Information availability at the competitive bidding stage for service contracts

Purpose – The purpose of this paper is to explore the information that manufacturing companies have available when competitively bidding for service contracts.
Design/methodology/approach - A semi-structured interview study was undertaken with industrialists in various sectors, which are currently facing the issue of servitisation.
Findings – One of the main findings was that, despite the novelty of the process, the decision makers at the competitive bidding stage have an understanding of the involved uncertainties. In particular, the uncertainty arising from the customer as the user of the product and evaluator of the competitive bids in addition to the uncertainty connected to the competitors were identified as the main influences on the pricing decision.
Research limitations/implications – The research implications show the influences and considerations during the decision-making process at the competitive bidding stage for service contracts. These include the customer and the competitors.
Practical implications – Shortcomings in current industrial practice were identified such as the approaches used to communicate the cost estimate for the service contract. The approaches currently used contradict research findings in the area of communicating uncertainty information, which means that further research is to be done to identify optimal approaches to displaying the uncertainty connected to the communicated information.
Originality – This paper offers a basis for research to understand the challenges industry faces when competitively bidding for service contracts. This can be used to develop novel approaches in supporting the decision maker such as a model that presents the probability of winning in comparison to the probability of making a profit.