Using Simulation To Evaluate Web-Based Bidding in Construction

The Internet is changing the whole business model by allowing companies to communicate instantly with suppliers, partners, and customers on a worldwide scale. To enjoy realtime data exchange and higher transaction efficiencies, companies need to use information technology (IT) solutions and change how they distribute goods and how they collaborate within the company with contractors and suppliers. While the Internet is the channel that allows instant interaction between all components of a company, IT provides the ability to streamline the structure and to influence and control the flow of information. In this paper, we evaluate the impact that using the Internet can have on the procurement aspect of the construction industry. Specifically, we describe how the traditional service procurement process in construction is affected by the use of a web-based bidding tool (WBBT). We use a simulation model on a case study to evaluate how the WBBT affected service procurement in a large pharmaceutical company. The paper describes the potential impact of IT solutions in the Construction Industry and on the procurement aspect in particular, before discussing the case study in detail