Bid-awarding systems: An overview

Construction work is usually initiated by an owner who signs a contract with a contractor. This contract fully describes the nature of the work to be carried out, and the contractor is entitled to payments as per the agreement. An owner may select a contractor through competitive bidding, negotiation, or a combination of these methods. There are different types of competitive bidding, such as the lowest-bidder system and the non-lowest-bidder system: the latter includes the nearest to the average of all bids, limited to the owner's estimate bid, and weighted average bids (the Danish system). Some of the different bid-awarding systems available worldwide are reviewed, with special emphasis on the systems used in Saudi Arabia and Germany.