require careful segmental bid models. The construction industry has undergone considerable model change in the last decade. Clients that are ever demanding and fierce competitions have resulted in 5 many construction companies having to look for ways of: beating their competitors. They focused on new bidding models, getting to know market situation of residential building projects, doing their marketing before trying to participating in their bids (Christopher et al., 2003). Hence, this study focused on the Dubai’s economic crisis in 2009-2010 to answer several questions arised 1.3 Research Questions 1. Do construction firms face bidding problems in residential building projects in Dubai during economic crisis (2009-2010)? 2. Do construction bid factors of residential building projects arise during market fluctuation? 3. Has there been any construction bid model to achieve appropriate estimation for residential building projects during the economic crisis? 4. Is there any construction bid risks that arise for residential building projects during economic crisis? 1.4 Aim and Objective The aim of this study is to develop a construction bid cost mathematical model during economic crisis for residential buildings in Dubai, United Arab Emirates. To achieve this aim, the following objectives are identified: i. To identify and establish the factors that influence bidding cost for residential buildings during economic crisis. ii. To establish the components of bid model necessary to be considered in bidding cost model during economic crisis. iii. To develop the construction bid mathematical model of a residential building project in Dubai during economic crisis. iv. To validate the bid model statistically through expert opinions. 6 1.5 Scope of the Research This research focused on build construction bid model for residential building projects in Dubai during economic crisis. The research made used of typical bidding documents for Dubai’s residential building projects for the year 2009 and 2010. The first questionnaire was developed to establish the required cost mathematical model and construction bidding cost components. The second questionnaire on the other hand focused on establishing the main components affecting residential building projects bidding. It also deals with the main variables in developing the bid mathematical model. Furthermore, the type of the projects considered are residential buildings. To this effect, the bidding stage for project executed duration for economic crisis was the main focus. On the other hand, the documentary analysis was performed to get an insight on the real market fluctuation and to explore the factors and components affecting bidding cost during economic crisis to establish the construction bid mathematical model and contractors’ bid plan 1.6 Research Methodology The research is divided into four phase 1, 2, 3 and four respectively, as illustrated in the Figure 1.1. Phase 1 deal with the identification of research problems and establishing the aims and the objectives of the research. Phase 2 covers a review on the information regarding the problem, construction-bidding cost during economic crisis in Dubai; factors influencing residential building bidding cost during economic crisis, construction bidding cost components during economic crisis and existing construction bidding cost models. Phase 3 deals with the , documentary analysis to investigate the bidding cost of construction for residential buildings during the economic crisis from 2009 to 2010. Likewise, Phase 3 involved questionnaire surveys to support the documentary 7 analysis in order to determine the construction bidding cost problems for residential buildings during the economic crisis in Dubai, Phase 4 covers development of construction cost bid mathmatical model, bidding paln and validation of the model. Figure 1.1: Research Methodology 8 1.7 Significance of the Research The reaearch identifies and established those factors influencing bidding cost for residential buildings during the economic crises. Likewise, construction bid mathematical model for residential building projects that incorporate construction market fluctuations and accurately predicts the biddig cost during the economic crises is developed. The model can be used by relevant firms for predicting the demand of ideal cost estimate of residential building projects for biding stage during economic crisis. Consequently, this will assist construction firms to survive the most competative environment during the economic crises with increased level of satisfaction. 1.8 Thesis Organization This thesis is divide into six chapters. Chapter 1 which consists of background of the research, problem statement, objectives of the research, scopes of the research, and significant of the research aimed to highlight the introduction aspect of this research work. Chapter 2 consists of comprehensive literature review based on the research topic. The literature reviewed covers the general overviews on factors affecting construction bidding cost. The chapter further reviews the available construction biiding cost methods It also describes the overview of construction bid cost mathemamtical models. Chapter 3 explained the methodology, data collection and analysis conducted to achieve the research objectives. The chapter discussed the research approach and overall research flow chart. Chapter 4 describes the results for the data collected from documentary analysis, questionnaire phase 1 and questionnaire phase 2. It also discusses the 9 results of projects’ prices during the economic crisis, construction bidding cost item components for data collected from the documentary analysis, the results for the residential building projects bidding cost in the form of graphs and tables, the construction bidding methodologies of bidding cost and the construction bidding cost components during the economic crisis. Chapter 5 presents the final results of the study, the construction bid cost mathematical model for residential buildings including validation tests for the model and then establish the contractors’ construction bidding plan as well as cost components. Chapter 6. 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