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The deter-mined values of r1 and r2 for a project are related to thebid ratio (lowest bid pided by the project ceiling price)of the project. In the proposed model, if the lowest bid isunder 80% (approximately the mean bid ratio of previ-ous projects in Taiwan) of the project ceiling price, thenthis lowest bid should be further evaluated. Therefore,on average, the unit price submitted by the lowest bidderis expected to be at least 20% lower than that assessed bythe owner. Then, setting the value of r1 greater than 20%or 0.2 is practical. Setting r1 6 0.2 (e.g., r1 = 0.1) willprobably cause most unit prices to be either suspiciousor unreasonable. In contrast, higher r1 values result inmore reasonable unit prices.Since r1 > 0.2 and r1 < r2, r2 > r1 > 0.2. The value ofr2 relates to the lowest bid ratio that is regarded asacceptable. For instance, if project administrators re-gard a bid ratio of 60% as the lowest acceptable bid ratio(meaning that the lowest bid is 40% less than the projectceiling price), r2 can be set to 0.4, because, on average,the unit price submitted by the lowest bidder is 40%smaller than that evaluated by the owner at a bid ratioof 60%.Clarification step – The clarification step is used toclarify the suspicious unit prices. This step is executedby a rule-based phase and an explanation-based phase.In the rule-based phase, the minimum and maximumunit prices submitted by other qualified bidders with re-spect to each cost item are calculated first. The minimumunit price, minj, of cost item j then is calculated accord-ing to the unit prices proposed by all other qualified bid-ders (excluding the lowest bidder), and resembles thecalculation of the maximum unit price (maxj) of costitem j. The rule-based phase then works as follows. A suspiciously low Bj (that is, r2 6 Dj < r1)isrevised to a reasonable one if minj 6 Bj. Practically,provided at least one qualified bidder proposes a unitprice even lower than or equal to Bj, then it is hard toreject Bj. A suspiciously high Bj (that is, r1 < Dj 6 r2) is revisedto a reasonable one if Bj 6 maxj. In practice, at leastone qualified bidder proposes a unit price even higherthan or equal to Bj, in which case it is hard to rejectBj.If a suspicious Bj does not pass the above therule-based phase, then the explanation-based phasecontinues to evaluate Bj. That is, the bidder is given anopportunity to explain or offer evidence to back up theirestimate. Based on discussions with several practitionersand governmental officers in Taiwan, several types ofaccepting or rejecting the lowest bidder s explanationare identified and summarized in Table 2. Generally, ifthe lowest bidder can provide evidence demonstratingthat the low unit price results from the types of self-sup-plied equipment, guaranteed low price from materialsuppliers, guaranteed low price from subcontractors,and mistaken owner estimates, then the explanation isaccepted and Bj is considered reasonable. However,the explanations, including mistakenly filled in data,bidding strategy and false interpretation of workrequirements, should not be accepted and Bj should beconsidered unreasonable. Moreover, if the suspicious-ness of Bj results from the ambiguous specifications pro-vided in the tendering documentation, then furtherdiscussion is needed. If the specifications are determinedto be too vague (namely, implying the faults are causedby the owner side), then Bj is reasonable; otherwise, it isunreasonable. Following this step, each suspicious unitprice can eventually be treated as either reasonable orunreasonable.Decision step – Finally, the model decides whether thetotal bid price is reasonable. This decision is made basedon whether the amount of the total unreasonable cost(TUC) exceeds the total bid price (TBP) by a predefinedthreshold ratio, TR (for example, 30%). The total unrea-sonable cost, TUC, is given byTUC ¼X Jj¼1ðBj QjÞ; ð2Þwhere Qj denotes the quantity in relation to the unrea-sonable unit price Bj for cost item j. Bj · Qj is termedthe extended cost for item j. Consequently, the lowestbid price is considered unreasonable if the value ofTUC/TBP exceeds the value of TR (that is, indicating that the percentage of the unreasonable costs over thetotal bid price is too high); otherwise, the bid is treatedas reasonable. Unreasonable lowest bids are rejected.Furthermore, the second lowest bid is considered thelowest bid, and the above-mentioned modeling stepsare repeated to evaluate this new lowest bid.The determined value of TR for a project is also re-lated to the bid ratio of the project. The lowest bid isconsidered to be reasonable if its bid ratio exceeds 0.8(or 80%). Namely, a 20% difference between the bidprice and the project ceiling price is reasonable. Accord-ingly, TR is suggested to exceed 0.2, indicating that thetotal unreasonable costs can reasonably exceed the bidprice by 20%. Similarly, the highest value of TR is re-lated to the lowest bid ratio that is acceptable to theproject administrators. For example, if project adminis-trators consider a bid ratio of 60% to be the lowestacceptable bid ratio, then the value of TR may equal0.4 (=1 0.6). Thus, the value of TR will be set between0.2 and 0.4.5. ExampleThe proposed model is applied to two subprojects(architectural and electrical) of a building project todemonstrate its potential merits. The building projectis in central Taipei, Taiwan. Besides three undergroundfloors, the project includes a 14-story hotel-like dormi-tory, a six-story educational building, a three-story of-fice building, and a six-story building including an800-seat meeting hall, and a 200-person convention hall.The total project budget is approximately NT$1,278,000,000 (US $42,600,000). (The project wasfast-tracked for completion by mid 2000). Notably, inreality the two subprojects were both awarded to thelowest bidder. The architectural subproject attractedeight bidders, one of whom was disqualified during theprequalification process. Furthermore, the electricalsubproject attracted eight bidders who were all qualified.5.1. Evaluation resultsThe lowest of the qualified bids for the architecturalproject was $830,000,000 representing a bid ratio of upto 0.94 (=$830,000,000/$880,000,000). Using the pro-posed model, the lowest bid can then be considered rea-sonable because the bid ratio is over 0.8; this subprojectaccordingly can be tendered out. However, the model isalso applied to the architectural subproject to furtherexamine the reasonableness of the proposed unit pricesof the lowest bid. Additionally, the electrical subprojecthas a bid ratio (0.76 = $121,510,000/$159,900,000) ofbelow 0.8, and certainly should be further evaluated.Suppose r1 = 0.3 and r2 = 0.4. Then, following con-ducting the preparation and evaluation steps of the pro-posed model, Table 3 lists the numbers of unit pricesthat are treated as reasonable, suspicious or unreason-able for each subproject.