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Notably, this is even the case for projects with a bidratio of only 0.3–0.4 (that is, the winning bid is only30–40% of the cost estimate of the owner). As ex-pected, disputes, arbitrations or lawsuits or contractorbankruptcies frequently occur in relation to these low-bid projects in Taiwan (including those provided bydifferential security bonds).Notably, in a few cases, a lowest bidder may seekrejection by intentionally providing poor explanationsto defend their low bids when they find that their bidis actually too low owing to a poor or mistaken estima-tion. In such a case, this bidder can still refund their bidbond following rejection; otherwise, their bid bond maynot be refunded. A refusal to provide an explanationwould be considered an intentional interference in thetendering process.3. Pertinent literaturePertinent research on bidding can be broadly classi-fied into six categories: prequalification, determinationof bid mark-up, selection of bid-awarding method,determination of project ceiling price, adjustment ofbid unit prices following project awarding, and evalua-tion of competitive bids.Prequalification – As a pre-tender process, prequalifi-cation assesses the capabilities of contractors tocomplete a contract satisfactorily [3], and it is a deci-sion-making process that involves a wide range of crite-ria for which information is often qualitative, subjective,and imprecise [4]. These criteria include past failures,financial status, financial stability, credit ratings, experi-ence, ability, management personnel, and managementknowledge [5]. Lo et al. [6] concluded that improper pre-qualification requirements severely delayed a projectand increased the cost to the project owner.Determination of bid mark-up – Numerous studieshave examined bid mark-up strategies from the perspec-tive of the number of competitors involved [7], the re-source constraints and opportunity costs of the bidder[8], the cost uncertainty [9], the probability of winningthe bid [10], and other factors influencing the bids [11].Meanwhile, other researchers attempted to implementbid make-up strategies using mathematical methods,including utility theory [12], neural networks [13], fuzzyset theory [14], analytic hierarchy process [15], and case-based reasoning [16].Selection of bid-awarding method – Besides the afore-mentioned lowest bid and the most favorable tenderingmethods, other typical contractor selection methods in-clude the A + B method, average bid method and multi-criteria evaluation methods. Herbsman and Ellis [17]designed an A-plus-B method that regarded construc-tion cost and time as selection criteria. This method isa converted lowest bid method [18]. The average bidmethod attempts to identify the average bid value bytotaling all bid prices and then piding this numberby the total number of bids. The winning bidder is theone whose bidding price is nearest to but below the aver-age bid value [19]. In the multi-criteria evaluation meth-od, Alsugair [20] proposed a framework, involving 36evaluation factors grouped into nine classes. Also, Laiet al. [21] presented a six-criteria-based bid evaluationmodel currently used in China. Besides the above meth-ods, Holt [22] collected and reviewed various potentialmethods, including the multi-attribute utility theory,cluster analysis method, multiple regression method,and fuzzy set theory method.Determination of project ceiling price – Before open-ing the bidding, a project cost threshold or cost estimatemust be decided by a project owner as a reference forevaluating competing bids. Wang [23] proposed a sys-tematic procedure that is developed according to a util-ity-based multi-criteria evaluation model and a costmodel. In the procedure of Wang, the multi-criteriaevaluation model is applied to reflect owner preferencesregarding the decision criteria, and the cost model is de-rived to establish a cumulative cost distribution for set-ting cost threshold boundaries.Adjustment of bid unit prices following project award-ing – The research in this category deals with the assess-ment and adjustment of unit prices for a lump-sumproject that has already been awarded [24]. The mainobjective of this type of research is to produce a reason-able allocation of total bid price to each cost item forpreventing an unbalanced bid.Evaluation of competitive bids – The research mostrelevant to this investigation is that evaluating competi-tive bids for a lump-sum bidding project. This type of re-search examines the decision to accept or reject thelowest project bid depending on whether or not the low-est bid price is considered reasonable [25,26]. For exam-ple, Crowley and Hancher [25] proposed a quantitativemethod that comprised preparation and examinationphases. The preparation phase used the bid records ofhistorical projects to develop a suitable transformationscale (for isolating inherent bid variation from variabil-ity arising from project size alone) and a discordantthreshold (a measure of disagreement). Extensive histor-ical data were required to establish the threshold limitsof discordant bids for bid assessments. The examinationphase assessed apparently low bids according to the ex-pected recurrence of scale deviations between the med-ian (market value) and the low bid. Based on thepreferences of the owners regarding the expected recur-rence, the bid can either be accepted or rejected. Crow-ley [27] investigated the most effective models (medianand normalized median absolute deviation, respectively) for location and scale estimators designed to achievemore accurate bid evaluations. Additionally, Skitmoreet al. [28] employed seven data sets to conduct a bid-spread analysis to explore the nature and statisticalproperties of bids, and concluded that bids were entirelyrandom, being drawn from a lognormal distribution.Overall, current bid evaluation models have four majorcharacteristics; (1) the bid evaluations emphasize the to-tal bid price; (2) the models require that a database ofprevious bids of past projects be established; (3) the ac-cept/reject decisions in existing models are made com-pletely based on various statistical analyses (such asthe t value and the Z score); (4) no mechanism is pro-vided to enable the lowest bidders to defend theirestimates.4. Electronic-facilitated unit-price-based bid evaluationmodel4.1. Reasons of adopting a unit-price-based approachA bidder must determine the unit price of each costitem to prepare a detailed estimate of a project. Then,the unit price multiplied by the quantity for each itemyields the costs of the item. The sum of the costs of allcost items is the total bid price of the project. Such a de-tailed estimate takes a long time for a responsible bidderto make. When a bidder is rejected because his bid is toolow, he is certainly expected to challenge the projectadministrators by asking, ‘‘which aspects of my esti-mates are unreasonable?’’ Current models evaluate lowbids from the total bid price and neglect a detailed eval-uation of the cost estimate. The modeling results aresuch that convincing the rejected bidder of the unrea-sonableness of his total bid price, developed from a de-tailed cost estimate approach is difficult. Therefore, amodel that can provide detailed evaluations of costitems is sought. The cost of an item is dominated bythe unit price. Accordingly, a unit-price-based bid eval-uation model is proposed to support the bid-rejectiondecisions to identify which of the estimates in a lowbid are unreasonable.Moreover, the unit-price-based approach offersadded value: it allows the ambiguous specificationsand drawings associated with high or low cost items sub-mitted by the bidder, to be clarified. Such clarificationhelps to reduce disputes during the execution of con-struction work related to cost items.