Abstract for: The Market Competitive Behavior in the Project-based Industries

Project-based industries are among the largest industries in the global economy and project-based organizations are also becoming prevalent in the emerging industries. In a project-based industry, a contract is usually awarded before the goods or services are completely provided by the contractor and contractors routinely compete for contracts under specific project awarding systems. The characteristic of the transactions and contractors’ reactions to project awarding systems forms unique pattern of market competitive behavior of the project-based industry. This paper demonstrates the market competitive behavior and the problems of the ineffective competition under price-based and qualification-based project awarding systems. Several unanticipated adverse feedback behavioral loops generated from contractors’ opportunistic bidding are discovered and analyzed. Managerial policy implications to project owners are also discussed and tested through a simulation model.