Development of an express risk assessment in tender participation for contracting construction organizations in civil and agro-industrial construction

Abstract

Participation in a tender is an integral part of the activities of contracting construction organizations. The difficulty lies in the fact that contractors have to make a decision on participation or non-participation in the tender quite quickly from the moment the customer posts information about the procurement. Incorrect decisions made by the contractor at this stage lead to lost profits, financial losses, ineffectiveness, loss of reputation and other unpleasant consequences. To level out this situation, the paper describes existing approaches to assessing the risks of participation in tender activities, which can protect the contractor from participating in unwanted procurement. In order to assess the feasibility of participating in a procurement, the authors propose the development of an algorithm for express risk assessment of a contractor's participation in a tender, which suggests, under limited time, to make a reasonable decision on the need to participate in a particular tender. This requires a qualitative and quantitative assessment of the contractor’s main risks, which are combined into two main groups: the risk of loosing the tender and the risk of future losses. The authors propose methods for assessing risks and classifying them as high, medium and low levels. The paper provides an example of practical testing of the proposed express assessment.