A Methodology to Select the Price Criterion in Public Procurement

Abstract

The construction sector is a key driver for economic growth in any nation and public procurement is one of its pillars – hence the importance of the study and investigation of its mechanisms, especially tendering criteria. Price is the main deciding factor for most tenders and projects must have an appropriate base price relative to market price to avoid problems during the execution of the project. Most research on price criteria has been developed from the point of view of bidders and has discussed the development of tools and methodologies for determining the optimal bid price. In this paper we propose a methodology for public procurement procedures from the point of view of the administration. The methodology enables setting all aspects of the price criterion based on the size of the project budget, the nature of the work, and the number of bidders.