You and another company are currently bidding on a construction project. Your competitor is an experienced construction company with an observed learning curve of 90%. You are a new company with no observed learning curve. Assuming the company with the lowest bid will be granted the contract and both companies determined their bid based on a 40% markup on cost, who will most likely get the construction contract?
A) You will get the contract since you are new and most likely offered a low bid.
B) Your competitor will most likely get the bid since its costs are probably lower than those of a new company because of the learning curve of 90%.
C) Each company is equally likely to receive the contract since a learning curve does not affect costs or the related contract pricing.
D) Not enough information is given to make this determination.

Question

Quizplus · Accepted Answer

Your competitor will most likely get the bid since their 90% learning curve suggests they can reduce costs over time, allowing them to offer a lower bid compared to a new company without a learning curve advantage.

You and Another Company Are Currently Bidding on a Construction