May 6, 2005—The Associated General Contractors Education and Research Foundation (AGCERF) and the Foundation of the American Subcontractors Association (FASA) have released a study suggesting that online reverse auctions do not deliver promised savings in markets in which they are being used.
The study, by two professors from Louisiana State University (LSU), reviewed published literature on reverse auctions and concluded there is no data supporting the claims of cost savings for construction services.
In the first phase of the LSU study, Online Reverse Bid Auctions for Construction Contractors and Subcontractors, authored by James H. Gill, Jr., J.D., AIC, and Yilmaz H. Karasulu, Ph.D., COSS, the researchers reviewed hundreds of published articles, papers and reports relating to the auctioning of commodities and services, with an eye to the use of cost-savings data that could justify the use of reverse auctions.
The analysis of these published materials exposed a scarcity of information supporting cost-savings claims in all industries, including the construction industry.
The second phase of the LSU study will gauge the impact of online reverse auctions in the construction industry, such as the impact on bidding processes, project relationships and work quality.
For more information, visit the FASA Web site.
