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
ECA Industry Awards 2024 shortlist revealed
22 leading businesses from across the electrotechnical and engineering services sector.
Government unveils Skills England strategy
Skills England to transform opportunities and drive growth.
New Government Hub for York Given Planning Green Light
For up to 2,600 civil servants, due for completion by 2028.
Construction Skills Certification Scheme cards
July update on Professionally Qualified and Academically Qualified Person Cards.
BSRIA Briefing 2024, November 22
Sustainable Futures: Redefining Retrofit for Net Zero Living.
The CLC on driving competency in the retrofit sector
Previously published roadmap on skills for net zero.
The first labour government King's speech in fifteen years
Construction industry reactions, support and some concern.
CIOB Retrofit of Buildings Technical Information Sheet
What retrofit is, the approach to be taken and processes to be followed.
Adapting Historic Buildings for Energy and Carbon Efficiency
Historic England advice note 18, free download published.
10 retrofit projects revisited 10 years after completion.
Information orders, building liability orders and SPVs
Key BSA terms and how they impact special purpose vehicles.
Listed despite problems with its design.
Zen and the art of cycling exploration.
Design Council Homes Taskforce launched
To support government 1.5 million homes target within UK climate commitments.