Is the study of the factors that have an impact on how individuals and groups respond to and act in organizations?

Deciding whether bid for the construction project is classic risk-based decision-making that is crucial to the survival and prosperousness of construction companies. More contractors are adopting group bidding decision-making to reduce the number of incorrect decisions. However, previous related studies mainly focus on project factors that overlook the members of bidding groups and the interaction between bidding group members. The aim of this paper, therefore, is to investigate the potential factors that influence group bidding decision-making for construction projects. Twenty factors relating to individual, group, and organizational levels are identified through a literature review and interviews with experienced practitioners. A questionnaire survey of 203 Chinese international contractors is conducted to obtain the importance of the factors involved. The results of the ranking analysis indicate 14 critical factors, among which “risk perception” and “team decision preference” are regarded as the two most significant. Moreover, 20 factors can be classified into five groupings: (1) values and strategic goals, (2) collaboration and learning orientation, (3) consensus reaching, (4) risk awareness, and (5) empowerment and development, with risk awareness having an especially strong influence. This research deepens the understanding of factors belonging to different organizational levels that need to be highlighted during the group bidding decision-making process and provides strategies for bidding groups and their companies to improve their decision performance.

1. Introduction

The construction industry is a highly uncertain industry [1, 2] where decision-making under risk is common [3, 4]. Of all the risks involved, the decision to bid or not to bid for construction projects is a primary task and critical for project success, as well as a crucial strategic decision affecting contractors’ survival and prosperity in the industry [5].

Bidding decisions and factors influencing the processes involved have elicited wide attention in previous studies relating to construction management (CM) [6–10]. However, the focus of these studies is mainly on project characteristics, the construction companies’ resources available, and economic environmental factors such as market conditions. The studies largely ignore the interactions between individual members in group decision-making concerning available project opportunities, the bid/no bid, and the bid price.

Group bidding decision-making is a process in which group members discuss specific project opportunities in order to make their bid/no bid decisions. Compared to individual bidding decision-making, a group of several individuals with different experiences and expertise are able to communicate with each other to reduce the decision deviation [11, 12]. For that reason, large- and medium-sized construction companies are more likely to adopt the group bidding decision-making in preference to decisions made by individuals.

The group decision-making processes of construction companies are quite diverse [13]. The groups need to establish a hierarchy based on experience, previous performance, persuasiveness, and ability to judge the relative power or knowledge of the individuals involved [14, 15]. In most cases, the international contractors will create the temporary bidding group for a specific project, and this kind of group usually includes a group leader and several technical and business experts that come from different units. Hence, the interaction and communication between group members can have a significant influence on the decision process as well as on the group’s final decision. However, most studies where potential factors are explored are in the field of psychology, and these studies generally focus on the specific kinds of influencing factors (e.g., majority and minority influences, group size, and framing) by conducting psychological experiments [16–19]. Few studies have investigated the factors affecting group bidding decision-making systematically, and none has addressed the real world of bidding for construction projects.

For these reasons, this paper aims to investigate the potential factors that influence the group bidding decision-making process for construction projects.

2. Literature Review

2.1. Project Factors for Bidding Decisions

A variety of researchers have paid attention to identifying and analyzing the factors influencing the bid/no bid decision, to provide support for reasoned bidding decisions [8, 20–23]. Early work mainly involved the bidding factors unique to countries and geographical regions, such as Ahmad and Minkarah [24] identified 31 key factors affecting the bidding decision process of contractors in the USA, which provided the foundation for follow-up studies [7]. Shash [25] identified 55 factors characterizing the bidding decision-making of contractors in the UK. However, these studies did not attempt to distinguish between factors.

Some researchers have identified bidding decisions factors and discussed likely taxonomies. For example, Bagies and Fortune [26] built a comprehensive list of bidding factors comprising 10 categories: (1) project characteristics, (2) business benefits, (3) client characteristics, (4) the contract, (5) project finance, (6) percentage of insurance premium, (7) firms’ previous experience, (8) the bidding situation, (9) the economic situation, and (10) competition. Egemen and Mohamed [21] developed a hierarchical structure of factors affecting bidding decisions that has three main categories: (1) firm related, (2) project related, and (3) market condition/expectations and strategic considerations related.

Recent work by Jarkas et al. [5] attempts to build the classification criteria that can possibly include and represent almost all these categories for application regardless of geographical region. Moreover, their research was also adopted by subsequent research such as Hwang and Kim [22]. This involves the following:(1)Employer-related factors: previous experience of the contractor with the employer; the employer’s financial stability, identity, reputation, strength, position, and special requirements; the employer’s promptness in payments process and efficiency in decision-making; and qualifications and quality of the staff.(2)Project-related factors: project type, size, location, safety level, complexity level and equipment type, identity of designer, and construction supervisor.(3)Bidding situation-related factors: tendering method and duration, identity and number of bidders, availability of other projects, the purchasing price of tender documents, and bid bond size and validity.(4)Contract-related factors: contract type, conditions and duration, payment scheme, the quality level of tender documents, value of liquidated damages, size and validity of security bonds, and insurance premium required.(5)Contractor-related factors: availability of required cash, labor and equipment and subcontractors, facilities available to contractors from financial institutions, the quality of available contractors’ staff, previous experience and profit in similar projects, current workload, need for work, and need for public exposure.

In addition, some studies focus on analyzing the interrelations between bidding factors or exploring effects of bidding factors on bidding results. For example, Olatunji et al. [23] identify 11 critical factors that influence contractors’ bid/no bid decisions and analyze the correlations between these factors. Aznar et al. [6] identify 11 bidding factors and examine effects of these factors on bidding success. Some studies also investigate factors and propose a decision model to aid bidding. For example, El-Mashaleh [8] investigated the factors affecting bidding decisions and then built a bidding decision model using data envelopment analysis (DEA), while Leśniak and Plebankiewicz [9] identify the factors affecting bidding decision-making and then employ fuzzy set theory to develop a bidding decision model.

A shortcoming of previous studies focusing on the factors influencing bidding decision-making has been a failure to consider the influence of the interactions between bidding group members on bidding decision-making. The processes involved in group bidding decision-making are becoming more complex due to the interactions and interdependencies among group members [27]. On the one hand, group decision-making can generate higher quality decisions through communication among team members, but on the other hand, it also suffers from such issues as disagreement among group members due to groupthink [28]. Hence, when the bidding decisions involve a group of decision makers, both the project factors mentioned above and factors affecting the interactive group decision-making process should be thoroughly considered. Considering the limitation of existing studies, this paper identifies and analyzes potential factors affecting the bidding group’s decision-making process and provides construction practitioners with a deeper understanding of group bidding decision-making.

2.2. Individual, Group, and Organizational Factors of Group Bidding Decisions

Except group-level factors, the traits of individual members and also the organizational context will shape the group decision-making [27]. Thus, group bidding decision-making is a multilevel phenomenon that must account for individual, group, and organization processes. The factors that belong to different organizational levels influencing group bidding decision-making are identified as follows.

Group bidding decision-making is based on individual bidding decision-making, which is a typical kind of risky decision-making that can be viewed as a choice between prospects and gambles [29]. There are two main steps involved when people face decision problems under risk: understanding the problem and making a choice.

Risk perception can generally be defined as the decision-maker’s assessment of the risk inherent in a situation [30] and plays a prominent role in the decisions people make [31]. Risk preference, on the other hand, describes what one does when faced with a risky option and a safer alternative and is an important predictor of behavior under risk [32, 33]. As Mellers and Cooke [34] point out, no decision model can describe all risk decision behaviors. Moreover, the behaviors may be influenced not only by circumstantial factors but also by risk preferences.

Organizations frequently require decisions to be made by a group of individuals [35], as the group consensus is expected to provide decisions of a higher quality [36]. In the field of psychology, social decision scheme (SDS) theory [37] is often viewed as the foundation of group decision-making, where the SDS is a rule or procedure that enables decision-making to be made where risk and influential factors are involved.

Much work has been done based on SDS theory to identify influential factors and explore the impact of these factors on the group decision-making. For example, taking expertise into account has an important influence on the group’s decision, and the group’s ability of recognition of expertise of its members is necessary for the group’s success [38]. Majority influence is also another significant factor [19], where 50 percent or more of the group members reach an agreement in the decision process is said to constitute compliance from these members without the need for detailed processing of their messages [39]. The difference in the number of group members also has an effect on the way they come to an agreement [40], while communication is the medium for group interaction and can be viewed as constitutive of group decisions [15], with different kinds of communication contributing to different outcomes [41].

Unlike individuals and groups, organizations themselves cannot make decisions. Groups always belong to an organization, which means the operations of the group are impacted by organizational context [42]. The dimensions of organizational-level factors include organizational capacity, organizational culture, and organizational structure [43, 44]. These different dimensions of an organization, that is, organizational culture, provide an organization’s identity. Organizational culture shapes its members ways of behaviors and decisions [1, 45], and previous research also has demonstrated that it has an significant impact on team decisions [46]. Hence, organizational culture factors are identified as factors belonging to the organizational level that influences group bidding decisions.

A variety of theoretical frameworks of organizational culture have been proposed. Of these, Denison’s organizational culture model (DOCM) is well recognized for analyzing organizational culture and has been widely applied in the construction sector [1, 45, 47]. Therefore, DOCM is selected in this research to investigate the factors affecting the interactive group bidding decision-making process at the organizational level. Denison’s model has four main cultural characteristics: adaptability, mission, consistency, and involvement [48]. Firstly, “adaptability” considers an organization’s ability to perceive and respond to the environment and comprises creating change, customer focus, and organizational learning. Secondly, “mission” considers the extent to which organizations have a mission that informs employees why they are doing the work they do and how the work they do each day contributes to why they are doing it. This contains strategic direction and intent, goals and objectives, and vision. Thirdly, “consistency” provides a central source of integration, coordination, and control and helps organizations develop a set of systems that create an internal system of governance based on consensual support. This consists of core values, agreement, coordination, and integration. Fourthly, “involvement” is concerned with creating a sense of ownership and responsibility in order to develop greater commitment to the organization and an increased capacity for autonomy. This is composed of empowerment, team orientation, and capability development [49].

3. Research Methodology

The research used literature review, in-depth interviews, and a questionnaire survey for data collection. The first step was to identify the preliminary factors influencing group bidding decisions through a thorough literature review and comprises two stages. In stage 1, the research searched for articles relating to factors belonging to the individual, group, or organizational level that influence bidding decision-making in the CM field. In stage 2, articles were selected relating to factors influencing group decision-making but not limited solely to group bidding decision-making. During this stage, we not only searched group decision-making factors in articles in the CM field but also considered related articles in the fields of general management and psychology. After the search process, 18 factors belonging to individual, group, and organizational levels were identified from the final selected articles.

In the second step of the research, in-depth face-to-face interviews were conducted with 32 middle and senior managers of Chinese international contractors to test the feasibility and comprehensiveness of the factors identified in the first step. Each interviewee’s company used group bidding decision-making, and each interviewee had experience of the decision-making processes involved. The interviewees were asked to comment on whether the provisional factors listed covered all possible factors, considering the context of Chinese contractors venturing into overseas markets, whether any factors could be added, deleted, or modified. This resulted in the confirmation of the influence of the identified factors and provided suggestions for two other potential factors of “personal interest” (individual) and “team decision preference” (group). The final set of factors is summarized in Table 1.

A questionnaire survey was conducted in the third step to obtain the importance of identified factors and facilitate subsequent analysis. The target population was experienced construction industry personnel who had attended group bidding decision-making or carried out bidding preparation work and who were familiar with the bidding process of their respective firms and departments.

A pilot study was carried out with 10 middle or senior managers from different enterprises to check the relevance of the questions and to identify any ambiguities in the wording of the questions. Based on their suggestions, the questionnaire was revised to improve its precision and readability. In the final questionnaire, a 5-point Likert scale was used to measure respondents’ views concerning the influence of the factors (1 = very low influence, 3 = moderate influence, and 5 = very high influence).

Due to the difficulty in developing a sampling frame, the nonprobability sampling technique was adopted, which is considered appropriate when respondents are selected based on their willingness to participate in the survey rather than random selection [65]. The specific sampling approach employed in this research is the snowball sampling method (i.e., respondent-driven sampling), in which respondents share or know others who also had experiences of group bidding decision processes involved. Estimates generated from the data of the snowball sampling method are asymptotically unbiased, no matter how the seeds are chosen [66–68]. Based on this method, a list of 264 potential respondents was developed. We connected respondents in the list to further verify that they have related knowledge of group bidding decisions and invite them to participate in this survey. Then, each respondent was sent the questionnaire, and a total of 216 responses were received. After strict screening, 13 improperly completed returns were removed, resulting in 203 responses finally used for data analysis. The profiles of the respondents are shown in Table 2.

4. Data Analysis and Results

4.1. Ranking of Factors

Cronbach’s alpha coefficient is 0.896, which is much higher than the threshold of 0.70 [69], indicating high data reliability. As indicated in Table 3, the mean scores of 20 factors range from 2.807 to 4.145. To select the critical factors, the normalized values of mean scores are calculated. The same method was applied by Xu et al. [70] and Zhao et al. [2], who determined critical factors to be those with normalized values equal to or greater than 0.50. Applying this principle here, the factors with mean scores closer to the maximum mean of all factors are regarded as critical factors. 14 of the 20 factors have normalized values greater than 0.50 and are therefore deemed critical (Table 3).

Of these, “risk perception” is ranked first, which indicates that each individual group member is aware of, and has an opinion about, the possible risks in each case. “Team decision preference” is ranked second, indicating that nearly all the respondents’ companies have their own decision tradition that they will follow without question. In the interviews, some interviewees pointed out that their group members generally do not bid in some circumstances.

“Organizational learning” is ranked last. Thus, this factor is less important, which is confirmed by the general comments during the interviews. The main reason to this result may be that the preferred project type and location are relatively steady, and that little attention is paid to increase capabilities to adapt to external change. An explanation for the second last factor, “personal interest,” can also be found in the interviews, where a manager explained that all companies have to consider the personal interests of their staff by rewarding them in one way or another when the company makes a profit. In other words, there are few situations where there is a conflict between the company interests and staff personal interests.

4.2. Exploratory Factor Analysis

Exploratory factor analysis (EFA) can identify a relative small set of underlying factors’ groupings that can be used to analyze correlations among a large set of interdependent variables. Therefore, this method is applied to explore the underlying groupings among the 20 identified factors involved.

The ratio of the sample size to the number of factors is 10.15, which is higher than the ratio of 5.00 recommended by Gorsuch [71]. This indicates that the sample size is significantly large enough for EFA. The factorability of the item correlation matrix is tested by using the Kaiser–Meyer–Olkin (KMO) index (KMO 0.50) and the Bartlett test of sphericity. The KMO value is 0.826, indicating a high degree of common variance among factors. The Bartlett test of sphericity result is 412.003, with 0.000 significance, indicating that the population correlation matrix is not an identity matrix. Hence, the data are appropriate for EFA. Principal component analysis is adopted to identify the underlying factor groupings, resulting in the extraction of five groupings with eigenvalues greater than 1. The five factor groups explain 80.59% of the variance (as indicated in Table 4), higher than the guideline of 60% recommended by Malhotra [72]. Table 5 presents the groupings based on varimax rotation. The factor loading value represents the contribution of individual factors to each underlying grouping, and all factor loading values exceed the 0.45 value recommended by Comrey [73].

The “values and strategic goals” grouping comprises five factors: (1) vision, (2) goals and objectives, (3) strategic direction and intent, (4) team orientation, and (5) core values.

This grouping reflects the influences of consistent values and clearly defined strategic objectives of the company for the bidding group’s decision-making process. Values of companies are reflected in various aspects (e.g., business ethics, relationships, and strategies) [1], and these values govern how the group members work. For example, if the companies’ strategic value is to maintain a good reputation in the industry, then group members would conduct an adequate evaluation of the probability of executing a project successfully before deciding to bid for it instead of just calculating the potential profit their company would receive. If the companies’ values are to trust and respect each other in their relationships, then the group members’ relationships will be closed and the group will be cohesive during its work. The company’s strategic goals are an important trait that determines the bidding group’s risk-taking behavior, and the group’s bidding decision needs to coincide these. In particular, the Chinese government’s recent “One Belt One Road” (OBOR) initiative has a primary aim of improving the connectivity between countries along the OBOR trade corridors. This initiative will create huge opportunities for international construction companies. In this context, the interviews revealed that most of Chinese construction companies’ strategic goals include actively taking part in this initiative and developing markets in countries along the route. This goal will encourage the bidding group to take risks in such decisions.

The “collaboration and learning orientation” grouping contains four factors: (1) agreement, (2) communication, (3) coordination and integration, and (4) organizational learning.

This group reflects the important role of cooperation and sharing thoughts between group members in improving the quality of the group’s bidding decisions. It also reflects the importance of the learning process when making decisions in highly uncertain conditions. The key element differentiating group decision-making from individual decision-making is information exchange between group members [54, 74]. In most cases, the construction company will create a temporary bidding group for a specific project. The members of this kind of group are usually from different units, which may have different working habits. Hence, guaranteeing effective information exchange between the members in these temporary groups is vital for achieving high decision performance. A company emphasizing collaboration can build an open atmosphere for communication and promote resource sharing between group members from different backgrounds. The interviews indicate that most of the senior managers of Chinese international contractors value this and point out that there will be no success unless everyone shares information. Learning orientation reflects the degree to which an organization values using and creating knowledge to survive and develop. A learning climate in a construction company will encourage the bidding group to absorb previous mistakes. Moreover, a company highlighting learning will also create an effective information sharing system, which enables the group to eventually reach better decisions.

The “consensus reaching” grouping comprises (1) majority influence, (2) number of group members, (3) taking expertise into account, and (4) customer focus.

This grouping is mainly linked to the group level, and factors such as majority influence, number of group members, and taking expertise into account represent fundamental features of group decision-making. The group with large size is more likely to produce high performance [16]. However, the performance of the group will also decrease if the group size increases continually [75], because extremely large group size increases the probability of generating disagreements and the time to reach a consensus. A powerful majority is also significant in driving the consensus of the group. Bidding groups also need to pay attention to minority opinions, since they can provide multiple perspectives and alternative plans. A bidding group needs to focus on the efficiency of decision-making (e.g., decrease the time to reach a consensus) while guaranteeing higher quality decisions. Therefore, during the bidding group design phase, company managers and group leaders should guarantee that the group will include adequate members to accomplish group goals and avoid the group size being overly large at the same time. In addition, the application of appropriate decision rules is also necessary during the group bidding decision process.

The fourth grouping encompasses the following factors: (1) risk preference, (2) risk perception, and (3) team decision preference.

This grouping reflects the individual as well as the group process when making a decision under risk. It is noteworthy that all three factors in this grouping are ranked among the top four influencing factors, indicating it plays a key role in the process of group bidding decisions. In the interviews, although the interviewees emphasized the importance of discussion, cooperation, and compromise, the results clearly show that the foundation of all these is the essence of bidding is a decision-making issue under risk. Before discussion, cooperation, and compromise, everyone participating in these procedures needs to have their own judgment of the problem based on “risk awareness.” “Risk awareness” has an invisible influence on decision-making, which is worthy of consideration. If the risk awareness of all decision makers is similar, it is easy to make a decision. However, the opposite is the case if the decision makers have big risk awareness differences. Therefore, it can be concluded that the team should have broad perspectives on risk and agreement on the risk decision.

The factors belonging to this grouping are (1) empowerment, (2) capability development, (3) creating change, and (4) personal interest.

This grouping reflects the importance of the construction companies’ efforts in empowerment and investing employee development in guaranteeing a high group bidding decision quality and is linked to both organizational and individual levels. Although the bidding group’s final decision needs be audited and approved by top managers in most construction companies, many interviewees agreed that whether the company bid for a project is largely determined by the bidding group, since their companies are quite trusting the group and rarely deny the bidding scheme. The prosperity of construction companies’ is significantly affected by the bidding group’s quality of work, which relies on each members’ active participation in the process. A company that emphasizes empowerment and investing in employee development will create a shared perception that their company pays attention to their future development and views them as important resources for competitive advantage, which will improve their sense of belonging to the company and responsibility in their work. Hence, a construction company that values these traits will encourage group members to find new ways to solve problems, increase their confidence to accomplish work tasks, and indirectly improve the group’s quality of work.

Initially, therefore, the factors were identified from three-organizational levels (individual, group, and organization) and, after a relationship analysis, they were categorized into five channels. The correlation between the initial categorization and the new categorization is shown in Figure 1.

5. Conclusions and Recommendations

This study identifies and analyzes the factors that influence group bidding decision-making for construction projects. The analysis results indicate that 14 out of the 20 factors relating to individual, group, and organizational levels were identified to be critical factors, of which “risk perception” and “team decision preference” are regarded as the two most significant. In addition, the factors can be assigned into five groupings: (1) values and strategic goals, (2) collaboration and learning orientation, (3) consensus reaching, (4) risk awareness, and (5) empowerment and development. Influence of the grouping risk awareness is especially strong among the five groupings, with all three factors belonging to this grouping being ranked among the top four influences on decision-making.

The managerial implications that can be drawn from this research are as follows:(1)Bidding groups act in an organizational context and the construction companies need to set an appropriate strategic goal and ensure that employees at all levels have a clear understanding about this goal to provide direction for bidding groups’ decision-making.(2)Except for emphasizing material incentives, construction companies are also encouraged to invest in developing their organizational culture, and traits such as collaboration and empowerment are vital for increasing the bidding group’s cohesion and the responsibility of group members.(3)The bidding group should be aware of the risk perceptions and risk preferences of group members and consider their risk characteristics during the decision-making process.(4)An appropriate group size and provision of effective decision rules is helpful for the bidding group to achieve a consensus from different points of views during group discussions, and a deep understanding of each group member’s expertise is also advisable.

Moreover, besides bidding groups formed by members from different units of a company, groups including members from different companies are also common in current large-sized projects due to increasing adoptions of construction joint ventures (CJVs) agreements. The factors identified in this research are not limited to the specific group type. Therefore, it can be believed that the findings of this research can provide wide implications for both the single company and CJVs to improve their group bidding decision performance.

Although the study sought out the potential factors influencing group bidding decision-making, there are some limitations and future associated research opportunities. First, this research focused on analyzing the factors belonging to different organizational levels that influence group bidding decision-making in construction projects, while ignoring such others as project factors, market factors, and government-related factors. Further research is needed to investigate the factors that affect group bidding decisions from a more comprehensive perspective. Moreover, the data were collected mainly from the Chinese overseas contractors, and further research could also be carried out using similar methods in detailed comparative studies between the different enterprises in different countries. The relationships between the five groupings classified in this research are also worthy of further study.

Data Availability

The data used to support the findings of this research are available from the corresponding author upon request.

Conflicts of Interest

The authors declare no conflicts of interest.

Acknowledgments

This study was supported by Humanities and Social Sciences Planning Fund from the Ministry of Education of China (16YJA630031) and Independent Innovation Foundation of Tianjin University (2017XSZ-0045).

Copyright

Copyright © 2018 Peng Yan et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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