Dutch auctions in the construction industry
Contents |
[edit] Introduction
A Dutch auction is also known as an open descending bid. It is a procurement method in which an inflated price is set at the start of the process and is then progressively lowered until a bidder is prepared to make an offer. This purchasing approach can be used to procure construction services.
[edit] History
This is a procurement method that has been throughout the history of commerce. In the 17th century, the method became associated with estate and painting sales in Holland. In the Netherlands, Dutch auctions are referred to as Chinese auctions.
Dutch auctions came to England in the 18th century, although at the time, they were referred to as ‘mineing auctions'. This was due to the fact the auction continued until the price dropped and a bidder shouted out the word, ‘Mine’.
[edit] Strategy
For bidders, it is essential to have an accurate sense of the value of the service that is being auctioned. This is sometimes referred to as rational bidding. A rational bid of this kind may factor in hidden costs known only to the bidder which will project that amount onto the value of the service.
Dutch auctions are generally considered to be an efficient procurement method, although they are not frequently used on construction projects. The method is primarily used when new companies make initial public stock offerings.
Dutch auctions are also referred to as multiple item auctions (since they allow services to be bundled together) or clock auctions. While Dutch auctions are similar to reverse auctions, there is a specific Reverse Dutch Auction where the price of the items starts low and then increases in set intervals.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Latest Build UK Building Safety Regime explainer published
Key elements in one short, now updated document.
UKGBC launch the UK Climate Resilience Roadmap
First guidance of its kind on direct climate impacts for the built environment and how it can adapt.
CLC Health, Safety and Wellbeing Strategy 2025
Launched by the Minister for Industry to look at fatalities on site, improving mental health and other issues.
One of the most impressive Victorian architects. Book review.
Common Assessment Standard now with building safety
New CAS update now includes mandatory building safety questions.
RTPI leader to become new CIOB Chief Executive Officer
Dr Victoria Hills MRTPI, FICE to take over after Caroline Gumble’s departure.
Social and affordable housing, a long term plan for delivery
The “Delivering a Decade of Renewal for Social and Affordable Housing” strategy sets out future path.
A change to adoptive architecture
Effects of global weather warming on architectural detailing, material choice and human interaction.
The proposed publicly owned and backed subsidiary of Homes England, to facilitate new homes.
How big is the problem and what can we do to mitigate the effects?
Overheating guidance and tools for building designers
A number of cool guides to help with the heat.
The UK's Modern Industrial Strategy: A 10 year plan
Previous consultation criticism, current key elements and general support with some persisting reservations.
Building Safety Regulator reforms
New roles, new staff and a new fast track service pave the way for a single construction regulator.
Architectural Technologist CPDs and Communications
CIAT CPD… and how you can do it!
Cooling centres and cool spaces
Managing extreme heat in cities by directing the public to places for heat stress relief and water sources.
Winter gardens: A brief history and warm variations
Extending the season with glass in different forms and terms.
Restoring Great Yarmouth's Winter Gardens
Transforming one of the least sustainable constructions imaginable.