Exploring Bid/No-Bid Decision Factors of Construction Contractors for Building and Infrastructure Projects

Abstract

While contractors may experience financial failure if they bid on an inappropriate project, bidding on the right project may allow them to profit substantially. Therefore, understanding the various factors that influence the bid/no-bid decision is crucial for construction companies in determining whether to pursue a project. The present study aims to identify the critical factors influencing contractors’ bid/no-bid decisions. A total of 112 responses were collected from a questionnaire survey to rate the relative importance of 22 factors, and these factors were then analyzed based on the type of project and the contractor’s years of experience. The results indicate that the client’s ability to pay, clarity of the scope of work, project cash flow, the need for work, and availability of qualified labor are the most critical factors influencing contractors when making bid/no-bid decisions. The factor “previous experience in similar projects” was statistically significant among building and infrastructure projects, while “project location” was statistically significant among contractors with different years of experience. Finally, factor analysis identifies the six major underlying groups: client-related factors, bidding-related factors, contractor-related factors, market-related factors, economy-related factors, and project-related factors. The study’s findings can help contractors better understand the factors influencing their bidding-related decisions.

1. Introduction

The construction sector has played a vital role in Saudi Arabia’s economic growth. According to the General Authority for Statistics [1], in 2022, the sector contributed 4.8% of Saudi Arabia’s overall gross domestic product (GDP). It is also expected to experience an annual GDP growth rate of 9.2% between 2020 and 2030 [2]. In terms of building projects, Saudi Arabia dominates most Gulf Cooperation Council (GCC) countries, accounting for over 43% of the total [3].

Contractors in the construction environment must regularly confront two difficult decisions. The first decision concerns whether or not they should submit a tender for a project. Upon deciding to submit a tender, the contractor must make a second decision regarding the percentage of mark-up to be added to the project’s cost. This decision ensures that they can be the lowest bidder while simultaneously achieving a reasonable profit [4]. The bidding process is both costly and time-consuming, and there is no guarantee that the contractor will secure the project. Therefore, companies carefully select the projects they bid for [5,6]. While bidding on an inappropriate project may result in financial failure, successfully bidding on the right project can result in substantial profits [7]. The bid/no-bid decision is considered one of the most crucial decisions that contracting companies must make when a new project is up for tender [8]. It is a complex decision that is typically influenced by multiple factors [7,9,10,11,12,13,14,15,16].

Many studies have explored the factors that affect bid/no-bid decisions in Saudi Arabia. However, a substantial amount of time has elapsed since those earlier studies were carried out [12,17], and they were limited to particular regions, such as the Eastern Province [18]. Additionally, studies of bid/no-bid decisions specific to the project type and the contractor’s years of experience in Saudi Arabia’s construction industry remain scarce. To address these gaps, the present study aims to identify the critical factors influencing contractors’ bid/no-bid decisions, considering the effect of the project type and the contractor’s degree of experience in the Saudi construction sector. To this end, the study has the following four objectives:

• Identify the critical factors that affect the contractor’s bid/no-bid decision for construction projects.
• Assess the importance of these factors through a survey of construction contractors in Saudi Arabia.
• Determine the effect of project type and the contractor’s experience on the critical factors identified.
• Categorize the factors into groups that reflect the key aspects considered by contractors.

Contractors are encouraged to focus on the factors influencing their bidding decisions to enhance the chances of making well-informed and suitable choices. The present study begins with a review of the existing relevant literature to examine the factors that influence bidding decisions. Subsequently, the research methodology and data analysis are detailed. The study will then conclude with a discussion of the significant findings and research limitations.

2. Literature Review on Bid/No-Bid Decision Factors

Several studies published in past years have examined contractors’ bid/no-bid decisions, focusing on four key topics: bidding strategy [19,20,21], bid mark-up determination [22,23,24,25], factors affecting the bid/no-bid decision [9,26], and the bid decision-making process [27,28].

Several researchers have identified key factors influencing the bid/no-bid decision. Ahmad and Minkarah’s [22] study is generally regarded as the first attempt to identify the factors affecting bid/no-bid and mark-up decisions among leading construction contractors in the United States, with numerous subsequent researchers investigating bidding factors acknowledging the significance of their work. For example, Shash [9] explored the main factors that top United Kingdom contractors consider in their bidding decisions and found that they include the need for work, the number of bidders, the company’s level of experience with similar projects, the company’s existing workload, and the client’s identity. In Australia, a study by Shokri-Ghasabeh and Chileshe [15] sought to identify and rank the most common bid/no-bid factors among 81 Australian construction contractors. Of the 26 factors they identified, three emerged as highly significant—namely, the client’s financial capability, the risk associated with the project, and the project’s anticipated future benefits and profitability. In Nigeria, Oyeyipo et al. [29] evaluated the key factors influencing bidding decisions among both local and expatriate contractors. Their findings emphasized that the client’s financial capacity and the availability of required capital and materials played pivotal roles in shaping bid strategies. In Tanzania, Chileshe et al. [30] identified and ranked the critical factors that impact indigenous small building contractors’ bid or no-bid decision-making processes. Of the 30 factors evaluated, 5 ranked particularly highly: availability of capital, the client’s financial capacity, project scale, past profits in similar projects, and project type.

The factors affecting bid/no-bid decisions in international projects are typically more complex than those in domestic projects. Li et al. [7] ranked 41 factors impacting Chinese contractors’ bid or no-bid decisions for international construction projects. Oo et al.’s recent study [31] identified 28 critical factors through a meta-analysis of 24 relevant studies published from 1988 to 2021. The study identified the top 5: project payment terms, the client’s financial capacity, the client’s reputation in the industry, the client’s past payment history for previous projects, and project size. In a recent study, Ahmed et al. [32] identified an extensive set of 43 bidding factors that are relevant and applicable to all countries.

Several studies have also examined how differences in contractors’ characteristics influence the significance of factors in the bid/no-bid decision. Jarkas et al. [33] examined the effects of contractors’ grades in Qatar on the importance levels of the factors explored. Their findings exhibited a high level of agreement between all grade-category contractors on ranking the factors. In Australia, Shokri-Ghasabeh and Chileshe [15] indicated that respondents from organizations of different sizes shared similar views on the importance of key factors in the bid/no-bid decision-making process. In a recent investigation, Dodanwala and Santoso [34] identified 43 factors that impact the bid/no-bid decisions of small and medium-sized contractors in Sri Lanka. For small-sized contractors, the three most crucial factors in the bidding process were perceived to be project size, availability of capital, and the promptness of client payments. Conversely, medium-sized contractors prioritized project size, current workload, and project type as key considerations in their bid/no-bid decision-making.

Several studies to date have addressed the factors that influence bid/no-bid decisions in Saudi Arabia and other GCC countries [12,13,17,18] and have demonstrated that construction industries in the GCC countries share similar bidding practices.

Table 1. Studies on factors influencing contractors’ bid/no-bid decisions in GCC countries.

Authors	Country	Sample Size	No. of Factors	Top Five Factors
Abdul-Hadi [17]	Saudi Arabia	71	37	- Project cash flow - Availability of required cash - Type of contract - Availability of required staff - Experience in similar projects
Bageis & Fortune [12]	Saudi Arabia	87	65	- Client’s financial capacity - Prompt payment habit of the client - The project payment system - Clarity of the work - Project cash flow
Jarkas [33]	Kuwait	149	40	- Employer type and identity - Project size - Clarity of technical specifications - Previous experience with employer - Number and identity of competitors
Jarkas et al. [13]	Qatar	92	43	- Previous experience with the employer - Need for work - Current workload - Previous experience with similar projects - Size of project
Alsaedi et al. [18]	Saudi Arabia	67	31	- Size of the job - Type of the job - Company’s strength in the industry - Project cash flow - Rate of return
Gunduz & Al-Ajji [35]	Qatar	169	34	- Current workload - Need for work - Previous experience with employer - Timely payment by the employer - Availability of other projects for bidding
Binshakir et al. [36]	UAE	55	40	- Client’s financial capabilities - Client’s payment history - Client’s reputation - Project risks - Contractor’s financial capabilities

lists previous studies on critical bid/no-bid decision factors. The previous studies outlined in Table 1 used research methods similar to those employed in this study, including a comprehensive literature review and a survey, which ensures a consistent approach to data collection and analysis across the research.

Based on the above literature review summarized in Table 1, it is evident that the factors influencing contractors’ decisions to bid or refrain from bidding on construction projects vary significantly across different countries, both in terms of quantity and importance. Research examining the effects of project type and contractors’ experience on bid/no-bid decisions in Saudi construction projects remains lacking.

3. Research Method and Data Analysis

3.1. Research Design

The methodology used in this study is a mix of qualitative and quantitative analysis, as Figure 1 illustrates. The quantitative analysis includes methods such as the relative importance index, Spearman’s rank correlation coefficient, independent t-tests, one-way ANOVA, and exploratory factor analysis. In contrast, the qualitative analysis comprises a literature review and content analysis.

An extensive literature review was conducted to identify bid/no-bid factors that influence bidding decisions. Next, a questionnaire survey was distributed to construction contractors working in Saudi Arabia; the contractors were asked to assess the importance level of the 22 extracted factors. While questionnaire surveys are widely acknowledged as the primary approach for identifying the important factors that impact bid/no-bid decisions in different countries, their effectiveness relies significantly on the list of potential factors identified in the literature review [37].

3.2. List of the Factors Influencing Bid/No-Bid Decisions

A practical approach to identifying the potential factors influencing bidding decisions is to examine the frequency of their occurrence and the importance ascribed to them in prior research using a literature study [37]. Twenty-two factors that potentially influence contractors’ bid/no-bid decisions in Saudi Arabia were shortlisted based on their high frequencies in previous relevant studies and local practitioners’ perceptions regarding bidding practices. Three practitioners were interviewed via video call to provide feedback on the identified factors based on their experiences with the bidding process. Each practitioner had over 20 years of experience in the Saudi construction industry and possessed relevant expertise in building and infrastructure projects. Their feedback was valuable in filtering the factors considered appropriate for the Saudi construction industry. Additionally, they provided input on whether the chosen names for each factor accurately represented the factor and would be understood by survey respondents. The factors were then adjusted accordingly and then incorporated into the questionnaire. These factors are listed in

Table 2. List of factors influencing bid/no-bid decisions captured in the literature.

Code	Factors	References
[F1]	The client’s ability to pay	[13,14,15,29,30,35,36]
[F2]	The client’s identity and reputation	[11,12,13,15,16,29,35,36]
[F3]	Previous experience with the client	[12,13,14,16,29,35,36]
[F4]	Identity of the consultants	[11,12,13,16]
[F5]	Need for work	[11,12,13,15,29,30,35]
[F6]	Project duration	[12,13,15,29,35,36]
[F7]	Project type	[11,13,15,16,29,30,36]
[F8]	Project size	[11,13,14,15,16,29,30,35,36]
[F9]	Project location	[12,13,15,16,29,30,35,36]
[F10]	Project risks	[12,15,29,36]
[F11]	Previous experience in similar projects	[11,12,13,16,29,30,35,36]
[F12]	Past profit in similar Projects	[12,13,15,16,29,30,36]
[F13]	Project cash flow	[11,12,13,16,29,35]
[F14]	Availability of work (both current and potential)	[11,13,16,29,30,35]
[F15]	Availability of qualified workforce	[11,12,13,14,16,29,30,35,36]
[F16]	Number and identity of bidders	[12,13,14,15,29,30,35,36]
[F17]	Bidding method	[11,12,13,14,29,30]
[F18]	The contractor’s financial capacity	[12,20,30,36]
[F19]	Clarity of scope of work	[12,13,14,36]
[F20]	Bidding duration	[11,12,13,14,16,29,35,36]
[F21]	Probability of winning the project	[30,38]
[F22]	The economic environment	[12,14,36]

.

3.3. Questionnaire Design

The questionnaire survey was prepared based on the identified bid factors discussed in Section 3.2 and feedback from local professionals on bidding practices. The professionals suggested shortening the survey to focus on identified factors and ensuring the questions are clear and simple for all respondents.

The survey was structured into three main sections. In the first section, respondents were asked to answer seven questions concerning their educational qualifications, positions, years of experience, and the types of projects their firms bid on. In the second section, the respondents were asked to assess the importance levels of the 22 identified factors based on their experience with respect to the bid/no-bid decision. A 5-point Likert scale was used with responses ranging from 1 indicating “Not Important” to 5 indicating “Extremely Important”. Likert-type ordinal scales are widely used to measure either agreement or disagreement with a particular statement [39]. The 5-point Likert scale is widely used in construction research [7]. In the questionnaire’s final section, respondents were asked to list any further relevant factors that were not mentioned in the survey and to indicate how these factors might influence their bidding decisions.

3.4. Statistical Data Analysis

The data were analyzed using the IBM Statistical Package for Social Sciences (SPSS v29). The survey data were coded and entered into the software to compute the necessary statistics, including the mean, standard deviation, and Spearmen coefficients. In addition, an independent t-test, one-way ANOVA, and factor analysis were applied [40].

3.4.1. Cronbach’s Alpha

The internal consistency among the 22 factors in the survey questionnaire was first assessed using Cronbach’s alpha, which yielded a value of 0.807. According to Taber [41], this value indicates a very high degree of internal consistency.

3.4.2. The Relative Importance Index (RII)

The Relative Importance Index (RII) is extensively acknowledged and utilized as a statistical method for evaluating and ranking various factors [13,31,35]. All scores given by the respondents for each factor were used to calculate the RII, which represents each factor’s level of importance, as follows:

$$\mathrm{R}\mathrm{I}\mathrm{I} (\%)={\displaystyle \frac{{5\mathrm{n}}_5+{4\mathrm{n}}_4{+3\mathrm{n}}_3+{2\mathrm{n}}_2+{1\mathrm{n}}_1}{5\mathrm{N}}}\ast 100$$

(1)

where N represents the total number of respondents who participated in the survey and n₅, n₄, n₃, n₂, and n₁ represent the number of respondents who responded “Extremely important”, “Important”, “Fairly important”, “Slightly important”, and “Not important”, respectively. The above formula was used to obtain the relative importance indices, ranks according to each type of project and each firm’s experience in the construction industry, and the factors’ overall ranks. The rank ranges between 100 and 0, with 100 being the highest and 0 being the lowest. When the RII is the same for several factors, the standard deviation is employed to determine the order of factor ranking. Factors with lower standard deviations in scores are ranked higher [42].

3.4.3. Agreement and Consistency of Response Analysis

Further investigation was carried out to assess the degree of agreement on the rankings of the factors explored among less experienced contractors (0–10 years), moderately experienced contractors (11–20 years), and more experienced contractors (more than 20 years) using Spearman’s rank correlation coefficient. Spearman’s coefficient varies between −1 and +1, where 1 indicates perfect positive agreement, 0 indicates no correlation, and −1 indicates perfect negative agreement “disagreement” [43].

3.4.4. Independent T-Test and One-Way ANOVA

The normality of the collected data must first be checked using the Kolmogorov–Smirnov test prior to conducting inferential analysis. The data were found to be normally distributed; for inferential analysis, the parametric independent t-test was performed to determine whether statistically significant differences were present in the factors across project types (building and infrastructure), and a one-way ANOVA test was used to determine whether the factor rankings differed significantly among firms with different levels of experience. This study classified contractors into three groups (less experienced, moderately experienced, and more experienced contractors) according to their years of experience in construction projects. A one-way ANOVA test was conducted on the 22 factors treated as independent variables, with the contractor’s years of experience serving as the categorical variable. This analysis revealed where differences occurred among the groups, and factors with a p-value less than 0.05 were considered statistically significant [44].

3.4.5. Exploratory Factor Analysis

Factor analysis was used to identify the underlying grouped factors affecting the decision to bid. Factor analysis is a multivariate technique used to organize the relationships between a large number of factors by identifying groups of factors that are highly correlated with one another [40,45]. The Kaiser–Meyer–Olkin (KMO) measure of sampling adequacy and Bartlett’s test of sphericity were checked prior to conducting factor analysis to determine the suitability of factor extraction [46].

3.4.6. Content Analysis

Content analysis is a method of observation that provides an alternative approach to direct interviews. This analysis is used to identify patterns or specific themes within qualitative data by systematically coding and analyzing keywords and phrases [47,48]. Content analysis was introduced by Fellows and Liu [49] as an analytical method that may be used in management and construction research [50]. In this study, the respondents’ comments were subjected to content analysis to derive valuable insights into additional factors influencing bid/no-bid decisions in construction projects.

3.5. Study Participants

The targeted population was construction contractors who were involved in the bidding process for building and infrastructure projects in Saudi Arabia. A questionnaire survey, including 22 factors, was distributed to the contractors. A snowball sampling technique was used, whereby respondents were asked to complete the survey and then forward it to other potential respondents with experience and knowledge in Saudi construction projects. Prior construction management studies (e.g., Maali et al. [51]) have also employed the snowball approach, which facilitates the collection and dissemination of information and responses through referrals or social networks. A total of 112 responses were obtained, exceeding 84, the average number of survey respondents in the 24 relevant studies published by Oo et al. [31].

Table 3. Survey respondent characteristics and their companies.

Academic Qualification	Percentage (%)
Bachelor	79.8
Master	18.1
Doctoral	2.1
Respondent Position	Percentage (%)
Chief estimator	14.9
Project manager	38.3
Managing director	12.8
Contract professionals	22.3
Others	11.3
Respondent Years of Experience	Percentage (%)
Less than 5 years	9.6
5–10 years	27.7
11–15 year	24.5
16–20 years	15.9
More than 20 years	22.3
Firm Years of Experience	Percentage (%)
Less experienced firms (0–10 years)	42.6
Moderately experienced firms (11–20 years)	20.2
More experienced firms (more than 20 years)	37.2
Project Type	Percentage (%)
Building	50
Infrastructure	42.6
Others	7.4
The Location of Projects	Percentage (%)
Central Region	37.9
Eastern Region	13.8
Western Region	18.3
Northern Region	16.1
Southern Region	18.3

summarizes the demographic characteristics of the respondents and their firms.

The breakdown of respondents’ positions revealed that 38.3% held project manager positions, while 22.3% were contract professionals. The remaining respondents held various other positions. The distribution of the respondents’ educational qualifications revealed that the majority of survey participants, 79.8%, possessed bachelor’s degrees, while 20.2% held higher degrees. In terms of the respondents’ years of professional experience in construction projects, 37.3% had less than 10 years of experience, and 62.7% had more than 10 years of experience. This distribution demonstrates the reliability of the questionnaire survey responses, whereby most respondents possess over a decade of professional experience. In terms of firms’ experience levels in construction projects, 40% of survey participants worked for less experienced firms with less than 10 years of experience, indicating that a large number of construction companies have entered the construction industry within the last 10 years. Conversely, 37.2% of respondents were affiliated with extensively experienced firms in construction projects, and the remaining 20.2% worked for firms with 11–20 years of experience in the construction industry. Table 3 also shows that the distribution of project types in which respondents were engaged revealed that 50% were engaged in building construction projects, 42.6% were engaged in infrastructure projects, and 7.4% were involved in other project types. Most projects were constructed in Saudi Arabia’s central region.

4. Results and Discussion

4.1. Ranking of Factors Affecting Bid/No-Bid Decisions

4.1.1. Overall Ranking

The factors affecting the bid/no-bid decision were ranked in order of their importance of weights.

Table 4. The RII and ranking of the factors affecting bid/no-bid decisions.

Factors		Overall		Project Type				Contractors’ Years of Experience
				Building Projects		Infrastructure Projects		Less Experienced		Moderately Experienced		More Experienced
		RII	Rank	RII	Rank	RII	Rank	RII	Rank	RII	Rank	RII	Rank
[F1]	The client’s ability to pay	93.40	1	91.49	1	95.00	1	93.50	1	89.47	7	95.43	1
[F2]	The client’s identity and reputation	86.60	9	85.96	6	86.50	9	87.50	6	91.58	1	82.86	14
[F3]	Previous experience with the client	72.13	21	70.64	21	72.50	20	70.50	22	71.58	19	74.29	20
[F4]	Identity of the consultants	72.13	20	74.89	20	69.50	22	72.00	20	68.42	20	74.29	21
[F5]	Need for work	89.57	4	90.64	2	87.00	8	90.00	3	89.47	6	89.14	5
[F6]	Project duration	85.96	10	85.53	9	86.00	10	85.50	11	83.16	12	88.00	9
[F7]	Project type	88.09	6	85.96	8	91.00	4	87.00	8	90.53	3	88.00	7
[F8]	Project size	85.74	11	85.53	11	85.50	10	86.00	10	86.32	9	85.14	11
[F9]	Project location	76.38	19	76.17	19	76.00	19	78.50	17	66.32	21	79.43	18
[F10]	Project risks	87.87	7	85.53	10	91.00	3	88.00	5	87.37	8	88.00	8
[F11]	Previous experience in similar projects	81.49	14	77.87	17	85.00	13	78.00	18	83.16	11	84.57	12
[F12]	Past profit in similar Projects	83.83	12	83.40	12	84.40	14	85.00	12	81.05	15	84.00	13
[F13]	Project cash flow	90.00	3	89.79	4	90.50	5	90.00	4	90.53	4	89.71	4
[F14]	Availability of work	80.43	16	78.30	16	82.00	15	81.00	14	81.05	14	79.43	17
[F15]	Availability of qualified workforce	88.51	5	88.94	5	88.00	7	87.50	7	91.58	2	88.00	6
[F16]	Number and identity of bidders	68.09	22	66.81	22	70.00	21	72.00	21	61.05	22	67.43	22
[F17]	Bidding method	81.06	15	81.28	14	82.00	16	82.50	13	80.00	16	80.00	16
[F18]	The contractor’s financial capacity	87.66	8	85.96	7	89.00	6	86.50	9	84.21	10	90.86	2
[F19]	Clarity of scope of work	90.64	2	90.21	3	92.50	2	91.00	2	90.53	5	90.29	3
[F20]	Bidding duration	78.51	18	79.15	15	78.50	18	79.50	16	75.79	17	78.86	19
[F21]	Probability of winning the project	78.72	17	76.17	18	80.50	17	78.00	19	75.79	18	81.14	15
[F22]	The economic environment	82.98	13	82.55	13	85.50	11	80.00	15	82.11	13	86.86	10
Average RII		83.17		82.4		84.00

lists the factors’ overall ranks and the sub-groups’ ranks, including project type and firms’ experience. The lowest-ranked factor was 68.09, and the highest-ranked factor was 93.4, indicating that the 22 factors were considered essential to construction contractors working in Saudi Arabia. Only the critical factors are selected for comparison to simplify the discussion regarding the difference in factor rankings. According to the Pareto principle, as recommended by Han et al. [52], the top 20% of ranking factors are considered critical factors, suggesting that 20% of the causes contribute to 80% of the results. In our study, the top five factors are identified as critical.

According to the Pareto principle [52], the analysis showed that the highest-ranked five factors were the client’s ability to pay, clarity of scope of work, project cash flow, the need for work, and availability of qualified workforce, whereas it was found that the lowest-ranked five factors were bidding duration, project location, the identity of the consultants, previous experience with the client, and the number of bidders. Interestingly, the respondents ranked “the client’s ability to pay” first. This factor has also been found among the top five factors affecting project schedules in Saudi construction projects [53,54]. It is critical for construction contractors to receive payment on time from project clients, as delayed payments can severely impact their cash flow, making it difficult for them to purchase materials, cover operational expenses, and pay their own employees.

The ranking order of the identified factors between the results obtained in this study and the results of previous studies conducted in Saudi Arabia [12,17,18] are presented in

Table 5. Comparison of the top five factors with other studies conducted in Saudi Arabia.

Top Five Factors Identified in This Study		Abdul-Hadi [17]	Bageis and Fortune [12]	Alsaedi et al. [18]
[F1]	The client’s ability to pay	Rank 18th	Rank 2nd (✓)	N/A
[F19]	Clarity of scope of work	Rank 22nd	Rank 4th (✓)	Rank 6th
[F13]	Project cash flow	Rank 1st (✓)	Rank 5th (✓)	Rank 4th (✓)
[F5]	The need for work	Rank 8th	Rank 43rd	Rank 12th
[F15]	Availability of qualified workforce	Rank 4th (✓)	Rank 16th	Rank 20th

. The factors that occurred in the top five ranked in the three selected previous studies are marked with the checkmark symbol (✓). It is interesting to note that project cash flow is the only factor appearing in the top five factors affecting bid/no-bid decisions in this study and all previous studies in Saudi Arabia, indicating that this factor remains highly influential in the bid/no-bid decision-making process for construction projects in Saudi Arabia. Meanwhile, the need for work was not ranked as a top five factor in previous research conducted in the Saudi Arabian context—for example, it was ranked 8th in Abdul-Hadi [17], 43rd in Bageis & Fortune [12], and 12th in Alsaedi et al. [18]. To conclude, the aforementioned comparison reveals that the ranking of the top factors drawn from this study is somewhat in agreement with that of Bageis and Fortune [12] in Saudi Arabia, where “the client’s ability to pay”, “clarity of the scope of work”, and “project cash flow” were found to be most significant. This supports the study’s purpose in that the important factors must be re-assessed, given that a considerable period of time has elapsed since those previous studies were completed [12,17] and were concentrated in specific regions, such as the Eastern province [18].

4.1.2. Ranking Based on Project Type

The characteristics of building construction differ considerably from those of infrastructure construction; thus, the factors influencing bid/no-bid decisions are compared according to the project type. This is significant because a contractor’s past performance and level of experience with a given type of project may influence their decision to submit a bid [55]. The project type term describes the nature of the proposed construction project. Construction projects are typically classified into two types: building and infrastructure. The result, as the RII scores in Table 4 demonstrate, indicates that the most critical factors affecting the bid/no-bid decisions in building projects are the client’s ability to pay, the need for work, clarity of the scope of work, project cash flow, and availability of qualified labor.

By contrast, when deciding whether or not to bid for infrastructure projects, contractor firms first consider the client’s ability to pay, followed by the clarity of the scope of work, project risks, type of project, and project cash flow. The critical factors considered in building projects differ slightly from those in infrastructure projects. Nevertheless, three factors—namely, the client’s ability to pay, the clarity of the scope of work, and project cash flow—were ranked as the critical factors in both project types, suggesting that these factors are of equal importance to both project types.

The factor “availability of qualified workforce” was ranked as critical in building projects but not in infrastructure projects due to the complexity of building projects, which require skilled labor to execute various tasks. In contrast, the factor “project risks” was ranked 3rd in critical importance for infrastructure projects and 10th for building projects, highlighting its greater influence on bidding decisions for infrastructure projects. This is because infrastructure projects tend to face higher risks compared to other types of construction. This aligns with the findings of Ikediashi et al. [56], which identified poor risk management as the leading cause of project failure in infrastructure projects in Saudi Arabia. The “project type” factor also had a greater influence on bidding decisions for infrastructure projects, where it ranked fourth, compared to building projects, where it ranked eighth. This is because infrastructure projects encompass a variety of types, such as roads, dams, and bridges.

It is noteworthy that the average RII score of all factors for the infrastructure projects (84.00) was slightly higher than for the building project (82.4), as shown in Table 4; comparing the RII for each factor, infrastructure projects had higher RII values for 16 factors, while building projects had higher RII values for six factors. This indicates that infrastructure projects require greater emphasis on specific factors.

4.1.3. Ranking Based on Firms’ Experience

Table 4 also shows the rankings for different categories of contractors based on their level of experience in construction projects. The importance of various factors changes in accordance with the contractor’s experience. Two of the five critical factors were shared across the three groups of contractors: the clarity of the scope of work and project cash flow. For the less and more experienced contractors, the factor “the client’s ability to pay” was ranked first, with a weighted RII of 93.5 and 95.4, respectively, while “the client’s identity and reputation” was ranked first, with an RII of 91.5, for moderately experienced contractors. Notably, in all contractor categories, the client of the construction project has a major influence on the contractor’s decision to bid. For the second-ranked factors, more experienced contractors consider “the contractor’s financial capacity” to be the most critical factor influencing the bidding process. This suggests that contractors with more substantial financial capacity are more competitive and can bid for more construction projects simultaneously. It is important to note that the “project cash flow” factor was considered the fourth most critical factor from the contractors’ perspective with different experiences. Cash flow is incontrovertibly important in terms of the contractors’ ability to continue and successfully complete the work. Less experienced contractors consider “project risks” to be the fifth most significant factor, whereas more experienced contractors rank it as the eighth most important factor. This reveals that the more experienced contractors are more confident than their less experienced counterparts in tackling project risks and challenges, owing to their extensive experience with construction projects. Project risks, including unknown site conditions, safety concerns, and price fluctuations, play a crucial role in the bid/no-bid decision process. An in-depth understanding of these risks helps evaluate whether the potential benefits of undertaking the project outweigh the associated uncertainties and challenges.

4.2. Contractors’ Agreement on the Rankings of the Factors Affecting Bidding Decisions

Spearman’s rank coefficient was calculated to determine whether there was a consensus among the three groups (less experienced, moderately experienced, and more experienced contractors) regarding their ranking of important bid/no-bid factors.

Table 6. Results of Spearman’s rank coefficient.

Contractor’s Experience	Spearman’s Rank Correlation Coefficient	Significance Level
Less experienced–Moderately experienced	0.875	<0.001 *
Less experienced–More experienced	0.861	<0.001 *
Moderately experienced–More experienced	0.792	<0.001 *

* The correlation is significant at the 0.01 level (2-tailed).

indicates that the highest degree of agreement (0.875) was between less experienced and moderately experienced contractors, whereas the lowest degree of agreement (0.792) was found between moderately experienced and more experienced firms.

The analysis showed an 87.5% correlation between less and moderately experienced contractors, 86.1% between less and more experienced contractors, and 79.2% between moderately and more experienced contractors. The results indicate a high degree of agreement among the different categories of contractors regarding the ranking of the important factors that influence the decision to submit a bid. These results confirm the findings’ reliability, validity, and consistency, indicating a high level of agreement among contractors with respect to the factors’ ranking. This further indicates that the contractor’s level of experience in the construction sector does not influence the prioritization of factors influencing their bidding-related decisions.

4.3. Significant Differences of the Project Types on the Factors Affecting Decisions to Bid

An independent t-test was used to investigate whether statistically significant differences exist in the factors between different project types when making bid/no-bid decisions. The p-values of the test between building and infrastructure projects were computed, with the significance level of the analysis set at 0.05. A statistically significant difference was perceived in the “previous experience in similar projects” factor between building and infrastructure projects, as indicated by a p-value of less than 0.05, as shown in

Table 7. Results of independent t-test and one-way ANOVA test.

Factors		Project Type		Firm Years of Experience
		Independent T-Test		One-Way ANOVA
		T-Value	Sig. (2-Tailed)	F-Value	Sig. (2-Tailed)
[F1]	The client’s ability to pay	−1.397	0.166	1.676	0.193
[F2]	Client’s identity and reputation	−0.147	0.884	1.758	0.178
[F3]	Previous experience with the client	−0.397	0.693	0.270	0.764
[F4]	Identity of the consultants	1.118	0.267	0.426	0.654
[F5]	Need for work	1.140	0.258	0.032	0.968
[F6]	Project duration	−0.137	0.892	0.628	0.536
[F7]	Project type	−1.808	0.074	0.454	0.637
[F8]	Project size	0.009	0.993	0.043	0.958
[F9]	Project location	0.039	0.969	3.146	0.040 *
[F10]	Project risks	−1.972	0.052	0.017	0.983
[F11]	Previous experience in similar projects	−2.079	0.041 *	1.702	0.188
[F12]	Past profit in similar Projects	−0.383	0.703	0.575	0.565
[F13]	Project cash flow	−0.263	0.793	0.022	0.978
[F14]	Availability of work	−1.235	0.220	1.380	0.872
[F15]	Availability of qualified workforce	0.329	0.743	0.678	0.510
[F16]	Number and identity of bidders	−0.613	0.542	1.385	0.255
[F17]	Bidding method	−0.187	0.852	0.203	0.816
[F18]	Contractor’s financial capacity	−1.061	0.291	1.878	0.159
[F19]	Clarity of scope of work	−0.714	0.477	0.019	0.981
[F20]	Bidding duration	0.179	0.859	0.308	0.736
[F21]	Probability of winning the project	−1.140	0.258	0.627	0.537
[F22]	The economic environment	−0.748	0.456	1.279	0.283

* The difference is significant at the 0.05 level.

. The contractors’ experience with similar projects is a significant factor in bidding decisions, particularly in infrastructure construction, which ranked higher than building projects. This practice allows contractors to submit more competitive bids for the types of work in which they have experience, which allows them to focus on the firm’s area of expertise and familiarity when selecting projects. A lack of expertise in certain project types might increase the risk of project failure.

4.4. Significant Differences in Contractor Experience on the Factors Affecting Decisions to Bid

A one-way ANOVA analysis was used to investigate whether any significant differences emerged in the ranking of the factors among contractors with different experience levels when making bid/no-bid decisions. The ANOVA results in Table 7 indicate that the p-values of the 21 factors were greater than 0.05. The result indicates no differences emerged between the opinions of construction contractors with different years of experience on the level of importance of 21 factors affecting bid/no-bid decisions despite the differences in the rankings and RII scores. However, “project location” was the only factor found to differ significantly in its degree of importance with respect to bidding decisions in Saudi construction projects. The “project location” factor refers to the specific area in which the construction project will be executed. Consideration of this factor in infrastructure projects is essential because the terrain may be unsuitable or hazardous for construction work. Challenging terrain can be a significant factor in determining a contractor’s success on a project. Furthermore, Holt [57] advised contractors to submit bids for projects located in areas that provide optimal cost control and maintain a positive cash flow. Each geographic region has building codes, zoning laws, and regulations that significantly influence a contractor’s bidding decisions [58]. As such, contractors must take the proposed project’s location into account.

4.5. Exploratory Factor Analysis

The ratio of sample size to the number of variables was used to assess the adequacy of the sample size for the EFA. Okakpu et al. [59] recommend a sample-variable ratio of at least 5:1. In this study, the sample size (112) compared to the 22 bid/no-bid decision factors resulted in a ratio of 5:1, which is higher than the minimum required ratio of 5:1.

Although the factors affecting bid/no-bid decisions were ranked according to their level of importance (Table 4), factor analysis was used to explore the clustering effects of the factors so that they could be grouped together. Bartlett’s test of sphericity and the KMO measure of sample adequacy were used first to ensure that the data were suitable for factor analysis. Tabachnick et al. [60] indicated that the data are suitable for factor analysis if the KMO value is more than 0.6 and Bartlett’s test of sphericity is significant (p < 0.05). As

Table 8. KMO and Bartlett’s test of factors affecting bid/no-bid decisions.

Test		Factors
KMO Sampling Adequacy Measure		0.713
Bartlett’s Test of Sphericity	Approx. Chi-Square	561.055
	df	231
	Sig.	<0.001

indicates, the KMO value for the 22 factors was 0.713, and Bartlett’s test of sphericity was statistically significant (p-value of <0.001), confirming that the data obtained are appropriate for the factor analysis.

Applying principal component analysis with varimax rotation to the 22 factors yields seven groups with eigenvalues greater than 1, explaining 62.60% of the total variance that exceeds the 60% required for adequate construct validity [45]. A visual analysis of Figure 2, which presents a scree plot, indicated that it is appropriate to retain seven components. However, the seventh group is excluded from the analysis, as it consists of only a single factor, “need for work” [61]. All 22 factors have factor loadings close to the threshold level of 0.45, significantly contributing to the principal factors’ interpretation [45,59]. The results of the factor analysis are presented in

Table 9. Rotated component matrix of the factors affecting bid/no-bid decisions.

Code	Factors to Bid/No-Bid	Factor Groupings
		1	2	3	4	5	6
Grouping 1: Client-related factors
[F9]	Project location	0.756
[F3]	Previous experience with the client	0.741
[F4]	Identity of the consultants	0.632
[F6]	Project duration	0.529
Grouping 2: Bidding-related factors
[F16]	Number and identity of bidders		0.672
[F21]	Probability of winning the project		0.644
[F20]	Bidding duration		0.565
[F19]	Clarity of scope of work		0.498
[F17]	Bidding method		0.432
Grouping 3: Contractor-related factors
[F1]	The client’s ability to pay			0.727
[F10]	Project risks			0.707
[F11]	Previous experience in similar projects			0.552
[F18]	The contractor’s financial capacity			0.492
Grouping 4: Market-related factors
[F2]	The client’s identity and reputation				0.761
[F15]	Availability of qualified workforce				0.635
[F14]	Availability of work				0.573
Grouping 5: Economy-related factors
[F13]	Project cash flow					0.797
[F22]	The economic environment					0.687
[F12]	Past profit in similar projects					0.535
Grouping 6: Project-related factors
[F7]	Project type						0.826
[F8]	Project size						0.813
	Eigenvalues	4.884	2.038	1.655	1.497	1.329	1.236
	Total Variance Explained (%)	22.200	9.266	7.524	6.803	6.042	5.618
	Cumulative variance (%)	22.200	31.466	38.991	45.793	51.835	57.453
	Cronbach’s α	0.720	0.649	0.620	0.666	0.591	0.641
	Average RII scores	76.65	79.40	87.61	85.18	85.60	86.91

.

All the extracted groups exhibited strong reliability and validity, with Cronbach’s alpha coefficients meeting or exceeding the minimum acceptable value of 0.60, as shown in Table 9. Each underlying grouping was given a name that explained its underlying meaning. Oke et al. [62] state that there is no exact technique for naming the groups. Accordingly, the six groups representing the factors of the bid/no-bid decisions were named as follows: client-related factors, bidding-related factors, contractor-related factors, market-related factors, economy-related factors, and project-related factors.

Another significant finding is the relationship between the RII scores of the factors group and the factor analysis results. Table 9 also calculates the average RII value for each underlying group. The respondents identified the “contractor-related factors” group as the most important, achieving an RII value of 87.61. This was followed by “project-related factors”, “economy-related factors”, “market-related factors”, and “bidding-related factors”, respectively. Finally, the “client-related factors” group had the lowest RII value, at 76.65. This indicates that contractors primarily consider factors pertinent to themselves when deciding whether or not to bid.

4.6. Content Analysis of Respondent’s Comments

After collecting responses to the survey question and asking respondents for suggestions on additional factors and how they might influence bid/no-bid decisions, several recurring themes emerged from the content analysis. Several respondents suggested adopting the techniques used to resolve disputes among project parties, pointing out that the ability to resolve disputes efficiently and fairly plays a significant role in project success and contractor reputation. This implies that contractors consider dispute resolution techniques when assessing bid opportunities, particularly in complex and high-risk projects. Additionally, several respondents highlighted the significance of the prices and availability of materials in the market, particularly materials that require special manufacturing, as influential factors in bid/no-bid decisions. One participant from infrastructure contractors said that contractors consider their equipment’s age, condition, and capacity when evaluating bidding opportunities, which may help improve project performance and competitiveness. Several participants emphasized the importance of considering the building code requirements specific to the project area in their bidding decisions. This indicates that contractors prioritize projects in areas with which they are familiar and can confidently comply with building code regulations. Some respondents highlighted various factors beyond the typical considerations, such as the amount of the financial bond and clarity of designs and bills of quantities. They said that well-defined project specifications, clear drawings, and accurate bills of quantities are necessary to estimate costs and evaluate project feasibility accurately. Contractors prioritize bidding on projects with clear and detailed documentation as it minimizes the risk of cost overruns or disputes during the project’s execution.

5. Conclusions and Contribution

Bid/no-bid decisions are not simple for contractors and are affected by various factors. No studies to date have investigated the influence of different project types and firms’ level of experience on contractors’ bid/no-bid decisions. The study aimed to investigate how bid/no-bid decision factors are influenced by different project types and contractors’ years of experience. An extensive literature review was conducted to identify the necessary factors, resulting in the identification of twenty-two factors. A survey was then formulated to assess the perspectives of construction contractors in Saudi Arabia with respect to the importance of these factors. A total of 112 responses were gathered and analyzed using both descriptive and inferential statistical methods.

Contractors should only submit bids on certain projects as they will only be able to manage projects within their capacity. In recognition of this fact, contractors should carefully select the right projects to bid on by paying more attention to the most salient factors: the client’s ability to pay, clarity of the scope of work, project cash flow, the need for work, and availability of qualified labor. According to the study’s conclusions, a consensus exists among the contractors regarding the ranking of the identified factors. The largest agreement (0.875) occurred between less experienced and moderately experienced contractors, whereas the lowest agreement (0.792) was between moderately experienced contractors and those with more experience. The differences were further studied based on project types and contractors’ years of experience to understand the behavior of contractors regarding the factors affecting their decisions for the bid/no-bid. Infrastructure projects had a higher average RII score (84.00) compared to building projects (82.4), with 16 factors rated higher for infrastructure and six factors rated higher for building. This indicates that greater emphasis is needed on specific factors for infrastructure projects. Principal component analysis indicates six underlying groupings for the bid/no-bid factors: (1) client-related factors, (2) bidding-related factors, (3) contractor-related factors, (4) market-related factors, (5) economy-related factors, and (6) project-related factors. The results indicate that contractors primarily prioritized contractor-related factors (RII = 87.61), while client-related factors were given the least consideration during the bidding process (RII = 76.65). Bidders often lack sufficient time to thoroughly consider long lists of factors when deciding whether or not to bid, and decisions must often be made quickly. The process would be rendered considerably more efficient if contractors could pinpoint the most important factors through scientific processes, as provided by the present study. Previous studies addressing factors influencing bid/no-bid decisions in Saudi Arabia have been limited to the RII or the mean ranking on a Likert scale; these factors were not analyzed based on project type and years of experience, a shortcoming that this study seeks to address.

The main findings of this study have significant practical implications for all project-associated stakeholders aiming to improve their bidding strategies and decision-making processes. First, project owners may benefit from this study’s findings if they improve their procurement design by better understanding the factors underlying the logic behind bidding decisions. Furthermore, they must build up good reputations and ensure timely payments to contractors, thereby minimizing risks for the contractors. These actions would assist in attracting competitive bids from a wide range of contractors and achieve the desired level of competition. Second, project contractors, however, could leverage these factors to shape their bid/no-bid strategies that align with their organization’s strategy, expertise, and capabilities. This will further help them to select appropriate projects, leading to improved performance and increased profits. Additionally, the list of 22 bidding factors can serve as a checklist for industry professionals, enabling them to consider all aspects that may influence their bidding decisions thoroughly. Finally, bidding practitioners can use these prioritized factors to support their decisions in terms of whether or not they will bid for building and infrastructure projects in Saudi Arabia.

The study’s findings may also be useful for international contractors interested in entering Saudi Arabia’s construction market, as well as new market entrants. With Saudi Arabia hosting Expo 2030 and the FIFA World Cup 2034, an increasing number of international contractors are pursuing opportunities in the country, signaling a potential construction boom. However, many of these contractors will likely have limited or no prior experience in Saudi markets. Therefore, it is essential that they have access to reliable bid/no-bid decision-making factors for construction projects in Saudi Arabia.

6. Research Limitations

The data for this study were obtained from contractors based in Saudi Arabia, which inherently restricts the findings to the Saudi construction industry. Consequently, the broader applicability of these results may be limited due to variations in tendering systems, economic conditions, and environmental factors across different countries. Specifically, the low-bid environment used in public projects in Saudi Arabia—where the lowest responsible bidder is awarded the contract—further restricts the generalizability of the bid/no-bid factors considered in this study to other procurement methods used in different regions. Additionally, the factors used in the study were filtered by local practitioners to ensure that they were tailored to the specific context of Saudi Arabia, further narrowing their relevance to other regions. Lastly, this study focuses exclusively on building and infrastructure projects. Future research could explore other project types, such as industrial, energy, and environmental projects, to gain broader insights into bid/no-bid factors in Saudi Arabia’s construction industry. Furthermore, future research could conduct in-depth interviews to understand how contractors at different experience levels can tailor their bidding strategies according to bid/no-bid decision factors.