Competitive bidding, where the project is awarded to the lowest bidder, is a basic part of the construction industry. This method of project delivery is designed to promote healthy competition in an attempt ensure the lowest price for the project. A contractor knows that lowering a bid price increases his probability of being awarded the project. However, without a clear understanding of the market in which he is competing, he can not know how low he should bid in order to win. One of the most important competitive forces in a competitive bidding market is the how low the contractors are willing bid, i.e., how aggressively they are pursuing the project. Contractors need a simple way to examine the level of aggressiveness in their market. The purpose of this research is to develop a methodology to enable contractors to better understand this level of aggressiveness. The level of aggressiveness is quantified by the ratio of the low bid to the pack price, where the pack price is defined as the lower of the two bids that are closest together. The examination of two competitive bidding markets--the Virginia Department of Transportation market between 1996 and 1998 and the Tennessee Department of Transportation market from 1996 to 1998--tests the validity of the methodology. The methodology for estimating the level of aggressiveness in a competitive bidding market produces a set of success curves and charts, which can be used by contractors to optimize their competitive bid amounts for future projects. / Master of Science

One goal of every business is to save money, and building strategies that work to minimize spending and maximize profit is key to the success of a company. Cidewalk is a mobile advertisement company that wished to implement an optimal bidding strategy to help reduce the company's cost and in turn maximize their profits. To accomplish this goal we collected market data which was then analyzed to identify the distribution of second best bids, which is the price Cidewalk pays for an advertisement space by bidding in a Vickrey auction. The optimal bidding model was then implemented through a simulation together with Bayesian updating methods to ensure the model would be responsive to changes in the market. The model's performance was evaluated through the simulation and it was discovered that throughout one day the implemented model yielded 17% savings when compared to Cidewalk's current bidding model.

One goal of every business is to save money, and building strategies that work to minimize spending and maximize profit is key to the success of a company. Cidewalk is a mobile advertisement company that wished to implement an optimal bidding strategy to help reduce the company's cost and in turn maximize their profits. To accomplish this goal we collected market data which was then analyzed to identify the distribution of second best bids, which is the price Cidewalk pays for an advertisement space by bidding in a Vickrey auction. The optimal bidding model was then implemented through a simulation together with Bayesian updating methods to ensure the model would be responsive to changes in the market. The model's performance was evaluated through the simulation and it was discovered that throughout one day the implemented model yielded 17% savings when compared to Cidewalk's current bidding model.