To Bid Or Not To Bid: A Private Party Decision Making Process Model For International PPP Project

Nowadays,bidding for international PPP(Public-Private Partnership)projects has become the mainstream approach for private party entering new market and conducting business worldwide.PPP project usually has wide range of parties participating,long investment cycle and complex organizational relationships which result in huge uncertainty during implementation.As for international PPP project,cultural and institutional differences due to multinational operation can lead to serious information asymmetry,which usually produces larger bidding cost.Moreover,the improper project selection can lead to failure and great loss.Based on the analysis above,the research problem is that how can potential bidders decide whether to bid or not certain international PPP project based on perceived risk level?A standardized bidding decision process model is potentially useful for private party making scientific and effective bid/no-bid decision for international PPP projects.In this research,three decision dimensions are first established: project value,the perceived bidding risk,and the perceived project risk.For potential bidders,these three dimensions respectively show that whether a project should be pursued,whether a project is obtainable and whether a project can be completed and operated successfully in the future.The logical valuation method is then used to logically evaluate eight decision criteria of the first two decision dimensions;for the third dimension,the modified fuzzy-gray-element model is coupled with the pair wise comparison method introduced to evaluate the white(recent)risk value and gray(long-term)risk value of eighty weighted critical risk factors(CRFs),grouped into country level,market level,and project level,as well as their cross-level impacts.All the decision criteria and CRFs were identified through literature analysis.To calculate the final evaluation result and derive the final guidance on whether or not to bid,a positive and a negative evaluation formula are given for potential bidders to choose based on his risk propensity and the enterprise's current development strategy.Finally,a computational example is given to demonstrate the feasibility and applicability of the decision process model.As for academic significance,it distinguished the main difference between international PPP project bid/no-bid decision making problem with that of the common construction project and made certain contribution for the insufficient current study on the international PPP project bid/no-bid decision making problem.As for practical significance,it will help guide potential bidder to make scientific and effective bid/no-bid decision for international PPP project.