Prevention and Detection of Unbalanced Pricing in Bidding for Construction Projects: A Review

Unbalanced pricing in construction projects involves shifting the markup and sometimes a portion of the costs of certain items to other items in order to attain additional profit for the bidder if he wins the contract and/or increase his chance of being the lowest bidder. Unbalanced pricing is a common practice associated with competitive bidding for public construction projects. Despite the spread of the practice, project owners oppose unbalanced bidding and may reject a submitted bid if they identify an obvious imbalance in the submitted item rates. This paper presents a review of research presented to help owners deal with this practice and control its negative impact on the owner and the entire process of competitive bidding. The reviewed studies include the outcomes of around 20 years of research on unbalanced pricing from the owners’ perspective and include: papers that presented models to reduce the negative impacts of unbalanced pricing on the owner; and papers that presented detection models or procedures to help owners identify imbalances in submitted bids. This should contribute to a better awareness of public procurement entities of the research work that represented the owners’ interests in handling unbalanced pricing and can establish the basis for further research to develop improved models for handling imbalances in prices.